Feds keep rates down, a critical housing report, rent breaks for retailers, a REIT's bet on behavioral health, Miami's proposed new sea wall.
In Today's News
Feds Hold Rates at Zero; Projects Two Hikes by End of 2023
Federal Reserve officials held interest rates near zero but signaled they expect two increases by the end of 2023, pulling forward the date of liftoff as the economy recovers, Bloomberg reported today [subscription required].
The Millionacres takeaway: The central bank kept its target range for its benchmark policy rate at the same spot where it's been since March 2020. And it doesn't expect economic conditions to require otherwise for two years or so. Real estate investments of every type can be sharply affected by inflation, and hiking interest rates is often seen as the antidote, so how long this lasts remains to be seen.
Housing Is Critical Infrastructure
The National Association of Realtors (NAR) today released a report that concludes that a once-in-a-generation response is needed to address the housing supply crisis.
The Millionacres takeaway: The report includes policy recommendations and calls for lawmakers to expand access to resources, remove barriers to and incentivize new development, and make housing construction an integral part of a national infrastructure strategy. It's worth a read to jump-start some thinking about how your investment dollars can take part, if and when any of these things actually happen. Or don't.
COVID-19 Rent Breaks for Retailers Are Becoming the New Norm
During the worst of the pandemic, many landlords offered deals where ailing retailers paid a percentage of their monthly sales in rent -- rather than a fixed amount -- to help them survive. Now, this once-temporary way of charging tenants looks poised to outlast COVID-19.
The Millionacres takeaway: If, as this Wall Street Journal piece posits [subscription required], such lease arrangements become standard fare, could that make it tougher for retail REITs (real estate investment trusts) to predict their own income and provide a steady flow of dividends to their investors?
Today on Millionacres
This Healthcare REIT's Buying Binge Continues
Medical Properties Trust (NYSE: MPW) is buying 18 inpatient behavioral hospital facilities and a stake in their operator for $950 million. That brings its year-to-date investment total above $2.5 billion.
The Millionacres takeaway: Our Matthew DiLallo explains why this is such a compelling niche and how the deal makes MPT an even more compelling healthcare REIT to buy this month.
Will Miami's Proposed Sea Wall Buoy or Bust its Real Estate Market?
While Miami's real estate market is on fire, its longtime battle with flooding has threatened the future of the city. That's why the U.S. Army Corps of Engineers is doing a feasibility study to help buffer and protect Miami from the flooding, sea level rise, and storm damage that is slowly seeping into the city.
The Millionacres takeaway: The arguments and options that our Liz Brumer discusses here can apply to coastal cities on all our shores. For long-term investors in those markets, it's time to start thinking about how to respond.