iREIT Daily

Let’s Focus on the Federal Reserve for One Small Second

Brad Thomas

467 postsMarch 3, 2022

Let’s not start with Russia today. Let’s start with the Federal Reserve. Specifically how Chair Jerome Powell appeared before the House of Representatives Financial Services Committee yesterday.

The Fed, he assured, still intends to raise interest rates this month and still expects inflation to ease later this year. For now though, that latter influence is “running well above our longer-run objective of 2%.”

Add in strong demand, “and bottlenecks and supply constraints” that are “larger and longer lasting than anticipated”… and there’s a lot to consider. Plus:

The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain. Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble responding to incoming data and the evolving outlook.

“Nimble,” of course, isn’t something the Fed has been known for the past 14 months or so. But maybe old dogs can learn new tricks?

As-is, Powell told the Committee he’s “inclined to propose… a 25-basis-point rate hike” mid-month. And he reiterated how the Fed is “prepared to move more aggressively by raising the federal funds rate by more than” that in subsequent meetings.

Speaking about that interaction, well-known economist Larry Summers told Bloomberg yesterday that he thinks the Fed is out of options. It has:

… to mount a strong response to inflation at a time when I think we are at or over the brink of a spiral of rising inflation breaking out. You’re seeing that in the numbers for expected inflation over the next year or over the next couple of years.

More Non-REIT News to Know About

Summers added:

The place you’re seeing it most clearly is in the wage data and the data on vacancies, which are pointing to wage inflation at close to 6% and pressures for that to accelerate. And I think that needs to be ringing all the alarm bells at the Fed. So I think there’s much more risk of the Fed doing too little than there is of the Fed doing too much at a moment like this.

And now we return to your regularly scheduled broadcast – i.e., Russia vs. Ukraine – where both Fitch and Moody’s have slashed Russia’s sovereign rating down six notches to junk status.

I won’t add them to the list of institutions that have taken action against Putin. They’re simply assessing that growing number… which now includes FTSE Russell and MSCI.

Both announced yesterday they’ll be removing Russian equities from all their indexes by March 9.

With all this going on, it’s no wonder that oil prices continue to rise. And – circling right back to inflation – food prices will likely climb further too. Just consider how dependent the EU’s meat and dairy industries are on feed crops from Ukraine and fertilizer from Russia.

As such, Politico writes:

“The consequences of this Russian aggression will have a major impact on our agri-food sector, and it will be painful…” Michael Scannel, the second most senior civil servant at the Commission’s agriculture department, told MEPs on the farm committee.
Russia and Ukraine jointly account for more than [30%] of the world’s trade in wheat and barley, [17%] of corn, and over [50%] of sunflower oil, seeds, and cakes for feeding animals – but all Ukrainian exports from the major trade route via the Black Sea ports have stopped because of the war, Scannell said.

So there’s that to consider too.

The World According to REITs

I have two more things to mention before addressing real estate investment trusts (REITs) directly.

First is how U.S. private payrolls rose by 475,000 last month, which was 100,000 higher than economists expected. And then there’s AMC Entertainment Holdings (AMC) CEO Adam Aron.

He used Tuesday’s Q4 earnings call to call out continued naysaying about movie theaters’ chances against streaming services as “a load of… cow dung.”

That’s after total sales rose from $162.5 million in Q420 to $1.12 billion in Q4-21. AMC’s net loss was just $134.4 million compared to last year’s $946.1 million. And it saw positive cash flow of $46.5 million.

So unlike our first entry below, the only things AMC is selling are tickets, popcorn, and good times again.

Cedar Realty Trust (CDR) signed definitive agreements to divest its parts and pieces through multiple all-cash transactions. Thirty-three grocery-anchored shopping centers will go for $840 million. Its Revelry redevelopment project will go for $34 million. CDR is negotiating with yet another group to sell its Northeast Heights redevelopment project for $45.5 million (with a backup plan in place). And everything else will go for $291.3 million to yet another party. The expected net proceeds of $29+ per share will then be distributed to stockholders.

Gaming and Leisure Properties (GLPI) completed its purchase of the Live! Casino & Hotels in Philadelphia and Pittsburgh properties. The total price was $674 million. Previous owner, The Cordish Company, will continue to run the facilities as-is, just now paying rent for their use.

Crown Castle International (CCI) priced $750 million of 2.90% senior notes due 2027. Net proceeds will go toward paying down outstanding indebtedness, fees, and expenses tied to its commercial paper program.

And here’s your snapshot of yesterday’s action…

(Source: The Daily REITBeat)

Happy Investing

Brad Thomas

467 posts

View all my Posts

Brad Thomas is Senior Research Analyst at iREIT and CEO of Wide Moat Research LLC. With over 30 years of real estate experience, he is also long-time Editor of Forbes Real Estate Investor, a monthly subscription-based newsletter that dives deep into the vast world of profitable properties, and since 2021, he has served as an adjunct professor at New York University.

Thomas has also been featured on or in Forbes magazine, Kiplinger's, U.S. News and World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. And he was the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 based on both page views and number of followers.

Thomas is the recently-published author of The Intelligent REIT Investor Guide (2021), co-author of The Intelligent REIT Investor (2016), and he wrote The Trump Factor: Unlocking The Secrets Behind The Trump Empire (2016) - all available on Amazon.

Thomas received a bachelor of science in business/economics from Presbyterian College and is married with five wonderful kids.

The Business Results of Russian Roulette

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Let’s Focus on the Federal Reserve for One Small Second

Brad Thomas

467 postsMarch 3, 2022

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