Another Day In REIT Paradise: Do You Feel Lucky?

Summary

• We’re pleased to see shares in American Tower making positive progress after we recommended it on March 3.
• My team and I are working on an article update for CLPR this week.
• We have three CEO interviews today: Iron Mountain, Global Medical, and Vici Properties.
• Come visit us at iREIT on Alpha!

Quote for Today:

“The best luck of all is the luck you make for yourself.” – Douglas MacArthur

(Source)

I’m starting today’s blog out with a few notes about residential real estate rather than our normal commercial focus. That’s for three reasons:

1. They both do tend to affect each other directly and even intensely.
2. The state of residential real estate is directly linked to the economy’s health and perceived health.
3. It’s interesting news in general.

With that said, the National Association of Home Builders wrote just yesterday that:

“Despite high buyer traffic and strong demand, builder sentiment fell in March as rising lumber and other material prices pushed builder confidence lower. The latest NAHB/Wells Fargo Housing Market Index (HMI) released today shows that builder confidence in the market for newly built single-family homes fell two points to 82 in March. [Emphasis added.]

“‘Though builders continue to see strong buyer traffic, recent increases for material costs and delivery times, particularly for softwood lumber, have depressed builder sentiment this month,’ said NAHB Chairman Chuck Fowke. ‘Supply shortages and high demand have caused lumber prices to jump more than 200% since last April.”

To put that in perspective, builder confidence peaked at 90 in November. And new homes will be $24,000 more expensive this year because of the noted demand issues.

That will be especially felt in places like Florida, as more and more companies consider flocking to it. The latest household-name business to contemplate the cost is JetBlue, known as “New York’s hometown airline” since its founding there in 1998.

Last week, it sent a memo around to certain staffers saying that it was:

“… exploring a number of paths, including staying in Long Island City, moving to another space in New York City, and/or shifting a to-be-determined number of LSC roles to existing support centers in Florida.

“We now have more leasing options as greater vacancy rates have changed the economics. The role of the office and our space requirements will evolve in a hybrid work environment, and our own financial condition has been impacted by Covid-19.”

Speaking of office space, JPMorgan Chase & Co. (JPM) is considering sending some of its interns back to the office in June. According to Fox Business, that will only apply to its London and New York offices, but it’s still interesting that such a big company still obviously believes in the power of face-to-face collaboration.

So can office REITs survive? I continue to answer yes, especially after my conversation with Boston Properties (BPX) CEO Owen Thomas late last week.

Along those same lines, I’ve been scheduling one interview after another this month. And this week isn’t any different. In fact, here’s my schedule for just today:

• 10:00 – video call with Iron Mountain (IRM) management
• 2:00 – video call with Global Medical REIT (GMRE)
• 3:00 – video call with VICI Properties (VICI).

While I’ll be adding the information they give me into my analysis of everything going forward, iREIT on Alpha members get access to those entire interviews.

Click here to join that exclusive club. Or just keep reading on…

The World According to Commercial Real Estate

As seen below in The Daily REITBeat’s winners and losers, tower REITs were up yesterday. We’re pleased to see shares in American Tower (AMT) making positive progress after we recommended it on March 3.

(Source: The Daily REITBeat)

It was also no surprise to see the first of our bulleted updates down below:

• While Washington Prime (WPG) continues its restructuring efforts, its board has suspended Q1 dividends on its common shares and operating partnership units, as well as for its Series H preferred shares of beneficial interest and Series I-1 preferred L.P. units.

Since a picture is worth a thousand words…

(Source: Yahoo Finance)

Also:

• Clipper Realty (CLPR) announced Q4 adjusted funds from operations (FFO) of $0.07/share, with rent collection coming in over 95%. It also repurchased about 1.71 million shares during that period at a weighted average price of $5.70 per share. Its properties are 95% leased at last check.

My team and I are working on an article update for CLPR this week, and we hope to interview its CEO soon at iREIT on Alpha.

(Source: Yahoo Finance)

Last but not least on our Daily REITBeat sneak peak is how:

• Host Hotels & Resorts (HST) saw S&P lower its issuer credit rating from BBB- to BB+. The agency did affirm its BBB- unsecured debt rating, but that was with a negative outlook.

Again, that’s hardly shocking considering the state of the hotel industry, which is why we’re largely avoiding that subsector for the time being.

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Author's note: Brad Thomas is a Wall Street writer, which means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: written and distributed only to assist in research while providing a forum for second-level thinking.