iREIT Daily

More Bad News for Retail

Brad Thomas

467 postsMay 7, 2021

Last night, one of my associates was driving home through a blue-collar central Pennsylvania town. According to 2018 data, this borough has a population of 11,450 residents – hardly some immense metropolitan statistical area.

Yet when she passed one particular gas station, she saw not one, not two, but three Amazon (AMZN) delivery vans in its parking lot.

Stop and think about that for a minute.

Three Amazon delivery vans. In one non-Amazon facility parking lot. At 8:30 at night. For a population of 11,450.

Do you take walks around your neighborhood? If so, you may very well have seen something similar, where there will be three delivery vans making their rounds at the same time.

The pandemic sure has been good to Jeff Bezos, to say the least.

Good to him and horrible to many of his brick-and-mortar retail competitors. Millionacres ran with this headline yesterday: “Half of U.S. Department Stores to Close by 2025, Say Experts.” And here’s how it concludes:

“Although some malls are doing well, the mall-based department store is not in a good place (literally) right now. If you’ve been investing in department stores, watch the trends and tread carefully over this landmine. Department stores are in decline, and the ones that are still standing are trying to redefine themselves. Stores that offer a good consumer experience and that are convenient and easy to get in and out of stand a better chance of success.”

I’ve been preaching something very similar for a while now. Well before the pandemic, in fact. There are still some retailers I’m willing to watch – and even to invest in. But I agree with Millionacres that this is an area you have to be intensely selective about.

Industrial real estate investment trusts (REITs), on the other hand, are seeing success after success. Another Millionacres article, “Amazon Doubles Warehouse Space in Philly…” starts out like this:

“Amazon… like an invasive bamboo plant, is taking over the Philadelphia landscape, expanding like no other by doubling the number of warehouses it owns in the region to over 50. The giant multinational tech company now encircles the entire Philadelphia region.”

Two more quick notes before we get to the REIT-specific news:

Fox Business reports that the number of Americans filing for first-time unemployment benefits last week fell to “a new pandemic low, the latest evidence that layoffs are slowing as the economic rebound strengthens.” So that’s an overall positive to pay attention to.
A second Fox article states that AMC Entertainment Holdings (AMC) CEO “Adam Aron said he is optimistic for the coming months.” Apparently, his theaters – all of which are now open – saw roughly 7 million moviegoers last quarter. He called it “an increasingly favorable environment for moviegoers and for AMC as a company.”

But that’s just for the summer. There are so many considerations to evaluate here, so you’re probably better off holding off on throwing any money into major AMC landlords like EPR Properties (EPR). That’s my professional opinion until I see much bigger upside news.

The World According to REITs

We don’t have as much information to work with today as we did yesterday (which isn’t always a bad thing). But here are some of the newest names to present their Q1 earnings reports nonetheless:

Lexington Realty Trust (LXP)
City Office REIT (CIO)
CorePoint Lodging (CPLG)
American Homes 4 Rent (AMH)
Cedar Realty Trust (CDR)
DiamondRock Hospitality (DRH)
Regency Centers (REG)
Ladder Capital (LADR).

That’s still more than enough to cover though, so let’s get right to it:

City Office recorded revenue of $39.5 million and GAAP net income of about $47 million, or $1.07 per fully diluted share. Adjusted funds from operations (AFFO) was approximately $11.2 million, or $0.26. Core funds from operations was about $14.5 million, or $0.33. And the company collected more than 99% of its contractual base rent, while same-store cash net operating income (NOI) rose 5% year-over-year.
Regency Centers reported $0.90 per share in FFO, significantly higher than its Zacks Consensus Estimate of $0.75. Revenue was $274.7 million, another significant beat and up from $283.66 million in Q1-20.
Ladder Capital announced a GAAP loss before taxes of $0.3 million and diluted earnings per share of $0.00. Distributable earnings were $3.2 million, or $0.04 per share (EPS).

If you’re surprised that I didn’t include American Homes 4 Rent in that initial list, I figured I’d make that newsmaker my bonus addition. So, without further ado, here’s how it did last quarter:

The REIT reported FFO of $0.32 per share, beating expectations by a penny and up $0.03 over Q1-20. Its revenue, meanwhile, was $312.57 million compared to $289.59 million the previous year. Believe it or not, AMH “only” surpassed expectations three times in the last four quarters for the former and twice for the latter.

Since expectations are pretty positive for this REIT though, there’s very little to object to here.

(Source: The Daily REITBeat)

Happy Investing

Brad Thomas

467 posts

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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.

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

More Bad News for Retail

Brad Thomas

467 postsMay 7, 2021

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More Bad News for Retail

467 postsMay 7, 2021

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