iREIT Daily

The Story I Find More Interesting Than the Federal Reserve

Brad Thomas

467 postsJanuary 27, 2022

I feel as if it’s been a while since we heard about China Evergrande Group, and maybe that’s been by design.

The last time it was prominently splashed across headlines was probably on December 10, when the property development giant was officially ruled as having defaulted on its debt obligations.

Then, after that, nothing. At least not anything prominent in the Western-World news.

Today though, Bloomberg reports that “Chinese authorities are considering a proposal to dismantle China Evergrande Group by selling the bulk of its assets, according to people familiar with the matter.”

Apparently, those sources prefer to remain anonymous – which brings me back to my opening line that the secrecy and silence has “been by design.”

The article continues with:

The restructuring proposal, submitted to Beijing by officials in Evergrande’s home province of Guangdong, calls for the developer to sell most assets except for its separately listed property management and electric vehicle units, the people said… A group led by China Cinda Asset Management Co., a state-owned bad debt manager and major Evergrande creditor, would take over any unsold property assets…
If approved by senior officials in Beijing, the plan would mark the biggest step yet by Xi Jinping’s government to prevent a disorderly collapse of the world’s most indebted developer from roiling China’s financial markets and economy before a closely watched Communist Party leadership transition later this year.

Meanwhile, the South China Morning Post says Evergrande “has promised investors and creditors that it will roll out a debt restructuring plan in the next six months.” Until then, it “‘will continue to listen carefully to the opinions and suggestions of the creditors,'” according to a filing with the Hong Kong stock exchange late yesterday.

How good of it to take affiliated opinions into such consideration.

More Non-REIT News to Know About

My plan was to lead with Federal Reserve updates this morning. But being a real estate guy, that Evergrande story captured my attention first.

Chairman Jerome Powell’s remarks definitely come second, however. So here’s what we know…

The Fed won’t be touching interest rates yet. They’ll stay at near zero until after it ends its other initiatives in early March.

Which is really only weeks away at this point.

No exact details were given on the question of timing.

Of that, Allianz Investment Management Senior Investment Strategist Charlie Ripley wrote:

While offering some clarity on how the Fed would begin the process of removing policy accommodation, the outcome of the meeting fell short in providing the needed guidance on the timing and magnitude of the shift in policy. [Yesterday’s] meeting has market participants fully convinced that a March hike is certain. But with Chairman Powell not making any timing commitments, the door is slightly open for a slower-moving Fed.

As such, it seems safe to say we should keep our market-riding seatbelts fastened securely for the time being.

That makes it an interesting environment to release earnings reports. Take Tesla (TSLA), which announced Q4 revenue of $17.719 billion and adjusted earnings per share (EPS) of $2.54.

Both are clearly better than the respective $16.64 billion and $2.37 expected. Yet shareholders initially dismissed that, focusing on the car company’s statement about the future instead.

Tesla acknowledged that its growth rate going forward will very much depend on its ability to obtain supplies… which has been “running below capacity” for several quarters.

And so the stock dipped down as much as 6% after the report.

Intel (INTC) also reported yesterday. And while it posted a 3% year-over-year boost to Q4 sales to $20.5 billion… net income fell 21% year-over-year drop to $4.6 billion.

All the same, both figures easily beat expectations. Not that investors cared once again. They sent shares down 1% after hours. And the stock was down another 3%+ when I checked at 7:45 a.m.

The World According to REITs

Also worth noting – and much more real estate investment trust (REIT)-related – is McDonald’s (MCD) quarterly disclosures.

Largely thanks to staffing shortages and inflation issues, revenue missed at $6.01 billion instead of $6.02 billion. And adjusted EPS was $2.23 instead of $2.33.

But U.S. same-store sales rose 7.5% instead of 6.58%. And as Yahoo Finance reports:

… the company’s booming app-driven MyMcDonald’s Rewards program helped to drive digital sales of over $18 billion in 2021, or over 25% of total sales in McDonald’s top six markets.

I’d call that further proof that brick-and-mortar real estate can survive if they only learn to adapt to this ever increasingly tech-dependent world. This brings us to our official REIT segment, which holds a few earnings updates of its own:

Crown Castle International (CCI) recorded Q4 adjusted funds from operations (AFFO) of $1.77 per share. And its guidance for 2022 is $7.31-$7.41. Full-year 2021 AFFO was $6.95 per share, and site rental revenue rose $399 million, or 8%.
Duke Realty (DRE) saw Q4 per-share FFO of $0.44 and predicts $1.87-$1.93 for 2022. Core FFO and AFFO jumped 13.8% and 11.6%, respectively. Leasing volume was 8.9 million square feet and 33.5 million square feet for the full year – its highest annual level ever. And DRE’s portfolio was 98.1% leased at the end of 2021, up from 9.6% in Q3.
SL Green Realty (SLG) reported $1.52 in quarterly FFO per share. Same-store net operating income (NOI) increased 2.9% and 0.7% for 2021. And Manhattan same-store office occupancy sat at 93.%. While there were setbacks, signed leases exceeded SLG’s original expectations of 1.3 million square feet, coming in at roughly 1.93 million instead for 2021.

And then here we go with the final results of yesterday’s latest round of volatility…

(Source: The 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.

GDP Rises, IMF Revises, and Consumers Continue to Crave Apple

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 Story I Find More Interesting Than the Federal Reserve

Brad Thomas

467 postsJanuary 27, 2022

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