iREIT Daily

It Wasn’t Quite “Nothing but Net” for Nike

Brad Thomas

467 postsMarch 22, 2022

Since the much-anticipated Nike (NKE) earnings were released yesterday, let’s review them first.

Most headlines I’ve seen on the subject focus on how the athletic apparel company beat on topline revenue. This was thanks to its North American and European markets, which seem to be improving.

It’s Chinese one, however, continues to struggle.

Williams Trading Senior Equity Analyst Sam Poser told Yahoo Finance Live that retail activity there “was slightly better than what we anticipated” but still not great. Its direct-to-consumer (DTC) business was down and its sales “still have issues.”

As such, Nike fell short on bottom bottom-line profits.

On the plus-side for real estate investment trust (REIT) holders, global foot traffic to Nike-owned stores rose around 14% year-over-year. Yet Poser also brought up that:

The [larger] mix of business to DTC really does help them fairly dramatically because it takes a lot of pressure off the supply chain. For every one pair they sell themselves, they basically have to sell two pairs to a wholesale account. So it appears as if they did a bit of maneuvering.

Overall, it appears Nike’s Western fan base remains willing to pay the price for some “swoosh.” But we have to compare that economic commentary with this Washington Post headline: “Fewer hot showers, less meat: How retirees on fixed incomes are dealing with inflation.”

I won’t repeat the particular retiree’s story it starts out with, skipping to this part instead:

Rising prices are squeezing household budgets around the country and putting additional strain on its 56 million older residents aged 65 and up…
The burden on older Americans is the latest example of how inflation – at 40-year highs – is exacerbating inequalities across the economy.

Bottom line: Higher prices on almost everything “are weighing heavily on those who can least afford it.”

More Non-REIT News to Know About

Please don’t shoot the messenger, but prices could go higher from here according to multiple sources when:

“Breadbasket” Ukraine might not be able to begin its wheat planting season.
Saudi Arabian energy assets were attacked on Sunday.
Oil is back on the significant rise.

Apparently, the implications are even worrying Federal Reserve Chair Jerome Powell. He told the National Association for Business Economics yesterday:

We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than [a quarter-point] at a meeting or meetings, we will do so.

And:

There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level and then to move to more restrictive levels if that is what is required to restore price stability. We are committed to restoring price stability while preserving a strong labor market.

That commentary probably factored into yesterday’s mild market drop.

In other business-world news, the Securities and Exchange Commission (SEC) wants to make public companies disclose their energy activity. The proposal is for them to disclose their direct and indirect greenhouse gas emissions and submit climate goals, including plans to achieve them and progress toward them.

That still-developing story could have significant repercussions over time – not just to individual companies but also to the economy as a whole.

On a shorter timeline – and an even more speculative note – I know many residential real estate insiders believe these high prices are the new norm. And maybe they are.

However, MarketWatch ran an article yesterday that seems worth mentioning here. I’ll discuss it in our REIT segment down below…

The World According to REITs

Here’s the headline: “‘The Housing Market Is in the Early Stages of a Substantial Downshift’: Home Sales May Drop 25% by the End of Summer, According to This Analyst.”

According to Pantheon Macroeconomics founder and chief economist Ian Shepherdson, the housing market is unsustainable as-is. To support that position, he points to Mortgage Bankers Association data, which showed home purchase loan applications were down 8%+ year-over-year. And demand for refinancing is down 50%.

If he turns out to be correct, apartment REITs will obviously be impacted as well.

I don’t have any such entities to report on below. But here are your three insights into what’s going on in other commercial real estate subsectors:

Pebblebrook Hotel Trust (PEB) reported that same-property occupancy stood at 50% last month, with demand rising significantly in the last two weeks of February. Same-property average daily rate (ADR) even beat 2019’s figure by 25%, while March bookings have accelerated from there with April expectations even higher. PEB attributes this in part to business group travel picking up.
Farmland Partners (FPI) bought a corn and soybean farm in Edgard County, Illinois, for $910,000. The 65-acre property is being leased back to the seller for the rest of 2022.
Four Corners Property Trust (FCPT) acquired a Fresenius medical care property in Michigan for $2.7 million. The existing net-lease still has six years left to it, and the capitalization rate is 7.4%. It also purchased a Smokey Bones restaurant asset in Illinois for $4.4 million. That triple-net lease has 12 years left to its term, and the cap rate was 6.3%.

That’s what we’ve got today, at least for here. If you want more updates like these on a regular basis though, you’re always welcome to try the completely free Intelligent REIT Daily!

(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.

Compliance Issue or Unfolding Conspiracy?

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

It Wasn’t Quite “Nothing but Net” for Nike

Brad Thomas

467 postsMarch 22, 2022

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