Photo by Yiorgos Ntrahas on Unsplash

Yesterday saw another round of Federal Reserve minutes released. And some news sources are claiming it provided clarity about what to expect rate-wise from here.

I’m going to let you be the judge of that by quoting the central bank directly:

Compared with conditions in 2015 when the Committee last began a process of removing monetary policy accommodation, participants viewed that there was a much stronger outlook for growth in economic activity, substantially higher inflation, and a notably tighter labor market. Consequently, most participants suggested that a faster pace of increases in the target range for the federal funds rate than in the post-2015 period would likely be warranted should the economy evolve generally in line with the Committee’s expectations.

To me, that’s still one giant “we’re not committing to anything.” But, as always, you’re free (and encouraged) to reach your own conclusion.

The minutes did include the word “soon” (or some derivative of it) 11 times. But remember this is coming from an institution that stuck by calling inflation “transitory” up until just a few months ago.

“I think the word ‘transitory’ has different meanings to different people,” Fed Chairman Jerome Powell told the Senate in November. “To many, it carries a sense of short-lived. We tend to use it to mean it won’t leave a permanent mark…”

And, again, no timeline for rate hikes was given in the minutes. Not as far as I saw anyway.

Meanwhile, inflation continues to run rampant. That’s the bad (and absolutely obvious) news. The good news is that, apparently, consumers are consuming anyway.

January retail data came out yesterday and, as Yahoo Finance’s Morning Brief summed it up, “U.S. consumers are apparently shopping their way through soaring prices.”

More on that below…

More Non-REIT News to Know About

As the writeup adds, “sentiment indicators show citizens are glum about relentless inflation and other factors.” Yet they appear to be coping “by buying virtually everything in sight with near-reckless abandon.”

A classic “eat, drink, and be merry, for tomorrow you die” mentality, the article suggests it’s essentially escapism. In which case, it’s just a question of how much escaping consumers can do before there’s no more financial room to run with.

For the record, a significant portion of that spending was done online – a cautionary tale real estate investment trust (REIT) investors need to be aware of. The same goes for continuing supply chain disruptions, which are slowly easing, but still very much an issue.

With that said, U.S. businesses are relaxing Covid-related restrictions more and more, bringing the nation closer to the old normal again. Tyson Foods (TSN) will begin ending mask requirements for its vaccinated workers at certain locations. And Walmart (WMT) and Amazon (AMZN) seem to be embracing that same concept everywhere state and local laws allow.

Meanwhile, Microsoft (MSFT) and Meta Platforms/Facebook (FB) have official timelines to return fully vaccinated employees back to the office.

Of course, we’ve seen such statements before from those two. So I’ll believe it when I see it.

Speaking of Meta, I didn’t get to mention yesterday that it’s suing Great Britain. The allegation is that the country’s Competition and Markets Authority acted illegally in blocking its intended purchase of GIF database Giphy.

This all comes as Europe is hitting hard at big tech companies over anti-competitive and invasive practices. So…

Considering the general sentiment against Meta, I don’t expect it to be successful in arguing its case. But I guess when you’re between a rock and a hard place…

The World According to REITs

We don’t have The Daily REITBeat today, but there’s still plenty of news to report. Yesterday was a busy one for earnings releases, including the following four:

• Equinix (EQIX) reported Q4 funds from operations (FFO) of $6.22 per share, which did miss estimates of $6.27. But that doesn’t mean it didn’t have other impressive numbers, including revenue of $1.71 billion. That was up from $1.56 billion in Q4-20 and the company’s 76th consecutive quarter of revenue growth. For the full year, revenue was $6.636 billion, up 11% over 2020. Meanwhile, operating income increased 5% to $1.108 billion.
• Four Corners Property Trust (FCPT) announced Q4 FFO of $0.42 per share, up from last year’s same-quarter figure of $0.38. Net income attributable to common shareholders was $23.7 million, or $0.30 per diluted share (compared to $20.3 million and $0.27 in Q4-20). FCPT collected 99.8% of rent due for Q4 and 99.9% for the full year by December 31. And CEO Bill Lenehan added that FCPT made “over $70 million of acquisitions in the fourth quarter.”
• Hersha Hospitality (HT) recorded Q4 FFO of $0.20 per share – significantly better than both expectations of $0.10 and Q4-20’s $0.23 loss. GOP margin for the comparable portfolio came in at 45%, up 150 basis points over 2019’s fourth quarter. And its 33 comparable hotel portfolio experienced 63.1% occupancy with an average daily rate (ADR) of $238.26 and revenue per available room (RevPAR) of $150.39.
• Retail Opportunity Investments (ROIC) saw Q4-21 FFO of $0.25 per share, down $0.01 from expectations and $0.02 from Q4-20. Net income attributable to shareholders was $8.5 million, or $0.07 per diluted share. It spent $94.5 million acquiring grocery-anchored shopping centers. And same-center cash net operating income rose 5.6% year-over-year. Meanwhile, it ended 2021 with 100% of its debt effectively set at fixes rates.