iREIT Daily

A Cure for the Summertime Blues

Brad Thomas

467 postsMay 12, 2022

It’s no surprise that the rise in gas prices and runaway inflation are now affecting summer travel plans. As Americans prepare for their first vacation season since the COVID closures, concerns linger over the high costs associated with travel.

In a new consumer confidence survey by The Conference Board, the number of respondents saying they plan to take a vacation this summer plummeted to its lowest level since last spring when vaccines were just becoming widely accessible. The Consumer Sentiment Index decreased slightly in April, with concerns over inflation ranking high among people’s anxieties.

Summer travel apprehension could have implications across a myriad of market sectors, but for those of us in the REIT world, the hospitality space is of particular concern.

From CNBC:

The question now is if consumers will rethink travel due to economic constraints or the prolonged volatility in the stock market.
The market turmoil could eventually hurt the “wealth effect,” Truist Securities lodging and leisure analyst Patrick Scholes told CNBC. “Basically, if we see a sustained bear market, people feel more conservative about their ability to spend.”

Those invested in hospitality REITs will want to pay very close attention in the coming months. Of course, everything seems to be down in this market so there’s definitely more to consider than recent ticker trajectories alone.

Some of the biggest factors to look at when investing in hospitality REITs are debt-to-capitalization ratios, property diversity, and greater economic circumstances (especially now).

Since luxuries are the first things we cut out during tough times, many hotels may experience decreased occupancy. You definitely want to make sure you’re investing during the right time, in a REIT that features a good mix of lux and business-oriented assets.

Undoubtedly, the smartest way to invest in hospitality REITs is by playing the long game. At the very least, extended holding periods allow you to endure short-term volatility in the form of economic turns and seasonality. More importantly, the longer you can hold onto a blue-chip hospitality REIT, the more you’ll benefit from stock price appreciation and long-term dividends.

While this logic applies to pretty much all REITs, the long-term investment strategy is especially true for hospitality REITs because of their correlation to the economy. Holding long will help you endure signs of economic instability like we’re seeing now.

More Non-REIT News to Know About

IRS Owes Big

You’ll get a kick out of this one. The IRS, notorious for levying penalties and interest for late payments, is now facing $3.3 billion worth of interest owed back to the public.

Yes, Americans can now expect 4% interest for late refunds by the IRS — a pretty significant amount compared to interest on, say, modern money market accounts, traditional savings, etc.

Usually, the IRS has 45 days to process a return and submit a refund. After that, interest starts accruing in amounts tied to federal short-term interest rates. As of last month, the IRS had nearly 10 million unprocessed 1040s for tax years 2020 and 2021. This translates to $3.3 billion in interest — over a quarter of what it costs to actually run the IRS.

Since the IRS is funded by taxpayers, the irony of this new interest penalty adds a whole other level of humor.

The World According to REITs

Let’s Look at Some Hospitality REITs

All this talk about travel plans and hospitality REITs has me in the mood to check the status of a few of my favorite ones. I picked out a couple with solid foundations and sound balance sheets that will undoubtedly survive our summer economy.

Apple Hospitality

With household names like Courtyard, Fairfield, and Residence Inn, Apple Hospitality (APLE) holds a diverse set of core hotel brands across the country. The management team has been working to improve efficiencies, lower operating costs, and renovate its entire portfolio of properties. Along with ever-increasing occupancy rates, the REIT’s dedication to efficiency will serve investors well.

Right now, it boasts a $4.21 billion market cap with 219 properties and 28,700 rooms across 36 states. Distributions from May were $0.05 per share based on a $17.97 share price.

Park Hotels & Resorts

Park Hotels & Resorts is a hospitality REIT operating mid-range lodging properties under the Hilton, DoubleTree, and Hyatt Regency brands. Besides maintaining solid portfolio performance in top destinations across the country, the company’s top brass has kept a close eye on the balance sheet. Even in spite of a few closures hindering occupancy and income rates, this REIT has been able to offload assets… pay off hundreds of millions of dollars in debt… and establish substantial liquidity.

This quarter, it saw a 66% year-over-year improvement in FFO and a RevPAR increase of $75.10, or 181.7%. Its dividends aren’t really anything to brag about at around $0.01 per share, but again, this REIT looks good for the long game.

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.

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

A Cure for the Summertime Blues

Brad Thomas

467 postsMay 12, 2022

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A Cure for the Summertime Blues

467 postsMay 12, 2022

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