Luck Favors the Prepared

Another Day in REIT Paradise

(Source: Canva.com)

According to the Wall Street Journal this morning, the “EPA will allow more ethanol in gas this summer in bid to tame prices.” Normally, gas contains about a 10% ethanol blend to reduce pollution. But given the rising gas prices, it seems desperate times call for desperate measures. The move will supposedly reduce our dependence on oil.

Although, interestingly enough, Reuters reported that we might need to purchase larger quantities of this new blend: 

The move will allow Americans to keep buying E15, a gasoline that uses a 15% ethanol blend, from June 1 to Sept. 15. While E15 is only 10 cents cheaper on average and is less “energy dense,” meaning drivers would need to buy more fuel, it should still help lower fuel expenses, they told reporters on a call previewing the announcement.

Biden will supposedly announce this news at an upcoming conference in Iowa. The article also mentions that because this goes against regulations:

The Environmental Protection Agency (EPA) is planning to issue a national emergency waiver closer to June, the officials said.The EPA is also considering additional action to allow for the use of E15 year-round, the White House said.

Now how does this all play into our financials? Well it’ll be a little rough in the months ahead. Russia’s invasion of Ukraine has impacted the global oil industry in ways we will still haven’t yet felt. 

Yesterday afternoon, CNBC published a piece entitled White House says it expects inflation to be ‘extraordinarily elevated’ in new report. This morning, the Labor Department’s latest Consumer Price Index report was released at 8:30 a.m. ET. While I haven’t had a chance to read it just yet, CNBC reported:

White House Press Secretary Jen Psaki said Monday that the Labor Department’s previous report—which showed prices rising at a dramatic rate in February—failed to include the majority of the jump in oil and gas costs caused by the Kremlin’s unprovoked invasion.

I’ll circle back on this topic in tomorrow morning’s blog. Luck favors the prepared. And although this isn’t great news, we all need to be aware of what’s around the bend. 

World According to REITs 

The Daily REITBeat is taking a break for the next day or so, but there is news in the REIT sector. Yahoo! Finance announced yesterday afternoon that Inovalis Real Estate Investment Trust (TSX), a Canadian REIT:

…entered the Spanish real estate market with the purchase of two connected office buildings in Alcobendas, north of Madrid. The high-quality, modern office buildings, with approximately 118,400 SF of leasable space, are fully let to two blue-chip tenants from the aeronautical sector.

This is TSX’s first acquisition in Spain. 

Closer to home, Starwood Property Trust, Inc. (STWD) made the headlines with the purchase of ReNUE Properties’ seven-property affordable housing portfolio for $345 million. According to Multi-Housing News, this is “one of the largest affordable housing transactions in Arizona’s history.” 

The portfolio includes a total of 1,462 units across seven different communities in Glendale, Peoria, Mesa, and downtown Phoenix. I will have to do some more digging, but all in all this looks like an incredibly lucrative investment. 

That’s it for today! But I will be sure to report back on the Consumer Price Index report tomorrow and what it might mean for the REIT sector. 

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