iREIT Daily

An Industry View of a Potentially Very Pretty Picture

Brad Thomas

467 postsMarch 30, 2021

Quote of the Day:

“The most essential factor to economic recovery today is the restoration of confidence.”
– Herbert Hoover in 1932.

(Source: StoryBlocks)

Have you ever heard of Marcus & Millichap?

If you’re a hard-core REIT investor, you might have. But don’t worry if it’s a new name for you. I wouldn’t exactly call it a household name in most circles, so here’s its own description of what it does:

“Marcus & Millichap is a leading firm specializing in commercial real estate sales, financing, research, and advisory services. Our firm has the largest team of investment specialists in the industry, dedicated to meeting the diverse needs of private and major/institutional investors throughout the United States and Canada.”

It’s been around since 1971, “founded on a unique set of principles to maximize value for real estate investors.” As such, it’s been known to evaluate a crisis or two, complete with navigational insights to help its community come out ahead.

Now, “To help commercial real estate investors adapt to and capitalize on the unprecedented health crisis-driven economic and investment climate, Marcus & Millichap presents the 2021 U.S. Commercial Real Estate Investment Outlook.” It’s “an integrated compendium delivering holistic insights and perspectives on seven different investment property types.”

It’s also 116 pages long, so clearly I can’t quote the entire thing to you today. Besides, the first several pages – as necessary as they are – mostly just reiterate what you already know: that the shutdowns turned everything on its head last year and that we’re not out of the woods yet.

Again, you don’t have to have heard about Marcus & Millichap to recognize any of that. So let’s fast-forward to page 8, where the segment heading reads: “Following Recalibration Period, Investors Returning to Market; Attractive Returns Draw Additional Eyes.”

Here’s what it says underneath:

“Investors positioned to deploy dry powder. Uncertainty surrounding economic and commercial property performance caused by the pandemic pushed a significant portion of investment capital to the sidelines, reducing transaction activity across all major asset types last year. Many would-be buyers have since reevaluated their strategies while monitoring changes in asset valuations and property fundamentals…
“The rollout of vaccines and additional federal relief measures implemented during the first half of 2021 should augment investors’ confidence, improving their willingness to deploy capital. Many buyers, after gaining greater pricing certainty and reassessing commercial sectors’ future demand drivers, have adjusted their underwriting standards and are ready to act. This includes investors who are focused on value-add and opportunistic transactions…
“Investors will need to continue to monitor the impacts of store closures, remote-working models and household migration on commercial assets, adapting strategies as needed until the health crisis has been resolved.”

Marcus & Millichap also notes how there was “a more than 500 basis-point gap between the average commercial real estate yield and the 10-year Treasury rate” at the beginning of the year. It doesn’t see this going away in the near-term since “the low cost of capital” isn’t supposed to go away in the near-term either.

As such:

“… borrowers are likely to take advantage of low commercial mortgage rates to acquire properties that are generating comparatively high return potential in the current environment.”

In short, we should see buyers begin to “come off the sidelines” sometime soon.

The World According to Commercial Real Estate

The last 24 hours have been a bit slow on the REIT-specific news front. Apparently, whirlwind companies like Four Corners Property Trust (FCPT) are taking a bit of a breather after all.

But here’s what The Daily REITBeat dragged in nonetheless:

Mack-Cali Realty (CLI) sold its Metropark portfolio of four office buildings in Edison and Iselin, New Jersey, for $245 million – part of a larger strategy to sell off urban assets to pay down its unsecure corporate debt.
Vornado Realty Trust (VNO) completed a $350 million refinancing of its 909 Third Avenue office building in Manhattan with a fixed-rate loan at 3.23% that matures in April 2031.
Moody’s affirmed the senior unsecured rating of CubeSmart’s(CUBE) limited partnership at Baa2 with a stable outlook.

Also, as you can see below, retail is once again out of favor. When it comes to Tanger (SKT) though, that means nothing.

I don’t mean to sound flippant, for the record. I’m still monitoring it just like I am every other position that I recommend buying, holding, or even selling.

I’m just singing my same old song, saying not to let day-to-day actions dictate your decisions. We want to play a much longer game than that.

(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.

How Much Thinking Are We Really Doing?

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

An Industry View of a Potentially Very Pretty Picture

Brad Thomas

467 postsMarch 30, 2021

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An Industry View of a Potentially Very Pretty Picture

467 postsMarch 30, 2021

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