iREIT Daily

The Misery Index and an End to E-Commerce?

Brad Thomas

467 postsFebruary 9, 2022

“This is the best labor market most workers have ever experienced in their lives,” a CNN article noted yesterday. “So why are so many Americans feeling gloomy about the state of the U.S. economy?”

“The simple answer,” it continues, “is inflation” – with the consumer price index (CPI) recording the fastest rise in prices “in nearly 40 years.”

Nothing we don’t know already, of course. And the same goes for its mention of the misery index, which measures unemployment with the CPI.

Today, the resulting calculation has been 11 or higher since December – “a level [America] hasn’t consistently seen since the Great Recession and the years that followed.”

Unfortunately, according to another CNN article, the misery index might not go down much or at all this year. In fact, it might go up from here considering what Goldman Sachs (GS) said this week.

In a report to clients on Monday night, Goldman Sachs… projected the food-at-home category of the [CPI] will increase by another 5% to 6% this year. The Wall Street bank cited a 6% jump in food commodity prices so far this year and ‘soaring costs’ of some farming inputs, including a quintupling of some fertilizer prices.
“The stage has been set for further substantial increases in retail food prices this year,” Goldman Sachs economists wrote in the report.
Grocery prices in the [CPI] have already jumped by 11% over the past two years, the fastest pace since the financial crisis, the bank said.

If that’s the case, hold onto your wallets and be sure to make sensible investment choices too: the kinds that can counter this kind of runaway inflation much more easily and reliably than other assets.

Historically, that includes a number of real estate investment trust (REIT) subsectors.

More Non-REIT News to Know About

The war on big tech continues, with a Belgian socialist leader calling for an unconditional return to brick-and-mortar shopping. Speaking to his country’s Humo publication, Paul Magnette said:

I don’t think e-commerce is progress but social and ecological degradation. Why do we have to let workers work in those warehouses at night? Can we really not wait two days for a book?
Order pickers and couriers are so rushed that they barely have time for a bathroom break. If we don’t act, they will be the long-term sick of tomorrow. Night work is terribly bad for your health. You should limit this to areas where it is strictly necessary.

Magnette probably makes some good points there. However, I don’t see his idea actually taking off. Unless something enormously disruptive happens, e-commerce is here to stay.

Still, I wouldn’t be surprised if there are meaningful reforms to how, say, Amazon (AMZN), is allowed to operate in the future.

The state of California is already saying it will take Tesla (TSLA) to court for unfair work environments. Specific allegations include racial and gender discrimination from, it appears, 2015-2019.

In other corporate-woes news, I do want to touch on Peloton (PTON). I mentioned on Monday that my daughter reported on it before its earnings announcement.

Since then, we’ve learned that the company:

Will replace CEO John Foley with Barry McCarthy
Dropped its revenue guidance from $4.8 billion down to as low as $3.8 billion
Will cut 2,800 positions soon.

Will that be enough? Some investors clearly believe so, since they took its shares up 25% yesterday.

Oh, and Toyota (TM) reported Q3 results yesterday, including how net profit fell 5.6% year-over-year thanks to continuing shortages.

Like rising inflation, that news is no surprise whatsoever.

The World According to REITs

There are seven REITs that reported earnings yesterday, three of which are listed below.

(Another three are listed on today’s Intelligent REIT Daily. Upgrade today!)

American Assets Trust (AAT) recorded funds from operations (FFO) of $0.54 per share for its fourth quarter. Guidance for the full-year 2022, meanwhile, is set at $2.09-$2.17. The company also noted that same-store cash net operating income (NOI) rose 20% year-over-year for the quarter and 10.3% for the full-year. It collected all of its office rent due in Q4, 97% of its retail rent, and the same for its multifamily units.
Highwoods Properties (HIW) saw Q4 FFO of $1.06 per share and offered 2022 guidance of $3.76-$3.92. Same-property quarterly cash NOI grew 3.2% year-over-year minus the net impact of temporary rent deferral repayments and 1.6% with them. And it leased 884,000 square feet, with 284,000 of that being new contracts. Its in-service occupancy was 91.2% at year’s end.
Site Centers (SITC) announced Q4 FFO of $0.30 per share with 2022 guidance of $1.08-$1.13. same-store NOI rose 14.9% year-over-year on a pro rata basis. Though annualized (pro rata) base rent per occupied square foot dropped from $18.50 to $18.33. For the full year, it sold 525,226 common shares under its at-the-market (ATM) program at a weighted average price of $16.87 for gross proceeds of $8.9 million. And, as of January 31, 2022, it had collected about 99% of 2021 rents due.

Also, as you can see below, Simon Property Group (SPG) continued to fall yesterday once the markets opened. But, as I keep saying, it’s not short-term market moves that make (or break) my portfolios.

It’s sound fundamentals, which Simon still has.

(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 Reopening Loves Me. The Reopening Loves Me Not.

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

The Misery Index and an End to E-Commerce?

Brad Thomas

467 postsFebruary 9, 2022

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