iREIT Daily

Retail Roars on Despite Runaway Inflation: Here’s How You Can Play It

Brad Thomas

467 postsMay 18, 2022

It’s no secret that Americans love to shop.

Whether it’s clothes or cars, shopping malls or supermarkets, we seem to consume at a rate unmet by other countries. Add to that our recent Covid economy, and we only saw an increase in the purchasing prowess of many Americans thanks to the influx of stimulus cash and incentives to spend.

But then 2021 introduced inflation into the conversation. And 2022 has only increased that powerful force, driving up everything from gas prices to grocery bills.

With rising prices set to cost Americans an additional $5,200 this year (as estimated by Bloomberg), you’d assume demand for consumer goods would be on the decline.

Surprisingly though, this isn’t so.

In fact, yesterday the U.S. Census Bureau released its monthly report on this big-ticket area of the economy. And, according to those figures, sales at retail stores soared 0.9% last month.

Here’s a summary about that from The Wall Street Journal:

“Retail sales – a measure of spending at stores, online, and in restaurants – rose a seasonally adjusted 0.9% last month compared with March, the Commerce Department said Tuesday. That marked the fourth straight month of higher retail spending.
“Consumers spent more at restaurants and bars, and boosted expenditures on vehicles, furniture, clothing, and electronics. They cut spending sharply on gasoline in April as pump prices pulled back briefly from a run-up related to the war in Ukraine.”

This is pretty incredible considering our current circumstances (i.e., rising inflation) and our probably outlook, with more and more experts estimating that we’re on the brink of a recession.

So what should we make of all this?

First off, we have to assume reports like this will embolden the Fed to further hike interest rates. Since its previous actions don’t seem to be affecting demand, I imagine it will take this as a green light to continue curbing upward price pressure.

As for Wall Street, its reaction could honestly go either way. On the one hand, the stock market loves a spendy society. Then again, this increase in demand alludes to the fact that we haven’t yet hit peak inflation.

Fears of further inflation plus looming interest rate increases could make for a couple more turbulent months on the stock tickers.

My advice is what it’s always been and undoubtedly always will be: Don’t move your money based on Wall Street’s moods. Buy into quality companies, then play the long game with them.

In other words, don’t check your portfolio balance each time the news reports fire and brimstone. Take market reports for what they are, simply checking to make sure that the companies you’re investing in maintain sound balance sheets and structural responsibility.

More Non-REIT News to Know About

Yesterday, I reported on how McDonald’s (MCD) has decided to cut its losses and sell off its properties in Russia. Today, it seems as though another blue-chip corporation is following suit.

Nissan, one of Japan’s premier automakers – the creator of cars like the Altima, Armada, and Sentra – announced it’s writing off its Russian business for the foreseeable future.

The company had already stopped deliveries to Russia in March shortly after Putin invaded Ukraine. And then it ended production at its St. Petersburg plant from there. But now CEO Makoto Uchida says it’s gone so far as to write off its Russian business altogether through March 31, 2023.

As of the end of its last fiscal year (March 31, 2022), Nissan had lost $499 million already from its operations there, or lack thereof.

The war in Ukraine has already had significant economic impacts all over the globe. One example is highlighted in this Business Insider headline, as featured on Yahoo Finance this morning: “U.K. Inflation Surges to 40-Year High of 9% in April, as Soaring Energy and Food Prices Deepen Cost-of-Living Crisis.”

It reads:

“The reading was below economists’ forecasts for a rise of 9.1%, but still showed inflation running at its hottest since 1982.
“The bulk of the increase came from a sharp rise in utility bills after the government lifted a price cap in light of how much wholesale energy prices have risen, in part because of the war in Ukraine.
“The 12-month inflation ate for gas was 95.5%, while for electricity, it was 53.5%, official figures showed.”

And while we’re certain we’ll see more suffering before everything is said and done… it’s hard to predict exactly how much worse it will get from here.

The World According to REITs

Since we’re talking about the retail world, let’s look at a couple of solid retail REITs.

I like this subsector for several reasons. These companies can provide great diversification with decent dividend potential. Plus, they’ve proven themselves to be resilient even after being shut down for an entire summer or more.

With that in mind, here are a couple of my favorites…

Kimco Realty

Kimco Realty (KIM) owns and operates open-air community shopping centers, mostly in the supermarket space. It boasts a $14 billion market cap, 13.5% year-over-year growth, and a share price of about $24.

Kimco is one of the few companies that’s enjoyed the benefits of our retail surge even now. Its stock rose nearly 6% in the last week. So if you’re looking for a steady retail-oriented real estate investment, Kimco could be right up your alley.

Just make sure it’s properly priced before you pounce.

Simon Property Group

Simon Property Group (SPG) is one of the biggest retail REITs in the world. With a $38 billion market cap, $5.1 billion trailing 12-month revenue, and a dividend yield of 5.31%, it can be a great way to put a little diversity into your portfolio while earning some passive income.

Similar to KIM, its share price has seen upward movement in the last week, rising about a point and a half in the past five days. Based on multiple factors – including its sheer size, which gives it a lot of clout – I’m a fan of this blue-chip REIT.

I encourage you to do the numbers to see if it’s a fit for your portfolio.

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.

It Could Be Worse (Unless You’re in the U.K.)

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

Retail Roars on Despite Runaway Inflation: Here’s How You Can Play It

Brad Thomas

467 postsMay 18, 2022

Featured Articles

The Great Housing Market Migration Is VERY Interesting

Let Dividends Help You Deal With Disappointment In The Stock Market

Amazon Wants to Ask What Ails You

Wall Street’s Workforce Crisis Should Be Taken Seriously

Santa Claus Has Left the Building

Retail Roars on Despite Runaway Inflation: Here’s How You Can Play It

467 postsMay 18, 2022

REIT Mutual Funds

REIT ETFs

Not All Dividends Are the Same