Managing Risk Is What Separates The Best From The Rest

Brad Thomas

467 postsJanuary 14, 2021

Quote for Today:

“When you boil it all down, it’s the investor’s job to intelligently bear risk for profit. Doing it well is what separates the best from the rest.”
– Howard Marks

(Source: Medieval castle Gravensteen)

We’re going to start out with a bit of residential real estate news this morning since that caught my eye. (Besides, it’s worth knowing about considering how commercial growth is so interconnected with it.)

U.S. housing mortgage rates may have ticked upward last week, but the Mortgage Bankers Association says that applications rose once again… this time to their highest level since March.

Possibly a plus for home buyers is how that was mainly driven by booming refinance activity. As a result, it might not be any more difficult for sensible people to purchase new residences than it already was.

It’s probably not going to be any easier, mind you. But hey… beggars can’t be choosers.

As for the rates themselves, Joel Kan, associate vice president of economic and forecasting at MBA, says:

“The expectation of additional fiscal stimulus from the incoming administration and the rollout of vaccines improving the outlook drove Treasury yields and rates higher. The 30-year fixed mortgage rate climbed two basis points to 2.88%. But, reversing the trend, the 15-year fixed-rate ticked down to 2.39% – a record low.”

That “additional fiscal stimulus” could benefit apartment landlords too if tenants use the extra money to pay back-rent they couldn’t come up with last year. Then again, there are a lot of necessities and luxuries alike that extra money could be spent on.

So it’s probably going to be a mixed bag at best.

In more iffy landlord news, we learned this week that AMC Entertainment (AMC) raised $200 million last month. And it’s been taking other proactive measures to keep its movie theaters afloat since the shutdowns.

Only problem is that, according to The Motley Fool’s MillionAcres publication, AMC “needs at least $750 million if it plans to make it through the other side of the pandemic.” And CEO Adam Aron’s tone-deaf statement that D.C. stimulus efforts are favoring small businesses over big businesses doesn’t bode well for the company’s ability to assess its situation either.

I’m hardly saying that its show is over, just that there’s more drama to unfold before the lights come back on.

In better brick-and-mortar real estate news, Amazon (AMZN) canceled its Prime Pantry, which it launched in 2014. The service was designed to provide click-and-ship nonperishable food and household items. But apparently Amazon decided to focus more on utilizing its physical Whole Foods and Amazon Fresh stores instead.

While that still ultimately benefits Amazon, it does offer insight into the continuing necessity of commercial real estate – shopping spaces and all.

Also a positive indication of REIT-related and greater economic growth opportunities is Shake Shack’s (SHAK) plans to open 35-40 company-operated outlets in 2021 and 45-50 more in 2022.

At least according to that tasty, tasty burger joint, the end of the world isn’t quite nigh after all.

The World According to Commercial Real Estate

This week, my team and I continue to get announcements about upcoming earnings calls. And as those presentations are actually unveiled, you know we’ll be on top of them here at Wide Moat Research.

In the meantime, here’s today’s snippet of the Daily REITBeat headlines… as well as breaking news about a certain unloved shopping stock:

Over the next three years, Farmland Partners (FPI) will be transferring ownership of about 1,268 acres in Virginia to Ducks Unlimited for $8 million in total gross proceeds of $8 million. If everything goes as expected, it will walk away from the larger deal with around $0.8 million in gains.
Power REIT (PW) entered into a 20-year triple-net lease with DOM F, LLC today concerning its acquisition of 4.31 acres in Crowley County, Colorado. As part of the agreement, it will give $1.8 million toward building an approximately 21,548 square-foot greenhouse/processing facility there.
Tanger Factory Outlet Centers (SKT) just reinstated its dividend at $0.1775 per share, to be paid out on February 12. The company says it “reflects Tanger’s strong liquidity position with more than $80 million of cash on hand and $600 million of undrawn lines of credit” among other compelling factors.

Speaking of the latter, look at how much Tanger jumped yesterday. And it’s hardly lagging this morning either.

I wonder if it’s enough to make a few naysayers change their mind.

(Source: 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.

Show Me the Stimulus Money

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

Managing Risk Is What Separates The Best From The Rest

Brad Thomas

467 postsJanuary 14, 2021

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Managing Risk Is What Separates The Best From The Rest

467 postsJanuary 14, 2021

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