iREIT Daily

Back-to-School Blues

Brad Thomas

467 postsAugust 17, 2022

For many American school children, this week signals the inevitable.

As the dog days of summer wind to a close a new semester is about to begin – if it hasn’t already.

This year, many kids across the country get to experience regular, maskless, in-class instruction again. But what hasn’t yet returned to normal is teacher availability.

The Wall Street Journal reports:

“Tens of thousands of teacher vacancies exist across the country, according to state education departments. Indiana schools are seeking more than 1,700 classroom positions. Delaware has 500 openings. An Iowa job board lists more than 1,400 teacher jobs, with another nearly 700 posted in Ohio.
“Some states have increased salaries; New Mexico teachers now start at between $50,000 and $70,000, an increase of as much as 25%. Teachers earn an average of $65,300 nationally, with average starting salaries of $41,770, according to the National Education Association.”

Summed up, schools are scrambling to fill their classrooms with qualified educators. On both the institutional and government level, officials are spending hundreds of millions of dollars to recruit and hire new teaching talent.

New programs include teacher residencies and salary increase incentives. Some schools are even paying the education costs for those earning their teaching certificates.

Others are going a step further than that.

Alabama, for one, now allows any licensed teacher from any state to teach in its public school system. It’s also eliminating entrance exams and allowing clemency for teachers whose certificates have lapsed.

Louisiana started a campaign to entice teens into the teaching profession, offering college credits in high school for entry-level education courses. And Arizona is allowing university students to teach in the classroom.

Meanwhile, federal stimulus cash has enabled many districts to incentive recruits with sign-on bonuses and retention rewards – up to $5,000.

Here’s the thing though…

Teachers deal with a lot of stress and stipulations. And as they’re quick to tell you, their summers off aren’t as simplistic as that.

So while this father of five certainly hopes I’m wrong, I’m not sure this shortage is going to go away any time soon.

More Non-REIT News to Know About

To kick off retail week, Walmart (WMT) reported Q2 earnings yesterday.

The Arkansas-based supermarket chain reported revenue increases thanks to higher sales numbers and increased price volume. It says it’s growing its grocery-specific market share, earning about 56% of its revenue from those aisles.

However, sales slipped in discretionary categories. To limit backlog and make room for things that will sell, Walmart is offering some major discounts.

“The actions we’ve taken to improve inventory levels in the U.S., along with a heavier mix of sales in grocery, put pressure on profit margin,” CEO Doug McMillon said.

As such, operating income dipped 6.8% as larger discounts and more low-profit grocery items cut into margins.

Even so, Walmart helped lead the market’s rally yesterday.

The World According to REITs

Despite the summer coming to a non-official close, I’m going to cover a “vacation” real estate investment trust (REIT) today.

Apple Hospitality REIT (APLE) owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States. It owns 219 of those with an aggregate 28,748 guest rooms located throughout 36 states.

As the summer travel season surged this year, Apple Hospitality demonstrated a killer business strategy – one defined by strong operating performance, a solid bottom line, and a sophisticated balance sheet.

Its Q2 revenue per available room (RevPAR) exceeded Q2-19 by about 4%. That was driven by a near 8% average daily rate improvement.

Apple Hospitality also has an outstanding contract to purchase an Embassy Suites in Madison, Wisconsin, for around $79 million. The hotel is currently being built and should include 260 rooms.

And here are some other facts and figures, courtesy of CEO Justin Knight:

“Portfolio performance continued to strengthen during the second quarter, exceeding our expectations and surpassing 2019 results. Leisure demand has remained robust while business demand, both transient and group, has continued to steadily improve.
“We are pleased to report occupancy of 78%, ADR of $153, and RevPAR of $119 for our portfolio… Driven primarily by rate growth and aided by continued operating efficiencies, we achieved adjusted EBITDAre [earnings before interest, taxes, depreciation, and amortization for real estate] of $126 million, comparable hotels adjusted hotel EBITDA margin of approximately 40% and MFFO [modified funds from operations] of approximately $111 million, or $0.48 per share, for the quarter. These outstanding results further validate our proven strategy of investing in a diversified portfolio of high-quality, branded, rooms-focused hotels with low leverage, and highlight the strength of our corporate and on-site management teams.”

The company also amended and restated its existing unsecured $850 million credit facility. As such, that total figure comes to approximately $1.2 billion.

Not too shabby.

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly if you buy in at inflated prices.

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

Back-to-School Blues

Brad Thomas

467 postsAugust 17, 2022

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Back-to-School Blues

467 postsAugust 17, 2022

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