The real estate sector has been one of the biggest beneficiaries of the recent wave of positive COVID-19 vaccine data. Commercial real estate such as retail, entertainment, and hotel properties rely on people being willing and able to go places.
Although the recent rally has certainly been impressive, there are some REITs that could thrive as the pandemic winds down. In this Nov. 25 Fool Live video clip, Fool.com contributors Matt Frankel, CFP, and Brian Feroldi discuss some of their favorite ways to play the REIT sector before we head into a post-pandemic world.
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Matthew Frankel: I know he kept some of it. I read that. I briefly wanted to talk about my favorite reopening stocks, which are sneaky reopening stocks that I think is the real estate investment trust. I say it's sneaky because unlike banks, well, pretty much every bank benefited from the vaccine news. Travel stocks, pretty much every travel stock I know of spiked during the vaccine news. Real estate's really a mixed bag. Some types of commercial real estate like say data centers, for example, were warehouses that fulfill orders for Amazon (NASDAQ: AMZN) have been real beneficiaries of the stay at home economy. Whereas, most types of real estate require people to be able to willing to go places. It's been a terrible time to be a mall operator just to name one example. But the flip side of this is now that we see some light at the end of the tunnel, the high-quality names in this space have just gone through the roof. So we mentioned some of the moves on the travel and banking space. We mentioned some of the airlines were up in the 30 percent range over the past few weeks. Cruise lines were up nearly 50 percent. One of my favorite real estate stocks, Empire State Realty Trust (ESRT 1.10%) that owns the Empire State Building, is up 77 percent over the past three weeks and that's after a slight pullback today. So a couple of other ones, so just Ryman Hospitality Properties (RHP -0.14%). One of my favorite hotel companies.
Brian Feroldi: What's the ticker for Empire?
Matthew Frankel: I'm sorry. It's E-S-R-T. Ryman Hospitality Properties, which is ticker symbol RHP. There a hotel REIT. They're up 60 percent over the past few weeks since the first vaccine news was announced. These are some massive moves and the reason is just because people are going to be able to be willing and able to go places. Some of these have excellent balance sheets, excellent management teams. Unlike some of the travel stocks that we've talked about, a lot of these companies have hundreds of millions, if not billions of dollars in reserves. Their ability to last a long downturn and now it looks like it might not have to do things like hotels. There's going to be pent-up demand. We're already seeing that. I saw a couple of days last weekend where the highest travel-base since the pandemic started. Thanksgiving weekend, supposed to be just as busy, if not more. We're seeing a lot of pent-up demand, like starting to come out. I'm not so sure people should be traveling right now given the case numbers and all that. But that's another discussion for another day. But there's definitely pent-up demand for things like like shopping, retailer and e-commerce and breaking what retail can co-exist. Then people want to go out and shop, people want to go travel and go to hotels, people want to go to tourist attractions like the empire state building, like I just mentioned. We're seeing a lot of real estate surprisingly has been one of the biggest winners of the COVID vaccine. So Brian, do you own any real estate stocks? I know you don't like banks, but, you own any real estate stocks.
Brian Feroldi: I do. I own one. I own STORE Capital (STOR). That's ticker symbol STOR. STORE Capital, that is one that's checks a lot of boxes for me. The big feather in their cap is Berkshire Hathaway owns 10 percent of them and they are a triple net lease companies. So they are basically just a real estate financier and they are excruciatingly detailed with their client when they take on a new client and I think that they are doing a great job of becoming e-commerce. Not proof, but pretty close to e-commerce proof. I agree with you, Matt, I think that physical real estate and e-commerce can co-exist, they just can. Some people, and I myself and I'm one of them. Enjoy going out shopping for certain items. Like I still haven't converted to using grocery delivery and maybe I have this because I'm a luddite, but I like going and seeing and touching the fruit and vegetables before I purchase it. So that's one thing. I also have a home depot, really close to my house, and whenever I need something for a project, I don't think I should order this on Amazon and wait, even if it's a day. I wanted to do that projects in 10 minutes. I don't want to wait a long time to do it, especially for big items are bulky items. I still think that people want to go out to bars, they want to go out to restaurants. There are plenty of physical retail establishment that can still exist post-COVID, because some experience you just can't replicate online and humans do want to be together.
