iREIT Daily

Market Bubble or No Market Bubble…

Brad Thomas

467 postsApril 5, 2021

Quote of the Day:

“I think we all see the world from our own little unique bubble.”
– Julie Taymor

(Source: StoryBlocks)

This weekend included a family conversation about whether there was a stock market bubble and, if so, whether it was going to pop pretty soon.

It’s something people are beginning to ask more and more these days, as reported more and more by various news outlets. For instance, on April 1 (and no, this wasn’t a joke), Business Insider noted how:

“The narrative that the stock market is in a bubble has been growing on Wall Street as valuations and retail inflows reach new heights. But Goldman Sachs’ chief global equity strategist says the market isn’t in a full-fledged bubble.
Peter Openheimer, who is also Goldman’s head of marco research in Europe, led a study that looked back over 300 years of markets and market bubbles. His team found that there’s a number of properties that are typically characteristic of a market bubble: excessive price appreciation, extreme valuations, a narrative that investing has reached a ‘new era,’ increased market concentration, high speculation, strong investor inflows, and strong corporate activity.”

Some of those characteristics, he says, are there. But not enough so to be worried about any imminent risk.

Who knows. He might be right in that assessment. Or he might be wrong: He might be off in his calculations or it could really be different this time around.

I’m not going to predict one way or the other, despite being the quintessential victim of a past market bubble not all that long ago. If the experience taught me anything, it’s that the signs are very easy to ignore until after the fact.

Then, once everything was said and done, they were all right there, plain as the dirt you’re suddenly sitting on.

That’s why I so firmly believe in investing in blue-chip businesses: companies with such solid leadership that they don’t just survive the bad times that come their way – and bad times always inevitably come – they can even grow in them or because of them.

Here’s what I wrote about the subject in The Intelligent REIT Investor, which is incidentally now available for pre-order on Amazon right here:

“Smart and capable management is what separates mere collections of properties from superior real estate-oriented businesses. By this, I mean that REITs can do reasonably well even under mediocre management just as long as their subsectors are growing. After all, rapidly rising rents and occupancy rates during any given boom cycle will generate strong internal growth for just about all property types under it.
“The true test of quality comes when the going gets rough. That’s when excellent property management, superior asset location, admirable leasing skills, and strong access to capital make an obvious difference. When their markets soften – meaning there’s more sellers than buyers – strong companies retain their tenants at much better rates, thus minimizing cash flow erosion. They’re also in better positions to take advantage of opportunities to pick up sound, well-located properties at bargain prices – that can then be put back on track to produce excellent returns for shareholders.
“Summed up, superior management is adept at taking advantage of both booms and busts alike to emerge ever stronger. Without solid leaders like that, blue-chip REITs don’t exist. So, when searching for them, it’s important to focus on those with management teams that have built sound portfolios with only a modest amount of debt. Look for noteworthy track records of measuring risk, and investing or raising reasonably priced capital to take advantage of external growth opportunities.”

We’ve already seen that of many real estate investment trusts last year. And it seems the smart thing to do to continue searching for those traits this year as well.

The World According to Commercial Real Estate

With all of that said, I hope everyone had a great Easter break!

Like I mentioned in Friday’s blog, The Daily REITBeat and markets were off for Good Friday. So you may have already heard some of the news below.

But in case you missed it, here’s what happened with the REITs we follow while everyone else was out and about buying up candy and ham – which I hope you thoroughly enjoyed:

Host Hotels & Resorts (HST) announced that MacKenzie Capital Management made an unsolicited mini-tender offer to purchase up to 90,000 of its operating partnership units at $12.27 each. Host recommends that its holders turn MacKenzie down.
Realty Income published its inaugural Sustainability Report concerning its 2020 environmental, social, and governance (ESG) activity.
Terreno Realty (TRNO) purchased an industrial property last week with three distribution buildings on it in San Leandro, California, for $17.6 million. The property is 100% leased to 13 different tenants through June 2023.

And, in that same spirit of catch-up, here’s what went down – and up – during Thursday’s trading session:

(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.

Baylor’s Win Shows Us the Power of Predictability and Upsets Alike

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

Market Bubble or No Market Bubble…

Brad Thomas

467 postsApril 5, 2021

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467 postsApril 5, 2021

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