“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.”

Then again, on that last note, Fox Business reports that its current lease there is reportedly on the books until 2031. So that does lessen its landlord’s sting significantly. And many other major companies considering similar moves will be facing similar situations since office leases are typically long-term.

As such, who knows what could happen in the next 10 years?

The World According to Commercial Real Estate

Innovative Industrial Properties (IIPR) is on the move again. It just made a new acquisition in San Marcos, Texas, which involved an immediate long-term lease with Surterra San Marcos. That tenant is affiliated with Parallel, one of the largest privately held multi-state cannabis operators in the U.S. So it seems to be a very profitable investment on the surface.

As seen below, IIPR and Power REIT (PW) were top movers Friday.

(Source: The Daily REITBeat)

The Daily REITBeat also shows how:

• American Tower (AMT) will shift Sanjay Goel into the role of executive vice president and president of its Asia-Pacific division on March 16 to replace Amit Sharma. Sharma will serve as chairman, however, until he retires in July.
• Pennsylvania Real Estate Investment Trust (PEI) announced Q4 earnings, including same-store net operating income that fell 33.3% year-over-year and 28.2% for the full-year. However, it was pleased to note that cash collections continue to improve, rising to 112% of billings for the previous quarter.
• BRT Apartments (BRT) reported Q4 adjusted funds from operations of $0.33 per share. As of December 31, it had $19.89 million in cash and cash equivalents and total debt of $167.52 million.