REITs Are Poised To Profit

“REITs Showing Financial Improvements From Pandemic Headwinds,” the Commercial Observer headlined yesterday, writing:

“Funds from operations (FFO) at REITs rose [11.3%] in the fourth quarter of 2020, compared to the third quarter and recovered nearly half of the dips experienced last spring, according to the Nareit Total REIT Industry Tracker Series report released Wednesday. The analysis noted that while FFO remains well below pre-pandemic levels, at [16%] lower than the 2019 fourth quarter, this metric was improved in eight of the 12 REIT property sectors.”

Moreover, Nareit senior economist Calvin Schnure says that, “With broad distribution of Covid-19 vaccines on the horizon, REITs are poised for further gains in 2021.”

And I want to share one more segment before turning to related news:

“The REIT asset classes that shined the most in later stages of 2021 with FFO included office, residential, diversified, [healthcare], self-storage, timber, and specialty, according to Nareit… As a group, their FFO, was [9.6%] lower in the fourth quarter than pre-pandemic levels, a substantial improvement from June when it was [19.6%] below.”

Keep that in mind as you digest the following news, both the ones that immediately jump out as positive points and what looks a whole lot more negative:

  • According to Million Acres, the $1.9 trillion American Rescue Plan Act just signed into law includes $25 billion in direct aid to restaurants and bars.
  • Beauty chain Sephora, a mall regular, says it will be opening over 60 locations this year at strip-mall shopping centers. It will also joining forces with Kohl’s (KSS) to establish boutique space at 200 of its stores. And it’s not the only one opting outside of malls for its expansion plans.
  • With homebuilding still surging to keep up with continuing levels of intense demand and a lack of supply, North American lumber prices are rising yet again. It’s reaching the point where there’s just not enough to go around.
  • Target (TGT) is quitting its office space in Minneapolis as it explores hybrid in-person and remote alternatives. Chief Human Resources Officer Melissa Kramer said in an email yesterday: “Our headquarters will always play a central role in who we are and how we work at Target. We believe in the culture, collaboration, and competitive advantages of working together at our vibrant headquarters in the Twin Cities and around the world. But the reality is that [we will now] require less office space. So we’ll be ending our City Center operations in downtown Minneapolis.”
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Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. As ...

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