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Another Day In REIT Paradise: The Uncertainty Continues

Sep. 22, 2021 10:02 AM ETCOLD, FCPT, VTR, WELL6 Comments
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  • U.S. markets ended lightly mixed yesterday. Despite how they opened, the three major indexes weren’t significantly up or down by the closing bell.
  • We also had news of another ransomware attack, once again on a food-supply company.
  • Thank goodness I'm investing in REITs! Today's REIT news is much less volatile.

Quote of the Day:

“The quality of your life is directly related to how much uncertainty you can comfortably handle.” – Tony Robbins

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(Source: Storyblocks)

U.S. markets ended lightly mixed yesterday. Despite how they opened, the three major indexes weren’t significantly up or down by the closing bell.

As such, I’ll reserve my commentary about today’s opening – especially considering the two issues waiting to be addressed today:

  1. The Fed is expected to relay what it’s decided from this week’s meeting. Will it announce official plans to raise rates? Or will it kick that can down the road again? While the Federal Reserve can be astoundingly predictable at times, it has been known to throw a few curveballs every now and again.
  2. The Evergrande debacle is still weighing heavy on investors’ minds with few answers to a sea of crucial questions. Chinese regulators haven’t spoken up on the subject yet, apparently waiting for the company and its lenders to hash things out instead. But no matter how this plays out, it’s going to mean losses all around.

We also have news of another ransomware attack, once again on a food-supply company. The target this time is New Cooperative Inc., an Iowa-based agriculture services provider of grain, pork, and chicken.

Fox Business reports:

“Security researchers say the attack was carried out by ransomware group BlackMatter, which has reportedly encrypted New Cooperative’s data and stolen 1,000 gigabytes worth of files, including invoices, research and development documents, and the source code to its soil-mapping technology. The hacking group is asking for a $5.9 million ransom payment in exchange for a tool to decrypt the data.”

With 2021 being so jam-packed with ground-breaking news, I’m sure some of us completely forgot about such threats. But clearly, they’re back and ready to wreak havoc once again.

Never a dull moment this decade, I suppose.

The World According to REITs

More REITs are pricing shares and senior notes these days. The number just keeps growing, the latest of which are featured at iREIT on Alpha, as always.

For today’s blog post though, I’m going to focus on other activity in the REIT world like how:

  1. Four Corners Property Trust (FCPT) acquired a corporate-owned NAPA Auto Parts property in Iowa for $1.1 million. The existing net-lease has about four years left to it, complete with 2% annual rent increases. Additionally, it purchased three Caliber Collision properties for $7.2 million in New York state. Also corporate-owned, those assets have a weighted average of seven years remaining to their rental contracts.
  2. Welltower (WELL) saw S&P affirm its BBB+ issuer credit rating. The agency also revised the REIT’s outlook from negative to stable.
  3. Ventas (VTR) completed its takeover of New Senior in its planned $2.3 billion deal, including debt assumed or repaid. New Senior debt stockholders can now receive 0.1561 shares of Ventas as a result.

As for why Americold Realty Trust (COLD) fell so much yesterday, as shown below? That would be because of its honest update.

The temperature-controlled warehouse landlord acknowledged the impact that labor disruptions, constrained food production, and inflation are having on its bottom line. As a result, it’s revised its full-year adjusted funds from operations (AFFO) expectations from $1.34-$1.40 to $1.15-$1.20.

Investors didn’t react in a positive manner.

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(Source: The Daily REITBeat)

Inflation Is a Monster REITs Can Help You Beat

One of my readers recently wanted to know if I was worried about inflation – an intensely legitimate question.

Ronald Reagan once said, “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hitman.” And, considering the mess he inherited, that statement wasn’t nearly as melodramatic as it might sound.

Jimmy Carter’s policies… on top of Richard Nixon completely cutting the dollar from gold… on top of Lyndon B. Johnson’s spending sprees were devastating. Together, they destroyed businesses, wiped out personal savings, and sent the entire country into a depressing tailspin.

Today, we could be looking at similar bad policies with similar bad results. Which is why I definitely do have inflation on my radar.

Fortunately though, I also have REITs.

As I wrote months ago, they offer “natural protection against inflation” since rental contracts tend to include such considerations. In fact:

“… many leases are tied to inflation. This supports REIT dividend growth and provides a reliable stream of income regardless, helping to support the following fact…

“That, in all but two of the last 20 years, REIT dividend increases have outpaced inflation as measured by the Consumer Price Index.”

Not bad, right?

Not bad at all! Just as long as you know which ones are worth your money at any given time – both from a valuation and quality perspective.

That’s why iREIT on Alpha gives members ahead-of-the-curve advice on what’s what in REIT-dom through:

  1. Insightful articles
  2. Profitable portfolios
  3. Proprietary tools…

This is your chance to try us out – without any strings attached. Activate your two-week free trial period now and see if iREIT is right for you.

I can’t wait to show you everything you’ll have at your disposal when you do…

Get started here!

Analyst's Disclosure: I/we have a beneficial long position in the shares of FCPT, VTR either through stock ownership, options, or other derivatives.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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