iREIT Daily

Simon Says, Airlines Unite, and Big Tech Battles Continue

Brad Thomas

467 postsFebruary 8, 2022

Simon Property Group (SPG) reported earnings yesterday, which I address in our standard real estate investment trust (REIT) segment.

But let’s start by mentioning the just-announced airlines merger plan. Frontier Group Holdings (ULCC) and Spirit Airlines (SAVE) want to combine their cheapskate flying forces in a $2.9 billion deal.

If everything goes as planned, the newly bolstered Frontier will be the fifth-largest U.S. airline around. Admittedly though, some analysts point out that there are industry-specific regulations that might hinder their efforts.

I’m sure the two management teams have considered those possibilities already. But we should know sooner than later whether the deal will take off.

As-is, the merger should close in H2-22.

Next up is the often-overlooked, small-cap-filled Russell 2000 Index. I know I’m just as guilty of ignoring it as many other analysts out there. But that doesn’t mean I won’t acknowledge Yahoo Finance’s very good point on the subject.

Yesterday, its Morning Brief included these thoughts:

Lots of trading desks are locked in on the dramatic underperformance of the small-cap Russell 2000… amid the bounce-back in broader stocks from the late January lows. The Russell 2000 – which is often viewed [as] a proxy for the strength (or lack thereof) of the domestic economy – is down 10.5% this year compared to a 6% drop for the S&P 500 and 3.6% decline for the Dow…

Moreover, “The Russell 2000 has lagged the S&P 500 by 25 percentage points in the past 12 months, its worst 12-month relative return since 1999, notes Goldman Sachs’ David Kostin.”

He also said that:

During the last 20 years, small-caps have lagged on average in periods when the yield curve was flattening, economic growth was strong but decelerating, or financing conditions were tightening…

So it’s not unjustified to wonder if we’re in for another pullback.

More Non-REIT News to Know About

Also in the “Goldman Sachs says” category is Jeff Currie’s Monday interview with Bloomberg TV. The head of commodities research shared that he’s never seen anything like the current environment:

We are out of everything. I don’t care if it’s oil, gas, coal, copper, aluminum: You name it, we’re out of it.

He adds that prices are rising the way they are based on legitimate supply-demand issues, not speculation at all.

Switching topics completely, Big Tech continues to struggle from lawsuits:

As part of an ongoing nationwide legal battle, an Australian court dismissed Meta Platforms/Facebook’s (FB) protests that it doesn’t collect personal data from Australian users. The presiding judge called its claims “divorced from reality” since such spying “is one of the things [that] makes Facebook work.”
Over in Europe then, Facebook is being legally pressured for the same actions, which it does admit to. In fact, it says if it can’t collect that data, it might not be able to offer its main social media platforms (including Instagram) there at all.
Swedish price comparison firm PriceRunner is suing Alphabet/Google (GOOG) for €2.1 billion for the increasingly common allegation of anti-competitive search result manipulation. While the global powerhouse lost a court case over this in 2017, PriceRunner says it hasn’t actually changed anything since.

I can’t say the larger category has completely lost its luster. But big tech definitely isn’t the irreproachable darling it used to be.

Speaking of less-loved companies, CNBC’s Lauren Thomas (my daughter) reported on Peloton (PTON) yesterday morning. You can watch her video commentary – titled “Peloton Stock Jumps on Reports That Amazon, Nike Are Among Potential Names to Take Over Company – right here.

The World According to REITs

On the residential real estate side, Fannie Mae released its Home Purchase Sentiment Index report yesterday. Apparently, only one in four respondents think it’s a good time to buy.

This survey includes such considerations as home-buying and -selling conditions, job stability concerns, and mortgage rates. And the National Association of Realtors shows similar results, indicating that the middle class increasingly can’t compete in today’s market.

As for commercial real estate, here are the three REITs that last reported, starting with Simon…

Simon announced Q4 funds from operations (FFO) of $3.09 per share, easily beating estimates of $2.88 and Q4-20’S $2.17. Its 2022 guidance is for $11.50-$11.70. Domestic property net operating income rose 22.4% year-over-year, and portfolio NOI jumped 33.6%, while occupancy rose from 91.3% to 93.4%. But that wasn’t enough to impress investors afterhours.
Brixmor Property Group (BRX) recorded per-share Q4 FFO of $0.46 with 2022 guidance of $1.86-$1.95. Same-property NOI rose 9.7%, and the REIT signed 2.1 million square feet of new and renewal leases. It also completed $191.9 million of acquisitions and $116.2 million in property sales – the bulk of its $259.4 million in purchases and $244.3 million in dispositions for the full year.
Piedmont Office Realty Trust (PDM) reported $0.51 per share in core FFO for the previous quarter. Its full-year guidance is for $1.97-$2.07. NOI rose 5.8% on a cash basis year-over-year and 5.2% on an accrual basis. The company completed about 2.3 million square feet of leasing for the year, with 400,000 square feet of that being during Q4. And its portfolio was around 86% leased by December 31.

As shown below, none of them made either Top 10 categories yesterday:

(Source: The Daily REITBeat)

But I’m curious to see about today’s closing-bell reactions.

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.

The Misery Index and an End to E-Commerce?

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

Simon Says, Airlines Unite, and Big Tech Battles Continue

Brad Thomas

467 postsFebruary 8, 2022

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