August 19, 2023 | Real Estate Investment Trust, Sales, Barbie Movie and are your I Bonds Worth Keeping?

Real Estate Investment Trust
Months ago at my investment firm, Wilsey Asset Management, we made a decision to go into a real estate investment trust to begin buying class A commercial property that was on sale. I was happy to read recently that the big Wall Street firms are now raising billions of dollars to invest in commercial property that is on sale. If you’re considering doing this as well, be sure to understand where the properties are located and verify that they are class A buildings. You also want to make sure you are not overpaying based on the fundamentals of the real estate investment trust and you should understand the debt level and when that debt is coming due. An investor should be able to get a yield of around 5% or higher plus I believe there could be some great appreciation. Keep in mind your investment time horizon for this should be somewhere between 12 and 24 months, do not expect a turnaround in just a few months.

 

Sales
Retail sales came in with a good report as sales in July were up 0.7% compared to June. This easily topped the estimate of 0.4% and compared to last year sales were up 3.2%. Gas stations weighed heavily on the report due to lower gas prices as sales decline 20.8% compared to last year. If these were excluded from the headline number, retail sales grew at an even more impressive pace of 5.8% compared to last year. Areas of strength included food services and drinking places (+11.9%), nonstore retailers (+10.3%), and health and personal care stores (+8.1%). Areas that continued to be negative included furniture and home furnishing stores (-6.3%), building material and garden equipment and supplies dealers (-3.3%), and electronics and appliance stores (-3.1%). These categories were all beneficiaries from covid, but with the beginning of the pandemic now more than 3 years ago I do wonder when some of these items that were purchased then will need to be replaced. For example, I do know laptops have an expected life expectancy of around 3-5 years so sales there could start to turnaround in the coming months.

 

Barbie Movie
Move over Batman and hello Barbie! Barbie has now become Warner Bros. Discovery’s (WBD) highest grossing domestic film of all-time. The movie has now topped $537M which comes in above Christopher Nolan's The Dark Knight, which generated $536M in 2008. Barbie does have the benefit of inflation as prices are now higher than 2008, but considering the weak box office post Covid the feat is still quite impressive and it shows the potential reach and advertising power of the recently combined Warner Bros. Discovery. From a global box office perspective, Barbie has collected over $1.2B which would make it the second highest grossing movie worldwide for WBD after Harry Potter and the Deathly Hallows: Part II. I personally have not seen the movie, but apparently many people have!