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5 at 5: Your Daily Digest for Real Estate Investing, 4/15/21


Apr 15, 2021 by Marc Rapport
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Kimco, Weingarten in retail REIT merger; remote workers want to stay that way; green office imperatives; economic recovery underway; and messy stores bum out analysts.

Today on Millionacres

Retail REITs Kimco, Weingarten Merging in a $12 Billion Deal

Kimco Realty (NYSE: KIM) has agreed to acquire fellow retail REIT (real estate investment trust) Weingarten Realty Investors (NYSE: WRI) in a cash-and-stock deal. The transaction will create a sector-leading retail REIT with a $12 billion market capitalization and more than $20 billion enterprise value.

The Millionacres takeaway: Our Matthew DiLallo says the increased scale will reduce costs and improve the combined company's balance sheet while putting it in a stronger position to weather the upheaval in the retail sector from the accelerating shift to e-commerce. And, he says, it could lead to more such consolidations.

A Third of Remote Office Workers Would Quit to Stay Home: Is CRE Doomed?

A recent survey by staffing firm Robert Half reveals that one-third of current remote workers would rather quit their jobs and look for new ones than have to work full-time in an office building again. And that sentiment may have real estate investors worried.

The Millionacres takeaway: Our Maurie Backman argues here that the demand for office space is not completely going away, and as more companies return to the office, those on the fence may opt to follow their lead. Office building investors should bank on the sector picking up, Maurie says, even if it does take a fair amount of time to recover from the impact of the pandemic.

Going Green: Office Takeaways from ULI and PwC

The pandemic has caused deep disruption to the real estate industry, and the recovery will be taking place in a context that may well include paying unprecedented levels of attention and expense to addressing carbon footprint, according to a new study by the Urban Land Institute and PwC.

The Millionacres takeaway: The researchers say a lot about a lot of things in this 44-page tome, but here’s a bottom line: Stakeholders tell them that ultimately, “green” buildings are becoming more saleable than those that aren’t.

Also in Today’s News

Recovery Quickens as U.S. Retail Sales Soar, Jobless Claims Ease

Bloomberg reports [subscription required] that Thursday’s barrage of economic data shows that some parts of the economy, like retail sales, have returned to or exceeded pre-pandemic levels. Applications for unemployment benefits, while still elevated, hit their lowest level in 13 months.

The Millionacres takeaway: Whether this clearly rising tide lifts all boats remains to be seen, since consumers have for a long time driven economic growth here in America, but a post-pandemic rally of a permanent sort may be no more than millions of vaccinations away. And any COVID-19 surge could be a setback, of course.

Crumpled Clothes and Bare Shelves: Retailers Face Cleanup as Shoppers Return

As retailers focused on e-commerce and faced supply-chain challenges during the pandemic, store appearance often became an afterthought, CNBC says, noting that Walmart (NYSE: WMT) shares were downgraded by a research firm earlier this year because of its sloppy stores, and Macy’s (NYSE: M) has been criticized for its poor presentation.

The Millionacres takeaway: One analyst told the news service that it’s time for retailers to clean up their act -- or risk losing customers. Could that be an edge for smaller retailers who can tidy up more efficiently? Regardless, big or small, now’s not the time to turn off consumers.

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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.