As we await recounts in some of the close battle ground states and the inevitable lawsuits to follow (did anyone expect this annus horribilis to end differently?), we wanted to take a break from constantly refreshing websites for updated vote counts to offer quick thoughts on the election and its impact on REITs for the months ahead. While the race for control of the Senate and the White house is tight, the most likely outcome seems to be the Democrats taking control of the Executive branch by a narrow margin and the Republicans retaining control of the Senate with only one seat flipped, hardly the “blue wave” envisioned by a number of prognosticators. In the short term (the next three

The efficient-market hypothesis (EMH) is a long-debated economic theory first introduced in nascent terms in the early 1900s, and advanced starting in the 1950s, which essentially suggests “security prices fully reflect all available information.” Although variations exist, the natural conclusion is that stock price movements are unpredictable; therefore “you cannot beat the market” and active portfolio management is a futile endeavor. While investable index funds first sprouted in the early 1970s, only recently has passive management taken a more prominent role – net inflows into U.S. actively managed funds, for all asset classes and including exchange-traded funds (ETFs), has been negative since 2006 while passive share has increased steadily since the early 1990s. Morningstar research shows $4.2 trillion of cumulative

Image used with permission of Philadelphia Inquirer Copyright© 2018. All rights reserved. Amazon, Inc. sent hundreds of municipalities into frenzy in September 2017 when the e-commerce juggernaut announced plans to establish a second corporate headquarters in North America, uninspiringly dubbed HQ2. Nearly 250 cities responded to Amazon’s Request for Proposal (RFP), with hopes of adding 50,000 full-time, highly-paid Amazons (Amazonians?) to its tax coffers within 15 years, in addition to $5 billion of promised capital expenditures over a similar time period. HQ2 is also expected to have a halo effect, with the “winner” validated by one of the largest, most successful and fastest growing companies on earth – other employers and employees will desire a nearby presence, boosting economic growth

After nearly five months of behind-the-scenes negotiations, regional mall REIT GGP Inc. (GGP, formerly known as General Growth Properties) recently agreed to be acquired by its largest shareholder (34% owner, originated from its role as plan sponsor and cornerstone investor during GGP’s bankruptcy reorganization and recapitalization in 2010, including the receipt of 57.5 million warrants with an exercise price of $10.75/share for its $2.3 billion investment) Brookfield Property Partners (BPY) at a price that underwhelmed the investment community; the regional mall REIT sector declined 2.6% on the day of this news, with GGP falling even more at 5.3%. Source: FactSet. While the updated “headline” offer of $23.50/share in cash is slightly higher than the initial $23.00/share cash or BPY unit

Amazon’s (AMZN) announcement on the morning of June 16, 2017 that it had entered into an agreement to acquire Whole Foods Market (WFM) for $42 per share in an all-cash transaction valued at $13.7 billion was positively received by shareholders of both companies. WFM shares ended the day up 29.1% (above the acquisition price in anticipation of a competing/higher offer) with AMZN shares closing 2.4% higher as the market cheered the e-commerce giant’s aggressive and decisive action. Remarkably, Amazon’s market capitalization increased by over $11 billion on the announcement, nearly as much as the entire price tag for Whole Foods Market whose acquisition boosted AMZN shares in the first place! Share prices have retreated a bit since then, with WFM