We are in uncharted territory. We already see some previously weak retailers and restaurants that may be forced under because of a government-ordered two-week hiatus in operations. U.S. Jobless claims reported this week jumped to 3.28M!
Can and will the retail market survive?
Yes, especially retailers that have been fiscally responsible, or strategically positioned to weather recessions. Companies with high levels of leverage or indebtedness will have a tough road ahead. The Coronavirus Aid, Relief, and Economic Security Act will provide some breathing room.
Some retailers have had record sales over the past weeks and continue to have excellent management and supply chains. Walmart, CVS, Costco, Walgreens, Dollar General, Dollar Tree, and most supermarket chains have shown how the free market works best to deliver to people in crisis.
I had mentioned to a number of people that while different in nature, this event is eerily similar to September 2008 when Lehman Brothers collapsed. The financing markets shut down, and everyone was waiting for the next “shoe to drop.” In 2009, Kevin Conner, one of our joint venture partners, said to me, “it is like trying to catch a falling knife.”
We cannot predict how long this event will last. We can predict: “This too will pass”.
Just like 2008, November 2000 (Dot Com Collapse) and 1990 (S&L Crisis), we will get through this. There will be pain for lots of people and companies. We, as a nation, should look to help our neighbors and those closest to us. In the last recession, we tried massive government intervention, and it extended the downturn longer and deeper.
What has been demonstrated over the last two years is that the stock market is casino-like, tied to the whims of random political events, algorithmic trading, active management manipulation, debt-fueled growth, and Benjamin Graham’s “Mr. Market” investor sentiment to name a few.
Real Estate Has Always Been The Number One Generator Of Wealth
Real estate has always been the number one generator of wealth since humans turned from a nomadic existence to settling down and staying in one place. Real estate is the largest asset class in the world, yet the commercial real estate industry still suffers from significant barriers to entry.
• Real Estate Has Always Been A Safe Haven In Times Of Economic Turmoil
• High-Quality Commercial Real Estate Has Intrinsic & Tangible Value – It Is A Hard Asset
• Regular Monthly Income and Equity Appreciation (Grow Your Wealth)
• Real Estate Has Traditionally Been An Excellent Hedge Against Inflation
The Right Type Of Real Estate Investment Makes More Sense Than Ever Before
There will be carnage in the retail real estate industry, especially among shopping center tenants that will have to endure a 2-3 week, maybe a month-long mandatory shut down.
But other tenants will thrive.
• Drug Stores (CVS, Walgreens are providing drive-through COVID 19 screening and can’t keep toilet paper and hand sanitizer in stock);
• Dollar Stores (Dollar General, Dollar Tree are hiring and expanding right now);
• Automotive Service (Car Washes, Oil Change, Tires & Batteries because new car sales will plummet for a while and people will need to drive their cars longer);
• Medtail (Dialysis, Urgent Care Providers, Dentists);
• Funeral Homes (the fact of life is we are all destined to die – the Baby Boom Generation is at the age where they are starting to create lots of demand for funeral services);
Internet resistant tenants in industries such as medical, auto services, daily needs providers will still continue to be in demand and make excellent tenants.
A conservative portfolio of long term, Single-Tenant Net-Leased (STNL) properties designed for geographic diversification, tenant credit diversification, and industry diversification makes more sense than ever before.
STNL Investments Provide Capital Preservation and Dependable Monthly Income
Single-Tenant Net-Leased (STNL) properties are really more similar to fixed income or bond type investments because of their long term leases with quality tenants. The cash flow of STNL properties are similar to a bond providing excellent cash flow backed by strong credit and operators.
Our strategy is an absolute return strategy providing long term stability, dependable monthly income total return with income. The equity value is growing over time, along with the income growing over time.
LibertyFund Is An Investment In High Quality, Well Located Net-Leased Properties
LibertyFund will initially be investing in high quality, well-located single-tenant net-leased properties throughout high growth, low tax areas of the United States. These properties are leased to major corporations, dynamic businesses, and health care providers. Investors will achieve: geographic diversification; tenant credit diversification; industry diversification; E-commerce disintermediation resistance; assets and properties with intrinsic value.
Our Country Will Get Through This
What has been truly impressive is the first responders, in this crisis, have been people typically taken for granted. Cashiers, stockboys, warehouse workers, delivery people, truck drivers and drive through restaurant workers. The amount of food, paper products and stock up staples that went through our national distribution system was truly impressive. It was all those workers staying at their jobs, sometimes at high stress with the runs on toilet paper. I have personally made a point to thank them for restocking the shelves, ringing the cash register and keeping America running.
We are truly thankful for our health care workers, scientists, and clinicians working to save lives and cure this virus. We are incredibly thankful for the millions of workers who still show up at their jobs so that we can continue to live our lives and do our jobs.
Thank you for taking your precious time to spend it with us!
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About the Author: Michael Flight, Principal with Concordia Equity Partners LLC
Michael Flight is a principal with Concordia Equity Partners LLC. Michael has been active in commercial real estate for the past 35+ years and has handled more than $600 million worth of real estate transactions. Michael has been featured on many business podcasts, served on numerous non-profit boards, held elected office, and shared as a featured speaker on real estate investment, poverty alleviation, and free markets. More information can be found at www.michaeljflight.com and www.concordiarealty.com
Concordia Realty Corporation has been successfully connecting sound economics with experience in real estate for more than 30 years. More recently, Concordia Equity Partners LLC was created to provide the same investment opportunities and expertise that our institutional partners have enjoyed over the years. We are a premier private real estate investment and management firm that specializes in Retail Real Estate, including Shopping Centers and Single-Tenant Net-Lease Detail/Medical (“Medtail”) properties. Our wide range of experience has uniquely positioned us to redevelop and repurpose properties that are experiencing disruptions related to technology and merchandising. This experience has built a skill-set that helps to add value to all of our real estate ventures.
For information about Concordia Equity Partners opportunities, contact us here: