iREIT Daily

Watch Out for Inflation!

Brad Thomas

467 postsMay 5, 2021

There was another string of real estate investment trusts (REITs) that released their earnings reports yesterday. So my plan was to cover them in some detail today.

But I think that’s going to have to take a backseat to what’s been happening with the Nasdaq.

Futures are up this morning as I write this. But the tech-centric index lost 261.62 points yesterday, or 1.88%. That was after dropping:

136.65 points on Monday
8.06 points on Friday
121.96 points on Thursday
31.75 points last Wednesday
80.69 points last Tuesday.

Some of those drops were very, very small, as you can see. But they were still negative actions on top of negative actions: a whole week’s worth of it, in fact.

For its part, the Dow barely stayed in the green yesterday, while the S&P 500 fell 28 points, or 0.67%. That drop showed across the REIT board too, with much, much more red than green to take into account.

So what’s going on? Barron’s published a speculative piece on the subject about noontime that raised four possible reasons:

The possibility that Fed Chair Jerome Powell might not get renominated, adding uncertainty on top of uncertainty
Inflation
Expensive stocks on top of inflation
Technology falling out of favor, thereby affecting the entire market.

I know I began by discussing the Nasdaq, but it’s actually that second factor I want to quote more extensively:

“Higher inflation is a top concern for investors. And signs of it are emerging, making them nervous about a Federal Reserve interest rate hike coming sooner rather than later. Manufacturing data out Monday revealed that companies saw the fastest rise in input costs since 2008 – and that they are passing the higher costs along to customers. Supply constraints are preventing companies from meeting demand, sending prices upward. If consumer inflation is strong enough, the Fed would raise rates ahead of its current schedule.”

And Bloomberg wrote on Monday:

“Executives mentioned ‘inflation’ more than any time since 2011 during earnings conference calls last month, according to Bank of America. Warren Buffett joined the chorus two days ago, saying price increase are more intense ‘than people would have anticipated six months ago.’ The billionaire added that, as his Berkshire Hathaway Inc. boosted prices, customers have accepted them.”

To that last line, I would add “for now.” Inflation always takes a toll, and hyperinflation always takes an intense one. In which case, now is the time to be properly positioned in safe high-yielding REITs – perhaps like never before.

The World According to REITs

Like I said before, there was a whole string of REIT earnings reports released yesterday, such as:

Hannon Armstrong (HASI)
Retail Properties of America (RPAI)
National Storage (NSA)
Summit Hotel Properties (INN)
Healthpeak (PEAK)
TPG RE Finance Trust (TRTX)
Franklin Street Properties (FSP)
Equity Commonwealth (EQC)
RMR Mortgage Trust (RMRM)
JBG Smith (JBGS)
Monmouth Real Estate Investment (MNR).

There were several “not as good as last year but better than expected” reveals, which only make sense. And there were several as-expected on the negative side.

I know I’ve been touting much of the good news this earnings season, as well I should be. It’s important to show that REITs are rising above the shutdowns.

But I’m going to include some of the bad today too for perspective’s sake. It’s that kind of reality-based approached that help us better build our REIT paradise, after all.

No delusions allowed! So…

Summit Hotel Properties reported a Q1 funds from operations loss of $0.07, which was two cents better than expected. For Q1-20, in comparison, it reported per-share FFO of $0.13.
Healthpeak announced FFO of $0.40 per share for the last quarter – one cent better than expected. This time last year, it reported $0.45 per share.
JBG Smith reported FFO attributable to common shareholders of $42.3 million, or $0.32 per diluted share and core FFO attributable to common shareholders of $49.6 million, or $0.38 per diluted share. Meanwhile, same-store net operating income decreased 9.2% from $83.6 million in Q1-20 to $75.9 million.

And here’s a bonus update:

Monmouth reported Q1 net income attributable to common shareholders of $25.9 million, or $0.26 per diluted share, a major change from Q1-20’s net loss of $75.1 million. FFO was $20.6 million, or $0.21 per diluted share.

I specifically chose that company as your “extra” because Equity Commonwealth just announced yesterday that it will be acquiring Monmouth in an all-stock, debt-assuming transaction that’s being valued at about $3.4 billion. Once fully combined, the new and improved Equity Commonwealth will have an approximate $5.5 billion pro-forma equity market cap.

Looks like our REIT list is shrinking again, and for the best possible reasons.

(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.

Second Star to the Right and Straight on ‘til Morning

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

Watch Out for Inflation!

Brad Thomas

467 postsMay 5, 2021

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Watch Out for Inflation!

467 postsMay 5, 2021

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