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5 at 5: Your Daily Digest for Real Estate Investing, 09/14/2020


Sep 14, 2020 by Marc Rapport

The "Whole Foods Effect," cross-border CRE buyers, Nareit index falls, Prologis sees progress, and time to poll the tenants.

In today's news

An Update on the "Whole Foods Effect" Post-Amazon Acquisition

Over the past two decades, the presence of Whole Foods in a neighborhood has functioned as an unmistakable cultural signifier, reflecting an area's affluence, lifestyle preferences, and evolution, says this report from RCLCO Real Estate Advisors. It raises the rent, too.

Why it matters: Is it the chicken or the egg? Guess it doesn't matter as long as they're both free-range. This report -- a follow-up from a 2016 look at the limited universe of apartments with premium grocers on the first floor -- shows that Whole Foods still rules that roost, followed closely by Trader Joe's.

Top 20 Cross-Border Buyers of U.S. CRE So Far This Year

National Real Estate Investor breaks down a Real Capital Analytics report that finds CRE sales to foreign investors accounted for 8% of all U.S. investment sales closed in the second quarter of 2020, down from the 12% average for the past three years. But it's still a lot of buying by international bargain hunters of the big institutional variety.

Why it matters: Click through the list, and a pattern emerges from these buyers (from eight countries) who head it: lots of interest in industrial and office, followed by multifamily and then a smattering of hotels and retailers. With this kind of money involved, presumably they have the best and latest intel, right? It might be a bit of confirmation bias, too, but it does confirm where a lot of domestic individual investors are looking.

REIT Stocks Dip in Nareit Index But Not as Much as Some

In a broad retreat, the Nasdaq has dipped 7.8% since Sept. 1, but an index of real estate investment trusts (REITs) -- the FTSE Nareit All Equity index -- is down only 2.2% so far this month.

Why it matters: This analysis reminds investors that REITs don't move in tandem with other sectors, which, along with required payout of profits, can help enhance a portfolio's ability to generate returns while reducing volatility.

Today on Millionacres

This Industrial REIT Sees Good Things Ahead

After cutting its guidance earlier this year, Prologis (NYSE: PLD) has now upgraded its own outlook on earnings, occupancy, and growth.

Why it matters: Millionacres' Matthew DiLallo explains that while there's still some caution in its most recent forecast, this quick reversal shows just how strong market conditions are in the logistics sector.

Tenant Surveys: How They Can Help You (and How To Do Them Right)

Millionacres' Aly Yale says surveying your tenants is a great way to gauge how you're doing as a landlord as well as pinpoint any areas that need improvement.

Why it matters: Tenants who feel heard, seen, and valued are more likely to stick around, and it's cheaper to keep good tenants than go find more.

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Marc Rapport has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.