Market Commentary | December 15, 2021

by | Dec 15, 2021 | Market Commentary

Surviving Inflation

Investor fears and anticipations were confirmed when the U.S. Bureau of Labor Statistics announced that the November 2021 Consumer Price Index rose 6.8% from the prior year period, the largest 12-month increase since June 1982. Ex food and energy, all prices were up 4.9%.


In contrast to the CPI news, S&P Capital IQ reported that same-store net operating income (NOI) across publicly traded U.S. equity REITs improved year over year at a median 7.1% as of September-end. These numbers are even stronger on an earnings/share basis when you factor in the cost of capital improvements REITs have enjoyed with sustained access to easy credit.

What this implies is that real estate investments can effectively capture inflation in their cash flows and help to sustain purchasing power.  This translates in the form of increased dividends, of which there have been at least 126 this year, including MGM Growth Properties’ (MGP) boost this morning (its 4th hike in 2021).

The higher cash flows and dividends in turn translate to higher property values and share prices. With more than $1T of newly raised, uninvested private equity capital earmarked for real estate and infrastructure investment waiting on the sidelines, we can anticipate that 2022 will be a record year for mergers and acquisitions.

Our portfolios are well positioned in this environment.

Notes and Disclosure

Articles are provided for informational purposes only. They are not recommendations to buy or sell any security and are strictly the opinion of the writer. The information contained in these articles is impersonal and not tailored to the investment needs of any particular person. It does not constitute a recommendation that any particular security or strategy is suitable for a specific person.

Investing in publicly held securities is speculative and involves risk, including the possible loss of principal. The reader must determine whether any investment is suitable and accepts responsibility for their investment decisions.

Commentary may contain forward-looking statements that are by definition uncertain. Actual results may differ materially from our forecasts or estimations, and 2MCAC and its affiliates cannot be held liable for the use of and reliance upon the opinions, estimates, forecasts, and findings in this article.

Past performance does not guarantee future results. Investing in publicly held securities is speculative and involves risk, including the possible loss of principal. Historical returns should not be used as the primary basis for investment decisions. Although the statements of fact and data in this report have been obtained from sources believed to be reliable, 2MCAC does not guarantee their accuracy and assumes no liability or responsibility for any omissions/errors.

We routinely own and trade the same securities purchased or sold for advisory clients of 2MCAC. This circumstance is communicated to clients on an ongoing basis. As fiduciaries, we prioritize our clients’ interests above those of our corporate and personal accounts to avoid conflict and adverse selection in trading these commonly held interests.

Hypertext links to other sites are provided strictly as a courtesy. When you link to any of the sites provided on our website, you are leaving this website. We make no representation as to the completeness or accuracy of information provided on these websites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information, and programs made available through this website. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the websites to which you are linking.

Share This