iREIT Daily

Let’s Not Freak Out Over Last Friday

Brad Thomas

467 postsApril 25, 2022

Last week was truly one for the record books. Behind all the anticipation around Elon’s Twitter buyout, the cease saga of CNN+, and Johnny Depp’s deranged court case drama, there were big concerns brewing in the all-American business sector.

To cap it off, Wall Street ended the week in an uproar, with the Dow falling 980 points—its worst day since before Biden was elected. This came after comments by Federal Reserve Chairman Jerome Powell on the subject of interest rate increases.

And if that weren’t enough to send the markets into meltdown mode, Verizon (VZ), one of the Dow’s most prized components, reported a dire earnings outlook after a decline in subscription revenue through the first quarter of 2022.

Of course, our other indexes weren’t exactly immune to this ebb in the market. Both the S&P and Nasdaq fell over 2.5%.

So, what does all this mean to the well-being of our already ornery economy? Well, Powell has just confirmed what many investors already suspected—that a half-point interest rate hike is “on the table” for the Fed’s meeting in May. This in and of itself doesn’t seem like such a big deal, but our investor class doesn’t believe it will end there. Some actually suspect more aggressive hikes are in the cards.

And while the Fed seems to be implementing these rate increases to quell runaway inflation, Wall Street suspects it will only slow the housing market, decrease consumer spending, and possibly spell a recession.

From CNN:

Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve,” said Jamie Cox, managing partner for Harris Financial Group, in an email. “It’s madness really. Most investors would be well served to ignore the machinations of the pricing craziness and wait to see what actually happens with rates.
The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, fell into Fear mode Friday.
“Fed worries and disappointing earnings are a lethal combination given how tenuous market sentiment is at the moment,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.

As of now, it’s hard to tell exactly what could arise from the Fed meeting in May. Is Wall Street really that scared of the interest rate increase or are they just in panic mode thanks to PTSD from the pandemic?

My advice: Don’t do anything rash. Let’s put Friday in the rearview and focus on making investment decisions based on sound economics, rather than letting fear run our collective financial thinking.

Other Non-REIT News to Know About

Starbucks Workers Unite to Wreck Share Prices

Starbucks shares are on the ropes as the java giant can’t seem to come to terms with its growing union.

Of course, all the infighting has left Wall Street wary of the world leader in coffee culture. Since April, shares have slid 12%, dragging the company’s market value down to $92.2 billion. The S&P 500 fell just 2% in the same time period. Wedbush Securities and Citi Research both downgraded shares to neutral ratings this month, calling out the union dispute and other concerns.

Last summer, company-owned Starbucks cafés in Buffalo, New York, petitioned the National Labor Relations Board for a union election. Since that time, over 200 of the coffee chain’s locations have filed the paperwork to unionize.

Though Starbucks hangs its hat on a reputation of progressive thinking, I can’t imagine the top brass of the barista realm truly welcoming the likes of the modern labor movement. We shall wait and see what happens.

The World According to REITs

REITs as an Insulation Against Inflation

I have been saying this for years, but as the subject arises more and more, many have caught onto the pros of keeping a REIT-heavy portfolio to stave off the effects of inflation. Recently Jonathan Morris, REIT Academy managing director, joined Yahoo! Finance Live to discuss the outlook on REITS, inflationary environments, and the rise of housing prices.

Morris cited the over $1.2 trillion growth in the last 25 years, plus the benefits to individual investors and ease at which REITs allow them to participate in the real estate market, one of our most inflation-proof economic sectors. He said:

Real estate is and has always been considered an inflation hedge. So what that means is if you own commercial real estate or even residential real estate, you’ve seen the values of that real estate go up pretty significantly. That is a hedge against inflation—meaning other aspects of the economy are going up, but so is real estate.
So it offsets at least one to one or even more what other pricing is doing. So it has been a port in the storm, if you will, for a lot of investors. When inflation comes around and they own real estate, they feel somewhat protected by rising prices due to the fact that their investments are rising as well.

As we move further into the uncertainties of an inflation-prone economy, it’s more important than ever to consider REITs as an investment staple. With the rise of housing prices and a proliferation of multifamily developments, there has never been a better time to enter this 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.

Dividend Growth Stock of the Week: Sonoco Products Company

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

Let’s Not Freak Out Over Last Friday

Brad Thomas

467 postsApril 25, 2022

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Let’s Not Freak Out Over Last Friday

467 postsApril 25, 2022

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