iREIT Daily

Have We Reached the Recession?

Brad Thomas

467 postsJuly 29, 2022

In the last two quarters, our economy has been defined by increased inflation, higher interest rates, soaring energy costs, and a housing market that’s become nearly unaffordable with severely limited inventory.

It’s no wonder then that consumers are feeling the sting while businesses suffer from excess inventory and declining profits. And it should be equally unsurprising that our gross domestic product dropped the whole first half of the year.

Q2 data from the Commerce Department confirmed yesterday that our GDP contracted for the second straight quarter – indicating that we have officially reached the definition of a legitimate recession.

The New York Times reports:

“A key measure of economic output fell for the second straight quarter, raising fears that the United States could be entering a recession – or perhaps that one had begun.
“Gross domestic product, adjusted for inflation, fell 0.2 percent in the second quarter, the equivalent of an 0.9 percent annual rate of decline, the Commerce Department said Thursday.
“The 0.2 percent decline followed a contraction of 0.4 percent in the first three months of the year – meaning that by one common but unofficial definition, the U.S. economy has entered a recession a mere two years after it emerged from the last one.”

As I’ve previously explained, the official authority on recessions in America is the National Bureau of Economic Research (NBER). And it defines a recession as a significant weakening in economic activity, spread throughout the economy for more than a couple of months.

Factors like employment, output, retail sales, and household income usually make up these broader criteria. So do human opinions, for better or for worse.

So far, the NBER has not officially sounded the sirens of recession. And maybe it won’t at all this year, as everyone was initially predicting back months ago.

Clearly then, whether or not we’re actually in a recession is debatable. What’s not so much is that we’re in one of the strangest economic climates in history.

Labor markets are tighter than ever and, as we’ve seen in the last couple of days, investor sentiment hasn’t yet soured. Moreover, economists surveyed by The Wall Street Journal expect to see a swift turnaround this quarter.

Since we have no choice to move forward and see what we can see, let’s do nothing less!

More Non-REIT News to Know About

Shell PLC (SHEL) is one of the world’s most well-known oil and gas companies. With service stations around the globe, road warriors the world over have come to depend on this “crude” corporation.

And as the price of gasoline has increased due to demand surges and supply shortages… this London-based petrol powerhouse is reporting record profits.

That makes for quite the difference from the pandemic. Oil companies took huge hits back then as daily commutes and weekend driving declined. In fact, Shell saw a $4.3 billion deterioration in profits because of the shutdowns.

But now drivers are returning to the road in droves. So Shell’s second-quarter yield was $16.7 billion, compared with $2.7 billion a year ago when performance was in recovery mode.

After announcing these profit increases, Shell’s shares shot up 1.8% in early morning trading yesterday.

Meanwhile, to quote The Wall Street Journal again:

“Exxon, the largest U.S. oil company, said Friday it’s second-quarter profit rose to $17.9 billion, its highest ever and nearly four times as much as the same period a year ago, citing rising oil and fuel production, higher energy prices, and cost cuts. Rival Chevron also posted a record profit Friday of $11.6 billion, up from $3.1 billion in the same period last year.”

At least they’ve got that going for them in the midst of rising global issues and increasing government accusations. Again, what an interesting time we live in.

The World According to REITs

A prominent retail real estate investment trusts – a mall REIT, to be exact – recently caught the attention of the Philadelphia 76ers. As such, it will now serve to house that three-time NBA championship team’s new arena.

Macerich (MAC) has been a Speculative Buy for me this year due to its sheer size and portfolio of retail assets in some of the nation’s most dense and diverse shopping districts. And apparently, it’s a buy for a few other people too, namely 76ers managing partners Josh Harris and David Blitzer.

They’ve formed a new development company, 76 Devcorp to develop the future home of the Philadelphia 76ers. And, as noted above, after carefully assessing several sites, they chose Macerich’s Fashion District in Philadelphia.

That makes sense given its proximity to Philadelphia public transit and Center City area. Tom O’Hern, the mall REIT’s CEO, adds.

“At Macerich, we are constantly enhancing our properties to bring greater value to our shareholders, retailers and communities. The decision to repurpose part of Fashion District Philadelphia to include the new 76ers arena is a natural evolution of the site and a unique and once-in-a-lifetime opportunity for our company. We are committed to working collaboratively with 76 Devcorp to bring to life the vision of this iconic development that will ensure Philadelphia’s vibrancy for generations to come.”

With 41 home games per year plus the plethora of concerts, conventions, and live events this coliseum will attract… this property is sure to be a real revenue engine and a great addition to the Macerich portfolio.

In which case, let’s go Sixers!

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.

Good News in the Grocery Department

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

Have We Reached the Recession?

Brad Thomas

467 postsJuly 29, 2022

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Have We Reached the Recession?

467 postsJuly 29, 2022

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