iREIT Daily

Zillow Is Still This Week’s Big Story

Brad Thomas

467 postsNovember 4, 2021

Zillow (Z) is still all over the news today.

I’m even seeing the same basic headlines I’ve been seeing all week: the ones about it failing enormously on its home-flipping venture and laying off 25% of its employees.

Shark Tank’s real estate mogul Barbara Corcoran spoke out about it, calling CEO Richard Barton “a phenomenal businessman.” A successful “disruptor” too, so:

“… no one thought [Zillow] could stumble. And what he did – and I’m sure he gave it a lot of thought – but he went into a space that has nothing to do with finding homes for people… I remember at the time thinking, what the heck is he doing that for? It makes no sense at all.”

This was during an interview with Yahoo Finance Live, where she added that Barton probably figured his sellers-based expertise was enough. But in reality, he was entering into a field he had no real understanding of.

Moreover, he got right into it, with the overly ambitious goal of buying 5,000 homes to flip by 2024… per month.

This is why Warren Buffett was so right when he said to stick with one’s circle of competence. Don’t go chasing every shiny toy that comes your way.

Know what you’re buying before you buy it.

It’s also why I just don’t trust the trends-based model that Cathie Woods seems to adhere too. Her ARK Innovation ETF (ARKK) just dumped 3.9 million Zillow shares yesterday.

Worse yet, she had just bought further into it on Tuesday, believing it would bounce right back.

But businesses – even those run by brilliant disruptors – are never sure-thing bets. They’re comprised of humans who can make mistakes and can’t control everything that comes their way regardless.

Never forget that.

The Markets Shrug Off Fed’s Tapering Talk After All

One more note about Zillow before we move on…

WeWork’s brilliant businessman debacle only two years ago should still be fresh in investors’ minds – enough so to keep us from being quite so trusting. Since clearly that isn’t the case, let’s review rule No. 1.

There is no all-powerful savior figure in finance. So never put all your trust in a single company.

The same goes for institutions like the Federal Reserve. (Especially when members buy and sell large amounts of personal holdings ahead of publicly made news.)

The markets have been euphoric at times this past year and a half on the Fed’s intense bond and mortgage-backed securities-buying program. We’re talking about $120 billion in so-called quantitative easing per month.

Yesterday, it announced it would cut that down to $105 billion from here. And its additional asset purchases will drop by $15 billion in December. To quote Fox Business on the matter:

“… growing inflation risks have put added pressure on the central bank to begin unwinding support in an attempt to take pressure off of rapidly rising prices. (In September, the Federal Reserve’s favored inflation gauge hit 4.4%, a 30-year high that’s well above the U.S. central bank’s preferred target of 2%.)
“Economists were closely watching the FOMC’s statement for signs that officials are more concerned about surging inflation, but the post-meeting statement was little changed.”

Or, to quote Fed Chairman Jerome Powell himself, “We understand the difficulties that high inflation poses for individuals and families, particularly those with limited means to absorb higher prices for essentials such as food and transportation.” But they’re still “transitory.”

In short, suck it up a little while longer. With “a little while” being up for interpretation.

So VERY Many REITs Reporting

Mr. Market isn’t despondent this morning on the tapering news. He actually seems to be taking the news pretty evenly despite previous temper tantrums at the mere possibility of such action.

Legendary investor Jeremy Grantham, however, isn’t so kosher about the state of stocks. He told CNBC’s Squawk Box Asia this week that investors are “carried away” with euphoria over constantly rising prices.

They’re “throwing their hearts and souls into it and putting all their cash reserves into the market.” In short, they’re fueling an enormous bubble that will end badly.

Again, we don’t ever want to trust just one person. But we’ve been saying that for quite a while now all on our own.

With that caution repeated, let’s finally move to real estate investment trusts (REITs). Because, man, do we have a lot of them to talk about today, with American Finance Trust (AFIN), Americold Realty Trust (COLD), Chatham Lodging Trust (CLDT)…

Diversified Healthcare Trust (DHC), EPR Properties (EPR), Equinix (EQIX), The GEO Group (GEO)…

Global Medical REIT (GMRE), Global Net Lease (GNL), Healthcare Realty Trust (HR)…

Host Hotels & Resorts (HST), Innovative Industrial Properties (IIPR), Iron Mountain (IRM)…

Mack-Cali Realty (CLI), Lexington Realty Trust (LXP), Pennsylvania Real Estate Investment Trust (PEI)…

Park Hotels & Resorts (PK), RPT Realty (RPT), Retail Value (RVI)…

Sabra Health Care REIT (SBRA), Summit Hotel Properties (INN), STORE Capital (STOR)…

Terreno Realty (TRNO), UMH Properties (UMH), and Urban Edge Properties (UE) all having reported.

This is why I keep urging you to join Intelligent REIT Daily for additional information. Because there’s usually something more to report.

The World According to REITs

It really can be difficult to choose which four to feature here when there are so many reports released – not to mention the non-earnings updates, which I’m pretty much skipping these days.

Then again, I do have my favorite REITs to talk about, whether as positive examples or negative ones, which does help out. Hence why I selected the following:

EPR Properties reported $0.92 per share in adjusted funds from operations (AFFO). It also raised its full-year guidance from $2.76-$2.86 to $2.95-$3.01 thanks in part to better-than-expected 90% rent collections. The company made $39.3 million in investments for the third quarter, including on experiential build-to-suit developments and joint ventures.
Innovative Industrial reported per-share AFFO of $1.71, which did miss expectations by a single cent – but massively beat out last year’s Q3 showing of $1.28. Management made five acquisitions and recorded shareholder-specific net income of $29.8 million, or $1.20 per diluted share. And it ended September with around $127.3 million in cash and cash equivalents.
Iron Mountain saw AFFO of $0.90 per share and affirmed its 2021 guidance of $3.33-$3.45. Service revenue went up 19.7%, storage rental revenue rose 2.2%, and global data revenue climbed 21.7% year-over-year. All told, total revenue came in at $1.13 billion versus Q3-20’s $1.037 billion, a nice 9% uptick.
STORE Capital announced $0.52 in per-share AFFO, leading it to raise its guidance from $1.94-$1.97 to $1.98-$2.00 for the full year. It also set 2022 expectations at $2.15-$2.20. The company invested $411.7 million in 75 properties at a 7.4% weighted average initial cap rate – meaning it’s invested $1 billion total for the first three quarters.

Meanwhile, we can catch a glimpse of how well The GEO Group did down below.

(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.

Monmouth Has a New (Sure-Thing?) Buyer!

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

Zillow Is Still This Week’s Big Story

Brad Thomas

467 postsNovember 4, 2021

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Zillow Is Still This Week’s Big Story

467 postsNovember 4, 2021

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