iREIT Daily

The Fed vs. Russia

Brad Thomas

467 postsFebruary 15, 2022

I was up early enough this morning that I saw the futures down and the accompanying headlines. They were all proclaiming that investors were incredibly nervous about the situation in Ukraine.

Now, as I actually begin writing this at 6:15, the Dow is up 350+ points and the Nasdaq is up 275+. And the S&P 500 has also gained – over 60 points – while the Russia narrative has switched to essentially, “Who’s afraid of the big bad wolf?”

You gotta love reporting during such tumultuous times. It can change on a dime, and woe to anyone who thinks they’ve got the minute-to-minute answers.

I’d say something similar about figuring out the Fed right now. AP News recently published this analysis on that situation:

A worsening inflation picture has touched off a range of opinions from the Federal Reserve’s policymakers about just how fast they should raise interest rates beginning at their next meeting in March.
James Bullard, president of the Federal Reserve Bank of St. Louis, on Monday reiterated his call for the Fed to take the aggressive step of raising its benchmark short-term rate by a full percentage point by July 1. Esther George, president of the Kansas City Fed, expressed support for a more ‘gradual’ approach. And Mary Daly of the San Francisco Fed declined to commit herself to more than a modest rate hike next month.

Interestingly enough, tying those two stories together is Barry Knapp. Director of research over at Ironsides Macroeconomics – an investment strategist for “institutional investors, market makers” and the like – he told Mornings With Maria that the markets have much more to fear from the Fed than Russia.

There’s some small risk “for a potential… Russian invasion,” he says. But that’s not “the real story.”

More Non-REIT News to Know About

Here’s more of Knapp’s commentary from yesterday’s interview:

The real story for the equity market is the Fed and whether they’re going to be incredibly aggressive about removing policy. There’s going to be a debate underway as to whether they should go 50 or whether they should get more active with their balance sheet management, meaning start the balance sheet run-off as soon as the March meeting.
That, I think, would be a much more surgical approach that would cause much less uncertainty in the markets and be more effective and actually cooling housing inflation.

Yet, he goes on to say, “we haven’t heard from the leadership,” whether Fed Chair Jerome Powell, board member Lael Brainard, or New York Fed President John Williams. To Knapp, that’s “the bigger, broader issue for the stock market” where the Fed is “panicked as a consequence of these off-the-charts inflation numbers.”

Of course, that just one opinion. But it’s hardly a baseless one.

I’m almost done covering the morning’s business news, but there’s one more quote I want to pull. It’s from an opinions piece by Tim Calkins, a professor of marketing at Northwestern’s Kellogg School of Management, as published on CNN.

He says there’s a clear conclusion about Sunday’s Super Bowl ads: “Americans are fatigued by the pandemic and are looking forward to brighter days ahead.”

Most years, you see, these spots feature both the funny and the emotional or thought-provoking. However:

This year, the tone was relentlessly upbeat. Only a few advertisers tried to address anything remotely serious… and even these had a positive tone. This suggests that the more emotional and serious messages simply aren’t resonating this year. After two years of a pandemic, people need positive messages and encouragement.

And that says something good about economic re-opening trades.

The World According to REITs

Yesterday was a light day when it came to REIT updates. And while today is hardly overwhelming, we do have a solid four earnings reports to summarize here:

Kite Realty Group (KRG) says it’s guiding for adjusted funds from operations of $1.69-$1.75 in 2022. And it announced AFFO of $0.43 per share for the fourth quarter. Same-property net operating income (NOI), excluding legacy RPAI properties, rose 7.2%. It signed 132 leases between new and renewed tenants. And its retail portfolio was 93.4% leased by the end of the year, up 60 basis points (bps) over Q3.
Safehold (SAFE) recorded Q4 earnings of $0.38 per share. It completed a record 17 ground leases during that time for $777 million. As such, SAFE’s total portfolio consisted of 106 ground leases by year’s end. Revenue rose 30% year-over-year to $52 million, and net income rose 39% to $21.3 million. Meanwhile, earnings per share (EPS) rose 29% to $0.38.
Spirit Realty Capital (SRC) affirmed its FFO guidance of $3.52-$3.58 per share for 2022. And it recorded AFFO of $0.85 for the fourth quarter. Throughout the three-month period, it maintained a 99.8% occupancy, with lost rent of only 0.04% and unreimbursed property costs of 1.4%. SRC also used the time to invest $487.9 million for 92 properties at a 6.38% cash capitalization rate.
Vornado Realty (VNO) announced Q4 FFO of $0.73 per share, with same-store NOI rising 5.9% year-over-year and 7.9% quarter-over-quarter. As for leasing activity, that came to 954,000 square feet of New York office space. Initial rent was $87.84 per square foot with a weighted average lease term of 14.1 years.

Then on to yesterday’s market action…

(Source: The Daily REITBeat)

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.

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

The Fed vs. Russia

Brad Thomas

467 postsFebruary 15, 2022

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