COLD: Yesterday Hedgeye CEO Keith McCullough added Best Idea Short Americold (COLD) to the short side of Investing Ideas. We wanted to also highlight a story in the Old Wall Journal from yesterday regarding Amazon's push to hire +150k seasonal workers in the U.S. ahead of the holiday season, amidst an already VERY tight labor market where retailers are climbing over each other to hire seasonal workers. For comparison this figure is ~50% higher than the +100k Amazon announced in 2020, and comes in addition to a +125k increase in permanent employees and a +40k increase in tech and corporate staff. Amazon is offering an average starting wage of $18/hour along with sign-on bonuses and hourly bonuses for certain shifts. Bringing this back to COLD, the company has already fallen victim to the current extreme disruption in the labor market, both on the top-line (FY21 SSRev outlook cut to -2% to 0% from 0% to +2%) as less product is moving through the cold chain, and now on its own bottom line (SSNOI growth -400 to -600bp lower than revenue growth from 0 to +100bp higher) as labor pressures increase. Labor is ~66% of the cost structure in COLD's same-store warehouse portfolio resulting in well-below-REIT average NOI and EBITDA margins to begin with, and the price increases needed to offset the new labor pressures will only come on a lag from here.
Office Utilization: Kastle Systems released its weekly office utilization tracker for the 7-day period ending 10/13, which showed a +10bp increase in the 10-city average utilization rate that has been tracked since the pandemic began (Figure 1 below). As a reminder this tracks "bodies through turnstiles," and is different than "occupancy" which represents tenant leased/occupied space as a percentage of total square feet. The New York Metro showed the biggest increase at +160bp to 31.2% which is positive for Long Bench names SLG and VNO, while Austin showed the largest decline of -340bp to 47.7% and San Francisco remains at the bottom of the barrel at 25.2%.
AMH: We wanted to share a throw-back video summary HERE on Best Idea Long AMH for new subscribers.
Figure 1: Kastle Back-to-Work Barometer
Source: Kastle Systems
Figure 2: Hedgeye REITs Position Monitor
Figure 3: Hedgeye REITs Sentiment Monitor
Prior Notes:
10.18.21 - REITS DAILY BRIEF | 10.18.21 | (PLD)
10.17.21 - SUNDAY NIGHT REIT READ | 10.17.21 | (PLD, POSITION MONITOR)
10.15.21 - REIT RECAP | 10/15/21 | PLD 3Q21 RESULTS
10.13.21 - REITS DAILY BRIEF | 10.13.21 | (PLD)
10.10.21 - SUNDAY NIGHT REIT READ | 10.10.21 | (POSITION MONITOR UPDATE)
10.8.21 - BLACK BOOK ROUND-UP | AMERCO (UHAL)
10.7.21 - BEST IDEA ROUND-UP | AMERICOLD REALTY TRUST (COLD)
Please e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
