iREIT Daily

Everyone’s Dependent on China, and That’s a Problem

Brad Thomas

467 postsJune 29, 2022

For decades, China has enjoyed a celebrated status as the world’s manufacturing mecca. Since Bill Clinton signed the NATO expansion of ‘98, a substantial slice of the American industrial sector has relied on the People’s Republic to produce everything from iPhones to outerwear.

Chinese exports soon became essential to the economic health of our country and so many other nations as well. So when Covid-19 hit China first and foremost, inducing lockdown after lockdown after lockdown the past 2.5 years…

The global economy began experiencing product shortage (after product shortage after product shortage) and shipping chaos. Naturally then, many a business has suffered too.

The Straits Times out of Singapore reports:

“Foreign firms saw a drop of 16.1% in their profits during the January-to-May period from a year earlier, a similar contraction to the first four months of the year.
“In contrast, profits across all industrial companies in China gained [1%] in the five-month period.
“For May alone, industrial profits fell 6.5% from a year earlier, narrowing from April’s 8.5% drop, data from the National Bureau of Statistics showed on Monday (June 27).”

With China continuing its strict Covid policies, many businesses around Europe and America are now reassessing their relationship with the global industrial giant. In fact, nearly a quarter of European companies are now considering cutting their ties to the country.

Strangely though, investors aren’t onboard with that boycott, as it were. Since Mid-March, Chinese markets have enjoyed a 30% upswing, believe it or not. Shares were cheap due to lockdowns and government policies, and so outsiders flocked to these indexes to take advantage.

Many banks and funds are especially funneling big money into this market.

As far as manufacturing goes though, we’re still at a loss, with American companies reporting continuing challenges. In fact, only 31% of manufacturing and services businesses surveyed by the American Chamber of Commerce in Shanghai said that operations had resumed fully.

And most that have are reporting problems in traveling to job sites there.

Obviously, China’s place in the global economy is shifting. Covid truly tested the resilience of this regime and revealed the weaknesses inherent in our over-dependence on it.

Hopefully then, we take these lessons to heart and operate wisely from here – both as investors and businesses.

More Non-REIT News to Know About

A couple of months ago, as we all know, tech billionaire Elon Musk made a move to acquire Twitter (TWTR) for a cool $44 billion. But then new information came to Musk’s attention that the social media service’s user numbers might not be as accurate or authentic as everyone has been led to believe.

Twitter projects that fake accounts represent less than 5% of its 229 million monetizable active users. Musk has estimated the number at around 20%.

As such, he ordered an investigation of user authenticity pending his purchase. This created a contentious back and forth that’s finally resulted in him being given the data he requested.

As per The Wall Street Journal:

“Twitter in recent weeks provided Mr. Musk with historical tweet data and access to its so-called fire hose of tweets, people familiar with the matter said. That fire hose shows the full flood of all tweets – people post hundreds of millions of times a day on the platform, according to the company – in near real-time.”

Yet this data dump hasn’t been nearly as helpful as the billionaire would have wished. The sheer amount of data and esoteric criteria for confirming inactive or unauthentic accounts apparently makes it especially hard to prove much of anything.

“It’s going to be very hard to get the level of assurance that would allow Mr. Musk to establish a defensible position to take a different action,” says Carey O’Connor Kolaja, CEO of identity-verification company Au10Tix Ltd.

It might take a rocket scientist to figure this all out. Or maybe just someone who employs a bunch of them.

The World According to REITs

So today’s final focus isn’t technically a real estate investment trust (REIT). But it certainly looks like it’s headed in that direction.

The so-far private Arrived Homes is single-family real estate rental investment platform. It’s accelerating acquisitions as demand from retail investors grows stronger for fractional real estate.

In just the last month, this business purchased approximately $11 million worth of rental properties, representing a 110% year-over-year increase. And investors can buy shares for as little as $100.

Amazon (AMZN) founder Jeff Bezos already bought in to the tune of $37 million last June through Bezos Expeditions. And he made a second investment during the company’s more recent $25 million Series A round.

Other big-name investors include Dara Khosrowshahi, CEO of Uber; and Hadi Partovi, CEO and founder of Code.org.

Arrived Homes has experienced rapid growth in just a short amount of time with its reimagination of how real estate investing is done. So far, it’s funded over 130 single-family homes, hand-picked by its investment team.

REIT or not, I remain curious to see what comes of this up-and-comer… and whether it will have an impact on the REIT world as younger investors enter the market.

Happy Investing

Brad Thomas

467 posts

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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.

What Did You Say, Mr. Powell?

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

Everyone’s Dependent on China, and That’s a Problem

Brad Thomas

467 postsJune 29, 2022

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Everyone’s Dependent on China, and That’s a Problem

467 postsJune 29, 2022

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