iREIT Daily

There’s No Stopping the Inevitable

Brad Thomas

467 postsJune 17, 2022

The Fed announced its 0.75% interest rate increase in an attempt to quell inflation and set the U.S. economy back to a pre-pandemic equilibrium. I reported on the initial market reactions and speculated that the sentiment would turn sour as the reality of these new rates set in.

And here we stand. Thanks to a surge of volatility and bleak buying behavior, all major equities indexes took a tumble yesterday to obliterate Wednesday’s rally.

The Wall Street Journal Reports:

The S&P 500 fell around 3.5%, while the Dow Jones Industrial Average dropped 2.6% or almost 800 points. The Nasdaq Composite slumped 4.4% as shares of big tech companies retreated. If the Dow industrials close below 30000—it was recently a bit below that level—it would be the first time since January 2021.

Investors seem to have lost any illusions of a soft landing in terms of interest rate increases. It’s clear now that the central bank is intent on levying whatever rate hikes it can to slow the scourge of inflation. And with this campaign, the risk of recession is ever-present.

Historically, the Fed hasn’t been all that good at balancing the market. Since the ’80s, the U.S. has suffered recessions four of the last six times the Fed ran interest rate increases.

This time, as inflation runs rampant, we’re already seeing the cooling of economic activity. Residential construction fell off last month. Retail spending also slumped for the first time this year, while a gauge of consumer sentiment collapsed to its lowest level on record.

This trend of tightening the market is never really a great idea, but it seems we may be all out of options. Our biggest hope is to maintain the spending surpluses that carried us through COVID, even with increased pricing pressure from the government and an inflated economy.

As for the stock market, there’s no telling how far the indexes will fall. This is only the second bump in a summer of rate increases. Hopefully, the next few will remain around 0.5% but who knows? Fed Chair Jerome Powell has indicated that the increases will come in varying increments between 0.5% and 0.75%. Either the worst is over or the storm is yet to come. Let’s hold out for the former.

More Non-REIT News to Know About

Elon Answers the Big Questions

Yesterday was a big day for Elon Musk. The tech billionaire finally sat down with his new employee base to discuss his impending acquisition of Twitter (TWTR). In this meeting, the Tesla founder addressed issues ranging from content control to his position on layoffs.

The meeting ran for about 45 minutes and was moderated by Twitter Chief Marketing Officer Leslie Berland. It kicked off with questions about whether Musk would do another employee meet-and-greet, which he said he would.

In response to questions regarding the future of Twitter, Musk’s answers reflected his unique attitude toward the modern corporate climate and his eccentric extracurricular interests. In answer to whether he would be CEO, he said he doesn’t care for titles and explained his idyllic philosophy to extend the scope, scale, and lifespan of civilization as we know it.

Musk also quickly touched on the prospects of alien life. “I’ve seen no actual evidence for aliens… yet,” he told employees.

Asked about his position on free speech, Elon explained individuals should be allowed to say pretty shocking things within the law, but that doesn’t mean those things should get amplified. He distinguished between freedom of speech and freedom of reach, the people said.

The entrepreneur clearly remains committed to his purchase and it appears he may actually be making headway with its employees. The world awaits his next move.

The World According to REITs

Cannabis REITs Grow In Texas

Austin, Texas has long been a mecca for mind-expanding exploration. As the live music capital of the world, this not-so-small town attracts talent from all over the globe and even hosts one of the most renowned creative retreats of all time: South by Southwest.

With so much to offer, it’s no wonder that San Diego-based Innovative Industrial Properties (IIP) is set to pay $22 million to acquire 25 acres of prime Austin hill country for a facility to produce medical cannabis.

IIP said in a news release that it’s putting an initial $12 million towards acquiring the land and will spend an additional $10 million when its construction company finishes building out a cultivation and production facility.

My question is how this will affect the local economy and influence the political landscape of Texas. As of now, even medical marijuana is banned in the Lone Star State. With a 25-acre cannabis factory sitting right in the heart of Texas, you have to wonder what kind of lobbyists will start popping up in the capital.

As for IIP, the stock took a bit of a hit yesterday along with pretty much everything else. It’s currently sitting at a $109.85 share price, down about 16% for the week. Still, I’m impressed with this one as it pulled in over $64 million last quarter representing a 50% increase year-over-year. And with this additional 25 acres of space, it’s on track for continued growth and increased returns as America slowly embraces cannabis culture.

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.

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

There’s No Stopping the Inevitable

Brad Thomas

467 postsJune 17, 2022

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