- Today I will be working on portfolio rebalancing for all of our iREIT on Alpha REIT portfolios.
- And of course, I will be thinking about the vaccine rollout next week in the UK.
- I know Mitch McConnell is no fan to cannabis, but as an investor, the odds are looking extremely attractive (for the sector).
I woke up this morning with another round of promising news as the UK approved Pfizer’s plans to start rolling out the vaccine in Britain next week in what Health Secretary Matt Hancock called “one of the biggest civilian projects in history.”
Meanwhile, CNN reports that Pfizer’s vaccine will be delivered on December 15th in the US, with shipments of Moderna’s shot scheduled for delivery on December 22nd.
As I cranked up the car at 6 am to take my kids to school (32 degrees outside), I overheard some chatter on NPR that the stimulus package may take some time to rollout. Bloomberg’s Wes Goodman said.
“The vaccines may turn out to be a case of ‘buy the rumor, sell the fact’ and they might lead policymakers to cut back on their stimulus plans a bit,”
Today I will be working on portfolio rebalancing for all of our iREIT on Alpha REIT portfolios, and of course, I will be thinking about the vaccine rollout next week in the UK.
Specifically, how I will allocate capital to some of the “disruptive” property categories like office, multifamily, and retail?
Alternatively, how much capital should I invest in the more defensive sectors like net lease, data centers, and medical office?
Yet, it’s not just the vaccine that I will be thinking about, there’s also the Georgia runoffs.
Yesterday I had a very interesting and thought-provoking interview with the CEO and CFO of Innovative Industrial (IIPR), the cannabis REIT. I found this management interview so enlightening that I decided to change course on my recommendation (see blog here).
I know Mitch McConnell is no fan to cannabis, but as an investor, the odds are looking extremely attractive.
The market ended the day yesterday mostly in the green. The S&P 500 was up 1.13% with the Nasdaq outperforming and the Dow Jones lagging. The Yield curve continued to tighten with the 10-Year Note now yielding 0.912%.
REITs and real estate outperformed slightly on the day with only the farmland sector in the red. All other sectors were positive for the day. Hotels, Single Family Rentals, and Commercial Mortgage lead the day.
Source: iREIT on Alpha
CorSite Realty (COR) announced the opening of a new 160,000 SF facility in Los Angeles, CA. This new LA3 data center was built from the ground-up (by COR) and will have a total capacity of 18MW.
Vornado Realty Trust (VNO) announced new cost coting measures to reduce overhead by $35M. This will take the form of compensation reductions and 70 person lay-off.
Pennsylvania REIT (PEI) announced that their restructuring plan filed with the US Bankruptcy Court has been confirmed. PEI expects to emerge from Chapter 11 early this month with a stronger balance sheet though sector headwinds still persist.
With less than 30 days in 2020, I am optimistic regarding the vaccine news, and the potential for REIT shares to respond favorably over the next few weeks. Our portfolios are well-positioned, as we have continued to underweight retail and office REITs.
We remain overweight net lease, recognizing that scale and cost of capital will drive the winners. In this sector, 3 (net lease RITs) of the 7 top holdings in the Cash is King portfolio have returned an average of 83.8% during the pandemic:
And let’s not forget the commercial mortgage REIT sector, in which 3 (mREITs) of the top 5 holdings (in the Cash Is King portfolio) have returned an average of 107.5% (during the pandemic):
Alas, I see a clear catalyst in site, and this provides us comfort as to whether to venture out further into lodging and retail sectors. It’s a beautiful day here in South Carolina, and there’s a lot to ponder today….
…and as the title to my new blog suggests, it is after all, just another day in REIT paradise!
It's Cyber Monday All Week!
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Analyst's Disclosure: I am/we are long adc, bnl, iipr, kim, STOR.
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