👋 Happy Friday, Everyone. Here’s the thing: It was another week of Wall Street being focused on whether or not the FED will raise rates at the September meeting. Despite some hotter-than-expected CPI and PPI numbers, investors liked the softer core numbers, which exclude food and energy. Sure, it may cost consumers more to buy food and gasoline, but the retail numbers were still above expectations. And as long as retail sales are up, Wall Street is happy.

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📈 Biggest Winners This Week: Hotel and Data REITs were looking sharp.

• Modiv Inc (NYSE: MDV) Up 14.90%

• Uniti Group Inc (Nasdaq: UNIT) Up 8.92%

• Diversified Healthcare Trust (Nasdaq: DHC) Up 6.38%

• DigitalBridge Group Inc (NYSE: DBRG) Up 6.28%

• Sabra Health Care REIT Inc (Nasdaq: SBRA) Up 5.18%

• Sun Communities, Inc (NYSE: SUI) Up 5.06%

• Omega Healthcare Investors Inc (NYSE: OHI) Up 4.65%

📉 Biggest Losers This Week: Office REITs were clearly the weakest group.

• Wheeler Real Estate Investment Trust (Nasdaq: WHLR) Down 48.36%

• Strawberry Fields Reit Inc (NYSEAMERICAN: STRW) Down 5.76%

• Piedmont Office Realty Trust, Inc. (NYSE: PDM) Down 5.47%

• Hudson Pacific Properties Inc (NYSE: HPP) Down 5.14%

• Kilroy Realty Corp (NYSE: KRC) Down 4.46

Prices as of September 14, 12:00 Noon

ONE BIG THING

Omega Healthcare Is The Picture Of Health!

Briefly: Omega Healthcare Investors Inc (NYSE: OHI), with a recent price of $32.74, is pushing up against 5-year highs set in February 2020 at $33.37, right before the COVID-19 crash. Omega Healthcare is one of the best-performing REITs in 2023, with a total return of 23.57% year-to-date.

Who They Are: Omega Healthcare Investors is a Hunt Valley, MD triple-net equity healthcare Real Estate Investment Trust (REIT) that has 66 different operators to which it provides finances and capital, as well as leasing. It owns 893 senior housing, skilled nursing facilities (SNF) and assisted living facilities (ALF) across 42 states throughout the U.S. and the United Kingdom, which makes it geographically well-diversified. The operators themselves run the facilities. Omega Healthcare Investors has no part in the day-to-day management of these facilities.

• Most of Omega Healthcare’s properties are triple-net leased, so the tenants pay all of the common expenses of the property, including taxes, insurance, and maintenance. This has been a boon to Omega Healthcare during inflationary periods such as the one that began in 2021.

Why This Happened: Analysts are taking note of recent improvements.

• On September 12, RBC Capital analyst Michael Carroll initiated coverage of Omega Healthcare with a Sector Perform rating and announced a price target of $33.

• On September 8, Mizuho analysts upgraded Omega Healthcare from Neutral to Buy and raised the price target from $31 to $35. It was noted that admission volumes in hospitals and SNFs have been climbing, and are almost back to pre-COVID 19 levels. Q2 Occupancy levels in the SNF’s were up 6.7% from a year ago.

• On August 2, Omega Healthcare reported Q2 FFO of $0.74 per share, slightly below the $0.76 FFO per share in Q2 2022. However, revenue of $250.19 million beat the analysts’ estimate of $231.90 by almost 8% and was an improvement over revenue of $244.65 in Q2 2022.

Big picture: 70 million Baby Boomers are aging and represent the second largest demographic population in the U.S. behind millennials. By 2030, all Baby Boomers will be 65 or older.

Betting On Boomers: As Boomers age, they may require more hospitalizations and begin to access ALF’s and SNF’s. With the worst of COVID variations behind us, the fears that many felt about entering these facilities since 2020 will probably diminish. Omega Healthcare Investors stands to benefit from these statistics.

Dividend Dive: Omega Healthcare Investors pays a quarterly dividend of $0.67 per share. The dividend hasn’t grown in four years, but it also has never been cut nor suspended. The $2.68 annual dividend presently yields 8.23%. That yield is fairly unusual for a stock that has performed so well YTD. However, there is one caveat- the forward 95% payout ratio is very high, so Omega will need to return its quarterly FFO to the $0.85 level of 2021 to drop the payout ratio to a more comfortable 80% and completely rule out a dividend cut.

Final Remarks: While there’s likely some overhead resistance at $33-$34 per share and the stock is somewhat overbought with an 89 stochastic level, with healthcare trends returning to higher occupancy levels, longer term this REIT could be a real winner.

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UPS AND DOWNS

Caretrust REIT Inc (NYSE: CTRE) September 12, RBC Capital analyst Michael Carroll upgraded Caretrust REIT from Sector Perform to Outperform and raised the price target from $19 to $23.

Omega Healthcare Inc: September 8, Mizuho analysts upgraded Omega Healthcare from Neutral to Buy and raised the price target from $31 to $35.

AvalonBay Communities Inc (NYSE: AVB) September 14, Colliers Securities analyst David Toti upgraded AvalonBay Communities from Neutral to Buy and announced a price target of $202.

Essex Property Trust Inc (NYSE: ESS) September 8, Citigroup analyst Michael Bilerman downgraded Essex Property Trust from Buy to Neutral and lowered the price target from $280 to $260.

REIT ROUND-UP

Welltower Inc (NYSE: WELL) September 11, raised its full year 2023 FFO guidance from $3.48-$3.59, to $3.51-$3.60.

MFA Financial Inc (NYSE: MFA) September 11, announced the appointment of Michael Roper to become CFO, replacing Stephen Yarad, as of September 15.

Realty Income Corp (NYSE: O) September 12, Announced an increase in its monthly dividend from $0.255 to $0.256, payable October 13 for shareholders of record October 2. The ex-dividend date is September 29. The forward yield is presently 5.57%.

SBA Communications Corp (Nasdaq: SBAC) September 13, announced it’s appointing Marc Montagner as its CFO and Brendan Cavanagh will succeed Jeffrey Stoops as President and CEO, both effective January 1, 2024.

Uniti Group Inc (Nasdaq: UNIT) September 14, announced its Chief Revenue Officer, Ron Mudry, will participate in a panel discussion at the RBC Capital Markets 2023 Global Communications Infrastructure Conference at 9:10 AM CST on September 27, 2023 in Chicago IL. This announcement sent Uniti stock up 11% the next morning.

HOUSING NEWS BRIEF

Although mortgage rates fell from 7.18% to 7.12% this week, potential homebuyers continue to stay away. The Mortgage Bankers Association (MBA) said that home loan applications fell 2.1% from the previous week to the lowest level since April 1995. Applications are off 28% from a year ago.

Higher-earning Millennials are moving from states like New York and California to states such as Florida and Texas, in an effort to find less expensive housing, while staying close to tech “hot spot” areas like Miami and Austin. Other states that Millennials are gravitating toward include New Jersey, Colorado, and North Carolina.

Despite earning at least $200,000, many of those aged 26 to 35 are still living paycheck to paycheck. A recent Seattle-based survey found that 18% of millennials and 12% of Gen Zers say they’ll never own a home. The high price of homes is the number one reason cited.

• UHT, RPT and FRT are quarterly dividend payers.

• VICI, LAND, GOOD and LTC are monthly dividend payers.

ONE FOR THE ROAD

Remembering 9/11, 22 Years Ago

The resiliency of the American stock market is remarkable. All throughout our history, markets have shouldered the burdens of economic down cycles and calamity when they have occurred. Time and again we have come back from hard times, stronger and with more hope for the future.

What Happened: This week, we remember September 11, 2001, and the terrible losses that occurred on that day. Over 3,000 people, including 332 first responders died that day, and the economic losses were estimated to be between $33 billion-$36 billion. The stock market saw a $1.4 trillion loss in market value, with the S&P 500 falling more than 14% that week.

But by mid-October, stocks had rebounded and returned to pre-9/11 levels. Boeing Co (NYSE: BA), which lost half its value in the week following 9/11, more than quadrupled over the next five years. 

Lesson For Investors: Every day we are overwhelmed with “noise” from dozens of different sources about what could happen and may happen in the stock market. Sometimes really profound events like 9/11 or COVID-19 do occur and stocks may drop for a while. Other times, the market declines are slower and born of economic cycles, such as the inflationary one that has been with us since 2021. It may seem like an eternity while we are living through these times, but when viewed on a chart throughout the long course of history, they are more fleeting in nature.

Many REITs have been hit hard since the spring of 2022, as the FED has raised interest rates numerous times to combat inflation. But REITs have also seen incredible rallies, once they’ve fallen to bargain levels, as markets tend to rebound when the value of these stocks produce higher dividend yields which become attractive to investors.

Furthermore, it’s rare for the better REITs to cut or suspend their dividends. So don’t let today’s news or some pundit predicting the demise of an entire sub-sector distract you from building a solid, diversified portfolio of dividend-paying REITs. Even during volatile times, the dividends received still pay the bills or just offset some of the losses while you wait for prices to return to higher levels.

It’s always a good strategy to hold some money on the sidelines so you can profit after a market decline, especially now with money market rates paying nearly 5%. It takes courage to buy stocks during these times, but that’s when the best opportunities arise to acquire top quality stocks at attractive prices and yields.

Difficult moments in time will always be with us. But in the long run, the human spirit and faith in the future are always stronger.

PRESENTED BY ROOTS

With Roots, anyone can build wealth through real estate

Roots believes that everyone should have the opportunity to build wealth with real estate. It took them years to build Roots, but you can start investing in 5 minutes.

Roots buys single family properties, fixes them up, manages them, and finds amazing humans to rent them.

It’s easy to get started: You invest in Roots for as little as $100