JP Morgan Totally Missed The Most Important Sector In REITs
JPMorgan Chase & Co. operates as a financial services company worldwide. It operates in four segments: Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM).
JP Morgan has been on my radar ever since @khaleelkazi took off his iron condor on JP Morgan for profits as discussed a couple of weeks ago in the Leo Podcast. As @khaleekazi was taking his position off, I was considering putting an iron condor on, but in a different way. Not only was I trying to make the iron condor delta neutral, where I factor in the volatility skew, but was also considering legging into the iron condor, meaning I put one side of the credit spread on, then put the other side of the credit spread at a later day. Needless to say, I haven’t put on the iron condor as of yet as my focus has been elsewhere. But now, I can’t see to get JP Morgan out of my head.
On Monday, JPMorgan raised its price target on Tesla due to better-than-expected second quarter delivery data. Tesla said it delivered 90,650 vehicles in the quarter, nearly 60% higher than JPMorgan's estimate of 57,000.
The largest U.S. banks will announce their second-quarter results next week. And I’m expecting the banks to take another big hit to earnings as banks set aside more money to cover expected loan losses. JP Morgan is set to announce earnings on July 14th.
This morning I came across an article by Barron’s that discussed JP Morgan calling a bottom in REITs and that the dividend yield on the nine REITs they recommend should be sustainable.
Those include Brandywine Realty Trust (BDN). which yields 7.6% and operates office and mixed-use properties, and Four Corners Property Trust (FCPT), which focuses on restaurants and food services. It yields 5.5%.
Another holding is Kennedy-Wilson Holdings (KW), which specializes in multifamily and office properties. It sports a yield of 6%.
Other stocks the analysts consider attractive include three health-care REITs: Healthcare Trust of America (HTA), Medical Properties Trust (MPW) and Welltower (WELL). They yield 4.9%, 6%, and 5%, respectively.
They also favor a few industrial REITs. That includes STAG Industrial (STAG), whose properties include warehouses and light manufacturing buildings. It yields 5%.
Another is W.P. Carey (WPC), which operates single-tenant industrial, warehouse, office, retail, and self-storage buildings. It yields 6.3%.
Elsewhere, VEREIT’s (VER) portfolio consists of retail, restaurant, office and industrial real estate properties. Its yield is 5%.
I think JP Morgan totally missed the most important sector in REITs, the data centers REITS.
The data center REIT sector is relatively new compared to other REITs. Salesforce was an early pioneer of moving their CRM services to the cloud in the early 2000s. The company's founder, Benioff's vision was that software should be delivered 24/7 to people over the cloud. Most data center REITs were founded around 2000 and make up a small percentage of REITs overall.
As data becomes an integral part of everything we do, data center real estate investment trusts (REITs) have become more important, especially in the era of COVID-19. Now Salesforce shares the cloud pie with Apple, Amazon, Facebook, Google, and Microsoft who have huge appetites for access to data centers. These companies are building their own data centers, but because of the demand, are turning to data center REITs to fill that void.
The relentless growth of wireless data, public cloud, digital content, social media, and ecommerce continues to fuel the need for more data center space. The beauty of data center REITs is that their growth isn’t dependent on consumer spending, population growth or unemployment like traditional REITs.
QTS Realty Trust, Inc. (NYSE: QTS) is a leading provider of data center solutions across a diverse footprint spanning more than 6 million square feet of owned mega scale data center space throughout primarily North America and Europe. Through its software-defined technology platform, QTS is able to deliver secure, compliant infrastructure solutions, robust connectivity and premium customer service to leading hyperscale technology companies, enterprises, and government entities. QTS owns, operates or manages 26 data centers and supports more than 1,100 customers primarily in North America and Europe.
The chart suggests to buy to go long at the daily as price is just below the monthly supply at $58.
CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. It’s America's third largest data-center provider and its solutions allow customers take advantage of cloud platforms such as Amazon Web Services and Microsoft Azure.
The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including more than 200 Fortune 1000 companies.
In 2018, CyrusOne have the most data center properties under construction in the U.S., at six and had the most preconstruction data center development properties at 24.
The chart suggests to buy to go long at the daily demand at $67.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
