What October May Bring

Time, Time Management, Stopwatch, Industry, Economy

Image Source: Pixabay

It’s officially the final quarter of 2021. And “transitory” inflation is still all over the news every other day. Friday, we were gifted some thoughts from Kevin Mahn, CIO at Hennion & Walsh, a premier investment service provider. After discussing Washington’s debt debate, he told Yahoo Finance that:

“… what investors are most concerned with… is inflation. Surging amounts of inflation.

“And I believe that Chair Powell even acknowledged recently that perhaps it’s going to surge longer than he originally anticipated due to some supply chain-related issues around areas such as semiconductors. The Fed, in fact, believes that inflation will end this year at roughly 4.2% but come back down to 2.2% next year. I think that outlook is a little bit optimistic. And in all likelihood, we’ll be in a high inflationary environment for the foreseeable future.”

Meanwhile, White House Advisor Jared Bernstein told Fox Business that inflation should settle down to 2.3% next year. Eventually. He has no actual idea when in the year that might be, reflecting increasing uncertainty about all the experts’ initial opinions this year on how fast the problem would go away.

The truth is nobody knows considering our current circumstances. And yes, as both Mahn and Bernstein point out, those circumstances include the supply chain. More about that in a minute.

First though, let’s talk about how the Commerce Department’s newest numbers show the U.S. experienced more inflation in Q2-21 since 1982. The Personal Consumption Expenditures price index rose at a seasonally adjusted annualized rate of 6.5%. And, again, there are no guarantees of abatement anytime soon, as evidenced by the International Chamber of Shipping begging for global government assistance.

The World According to REITs

It and related organizations recently reminded the world how much it’s responsible for:

“Our collective industries account for more than $20 trillion of world trade annually and represent 65 million global transport workers and over 3.5 million road freight and airline companies, as well as more than 80% of the world merchant shipping fleet.”

Yet they’re apparently working under severe government restrictions.

“Seafarers, air crew, and drivers must be able to continue to do their job and cross borders to keep supply chains moving. We ask heads of government to urgently take the leadership that is required to bring an end to the fragmented travel rules and restrictions that have severely impacted the global supply chain…”

How will governments respond? Probably very slowly, as they usually do. Fortunately for us, our real estate investment trusts (REITs) are much more efficient. Which is why I can report how:

  • Innovative Industrial Properties (IIPR) says it owns 75 properties – including four purchased in Q2 – across 19 states amounting to 7.3 million rentable square feet. Better yet, it’s all 100% leased with a weighted average lease term left of 16.7 years.
  • Alexandria Real Estate Equities (ARE) says Moderna (MRNA) chose it to develop, operate, and construct its new corporate headquarters in Cambridge, Massachusetts. The 462,000 rentable-square-foot property will be completed in 2023.
  • American Finance Trust (AFIN) priced $500 million worth of 4.50% senior notes due 2028. The proceeds will help repay its credit facility and certain mortgage notes, as well as fund future acquisitions and general corporate tasks.

Finally, with this week being so special – i.e., the start of a new month and quarter – here are three charts to ponder as we watch to see how the markets hail October.

Source: The Daily REITBeat

Source: The Daily REITBeat

Source: The Daily REITBeat

Brad Thomas is the Editor of the Forbes Real Estate Investor.

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

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.