I can’t deny the feeling that the world is on the precipice of an immense global conflict. I’m sure a large portion of the American population has that same feeling in the pits of their stomachs. President Biden’s comments yesterday “walking back” his previous statement don’t exactly ease my nerves. On Saturday, he declared:

“For God’s sake, this man cannot remain in power.”

Oh boy. Immediate pushback ensued as these nine words are now being noticed by foreign policy experts, members of Congress, and NATO allies as essentially fighting words. Russia already has its theory that the U.S.’s main motivation for supporting Kyiv is to ultimately topple Putin’s reign. Thomas Graham, a member of the council on Foreign Relations, responded by saying:

“Biden’s comment will only further confirm them in that belief.”

Yesterday, Biden was reading from cue cards during the White House briefing, so I can’t help but wonder if he went off the rails when he delivered Saturday’s passionate statement and the administration is now taking repercussive measures. Either way, according to The New York Times, he made clear during the briefing that

“[He] was expressing the moral outrage [he] felt toward the actions of this man… [He] was not advocating a change in policy.”

He also reassured listeners that NATO has never been more united; if Putin takes Biden’s words the same way I did, we are going to need those alliances. I’m hoping, however, that he heard Biden’s comments yesterday loud and clear and that the administration’s steps to reconcile have not been futile. 

A man can dream, right? 

Or, a country can hope, right?

More Non-REIT News

Although Biden “almost” advocated for WWIII on the global stage, it looks like the stock market has the same hopeful attitude that I do. Stock futures rose this morning and CNBC reported:

Futures on the Dow Jones Industrial Average rose 139 points, or 0.4%. S&P 500 futures were up 0.4%, while Nasdaq 100 futures climbed 0.3%.

The Dow and S&P 500 are each coming off three straight positive sessions. The S&P 500 has now rebounded more than 9% since March 14.

We are still being told that food shortages and inflation are set to rise, but at this present moment, there seems to be a nice calm before the storm.

China has not been so lucky. With COVID-19 outbreaks in the Jilin province, China has shut down the area to deal with the virus outbreak. As a result, there have been major food shortages. According to this morning’s article in Reuters, the city of Changchun

“apologized to its 8.5 million residents for food shortages related to shutdowns and disruption caused by COVID containment measures.

Due to COVID-19, two major wholesale food markets in Changchun have shuttered, leading to a shortfall in food supply, said the city’s deputy Communist Party secretary, Liu Renyuan, a problem aggravated by a shortage of workers that has delayed deliveries to homes.”

It seems this shortage had more to do with COVID-19 than our current global conflict. Maybe the food supply will follow our current stock futures. No need to panic just yet.

The World According to REITs

As I teased in yesterday’s blog, I am going to give you my office REIT recommendation this morning. Stealing my own words about the Orion Office REIT (ONL) from an article I wrote on Seeking Alpha:

I’m maintaining a Strong Buy, recognizing that ONL is not an income play, it’s a deep value play. For certain investors, fixated on income, I certainly understand the frustration and the reason for unloading shares.

However, I’m going to take another bite at the apple and buy more shares in the Small Cap Portfolio. This is the perfect portfolio for us, because it’s designed for medium risk investors, where most of the picks aren’t SWANs.

And here is why:

While the company does have sizeable leases coming up for renewal, the opportunity is in the hands of management and its ability to execute, and create value creation. The company employs an active asset management team, and in order to create value, it must continue to drive up the WALT over the portfolio.

As I see it, if the company had announced a 70% payout ratio (vs. 40% based on FAD), shares would be trading up right now. However, as the CFO explained on the earnings call,

“The dividend was sized to permit future growth while preserving meaningful cash flow for reinvestment into the current portfolio and for accretive investments.”

Do what you will with that piece of information. As I found out recently from a friend of mine, all of Google’s employees are being told to come back to the office. That is just one of the major companies that will be making my Strong Buy recommendation even stronger.

Last but not least, we have some updates from The Daily REITBeat:

• Industrial Logistics Properties Trust (ILPT) elected June S. Youngs to its board of trustees as an independent trustee, effective immediately. With the addition of Youngs, the board now includes seven trustees, consisting of approximately 71% independent trustees, 29% women, and 14% members of underrepresented communities
• Ryman Hospitality Properties Inc. (RHP) announced with Stratus Properties that the anticipated closing date for the previously announced sale of Block 21 by Stratus to Ryman has been extended to June 1, 2022, as the parties complete the process of obtaining the remaining required approvals of the assumption of the property’s existing mortgage loan by the purchaser.
• Pennsylvania Real Estate Investment Trust (PEI) provided an update on key activities signaling consumer and tenant demand. It commented that over 60% of the portfolio is generating sales productivity in excess of $550/sf. Leading the growth over January results were: Mall at Prince George’s, Springfield Town Center, Moorestown, Jacksonville, and Capital City Malls.

(The Daily REITBeat)