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Property taxes and the dark store theory

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This is a continuation of my piece from last week on Property taxes. I suspect that this will be an issue of no small concern to property investors, appraisers, and financial advisors in 2021 and beyond, not just as a result of COVID, but certainly exacerbated by COVID.

I was recently looking at a 10,000 square foot stand-alone commercial building — an “out-parcel” in a shopping center. For a variety of reasons (COVID being only one of them) this shopping center has fallen on hard times, and the tenant (a big national chain) has declared bankruptcy. This store, and nearly all of the properties near it, are vacant, and there is little forecast that this will change in the near future.

So, the total taxable value of the property back when everything was hunky-dory was about $2.2 million. Today, the total taxable value is… you guessed it, $2.2 million. The question which perplexes property owners, appraisers, and tax assessors is the valuation of these “dark stores”. Do they get valued at their highest-and-best use (even though they are vacant) or as some value-in-use, recognizing the current economic condition. More to the point, even when these properties are up-and-running, should the value be reflective of the current contract rent or some other theory of valuation?

As an aside, about 30 years ago, I published a paper on the impact of the failure of anchor tenants in strip shopping centers. The original tenants are typically very stable, boring grocery stores. The other tenants, who on a per-square-foot basis are usually much more profitable to the landlord, draw business as a result of proximity to the grocery anchor. After one fails or moves out, all too often, the landlords scramble around for a substitute, picking up an anchor tenant that may be very risky and/or fails to provide traffic to the other tenants. The result is often a financial failure of the whole shopping center.

Back in February, 2017, the Texas Comptroller published a piece on the Dark Story Theory and how it impacts property tax assessments. There is a lot more written on the subject, and a full literature review would be beyond the scope of what I hope to accomplish today. This theory first gained purchase with the big-box landlords, but it is now the theory du jour with many tax advisors in the commercial sector. In short, the Dark Story Theory holds that a big-box retailer really only has value due to the unique tenant. As such, these properties should always be valued as if they are vacant (or “dark”), because these locations would be difficult to sell to subsequent buyers without the big-box tenant. The Texas Comptroller article notes that the most vigorous proponent of this theory in that state, at least in 2017, was Lowes Home Improvements Stores, with 141 operating locations in that state. In Texas, Bexar County alone estimates it would cost the schools $850 million per year in property tax revenues if this theory was to succeed. As of 2017, Bexar County had spent $300,000 on Lowe’s tax appeals.

Note that the definition of market value for commercial properties, for tax purposes, may be somewhat different than the definition used for a simple home mortgage. Texas law, for example, taxes property at its current use, including any rents it generates. Note that many dark stores are still generating rent for the landlords due to the complex build-and-lease-back provisions in the original development.

This is not an issue limited to Texas. A study out of the U. North Carolina in 2018 showed that this theory has caught on with commercial property owners throughout the U.S., and that the reductions sought often amount to 50% or more of the otherwise assessed value. With millions of dollars in annual tax expense at stake per building, the landlords can afford to hire the best talent and litigate these appeals. Courts are increasingly finding merit with the landlords’ arguments. In 2008, the Wisconsin Supreme Court held in  Walgreen Co. v. City of Madison, 311 Wis. 2d 158 (2008), that the market value for tax purposes must be based on market rents rather than contract rents, because the latter, “artificially increased sales prices cause by unusual financing arrangements[.]” The Walgreens decision has resulted in over 140 property tax appeals in that state alone. A bill to effectively reverse this decision failed in the Wisconsin legislature in 2018.

In Indiana, the state tax court was persuaded by appraisers and attorneys for Kohl’s to rely on sales data from nine “dark box” retail stores. This was effectively upheld by the State’s Supreme Court. (See Howard Cty. Assessor v. Kohl’s Indiana LP, 57 N.E.3d 913, Ind. T.C. 2016, review denied, 86 N.E.3d 171). In North Carolina, the Lowes Store in Kernersville (Forsythe County) was valued at $16 million. Using the dark story theory, Lowes appealed with a $6 million valuation, which was upheld by the Property Tax commission. (Matter of Lowe’s Home Centers, LLC, COA17-220, 2018 WL 708657, N.C. Ct. App. Feb. 6, 2018)

With the implosion of certain sectors of commercial real estate becoming more of a reality in the COVID recession, we can surmise that these theories will be more vigorously litigated in the coming months. There is very real money at stake on both sides of this issue.

Written by johnkilpatrick

January 11, 2021 at 9:26 am

Posted in Uncategorized

Property taxes on the rise

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Fair and Equitable is the monthly journal of the International Association of Assessing Officers, the primary professional group for tax assessors around the U.S. In the current edition, there is a striking article about rising property taxes due to COVID. In summary, it’s not very good news.

In most towns, cities, and counties, one of the primary sources of operating budgets is property taxes. However, many, and perhaps most cities also rely on sales taxes, tourism taxes, and sometimes even local option income taxes. All of these latter sources of revenues have gone in the tank since the onset of the COVID recession. A study out of the U. of Wisconsin indicates that the shortfall for 2020 is $165 Billion across all cities. Many cities which are highly dependent on tourism — Nashville, New Orleans, and Las Vegas immediately come to mind — are particularly hard-hit.

Many states have hard caps in property tax increases, although some do provide exceptions for emergencies. Houston, for example, has an annual tax increase limit of 3.5%, but may exceed this in the case of declared emergencies.

For the uninitiated, the property tax bill you receive every year is the product of two things — the property ‘assessment’ (determined by the local property assessor or appraiser) and the ‘tax rate’ (sometimes somewhat archaically called ‘millage’), set by the taxing authority, such as the city, county, or school district. This gets particularly cumbersome during recessions because, arguably, the assessed values of some properties, particularly in this case commercial properties (such as restaurants, bars, or such) may decrease even as the local taxing authority needs to raise more money. Hence, to get a 5% increase in tax revenues when some properties are declining in value, the local county council may need to actually raise the tax rates by 10% or 20%. Nashville, for example, just raised tax rates by 34%. Notably, Tennessee has been historically less dependent on property taxes as a source of revenue, with the average tax bill in that state about 40% below the national average. As a result, Tennessee tax payers may feel some very real sticker shock in 2021.

What’s more, if some properties go down in value more than others (as is happening now), the burden of higher taxes falls disproportionally on property owners who are still solvent.

Property owners are advised to take a very serious look at tax assessments in light of the potential declines in property values. Some assessors are trying to get ahead of the game. For example, New Orlean’s assessor Erroll Williams has made pro-active, across the board cuts in the values of hotels and restaurants by as much as 57%. Cook County, Illinois, Assessor Fritz Kaegi is in the midst of a re-evaluation of every commercial property in his jurisdiction.

All in all, a phone call to your friendly, neighborhood real estate appraiser is probably warranted. If and as we can be of any assistance, please let me know.

John A. Kilpatrick, Ph.D., MAI —

Written by johnkilpatrick

January 8, 2021 at 1:26 pm

Posted in Uncategorized

ACCRE LLC Report, December, 2020

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Let’s all start by admitting that the S&P 500 has been on a tear this year. If you had put a dollar in an S&P Index Fund on March 31, it would have been worth $$1.38 when you sang Aude Lang Sine last week. Personally, I hope it keeps going! ACCRE is designed in no small part to hold value during market swings, to outperform REITs in general, and to attenuate a well-diversified portfolio. It did all of those this year, and particularly in December. Let’s get down to the basics.

I use January 31 as a benchmark date — that was nominally the beginning of the COVID bear market. As you can see (below) ACCRE did very well compared both to the broad market and to the S&P Property Index. Indeed, but for some market reversals in the fall, we’d be well ahead today. December was a great month for us, and we’re back in the lead against both benchmarks. A dollar invested in ACCRE at the inception would be worth $1.65 today, compared to $1.59 for that same dollar in the S&P 500 and $1.19 in the Property Index.

We feel like we’re well positioned for the coming year, and in fact we were up on the first day of trading, today, while the main market indices all tanked.

One important measure is our Sharpes Index, which looks at excess returns (returns in excess of what we would have earned in treasury bills) adjusted for risk (volatility — measured by the standard deviation of those returns). An additional measure is the correlation with the S&P 500. We generally measure this over the life of the fund, and it hovers around +50%, which is where we want it to be. However, in December, this hit about +15%, suggesting that the market may be looking at real estate very differently from other securities.

S&P 500
Average Daily Excess Return0.0424%
Standard Deviation1.3215%
Sharpes Ratio3.2034%
Average Daily Excess Return0.0448%
Standard Deviation1.1975%
Sharpes Ratio3.7398%
Correlation (overall)52.3091%
Correlation (December)14.6899%
ACCRE Metrics as of December 31, 2020

Well-curated real estate continues to be viewed as a safe haven, with very real value opportunities when and as this recession is over. As always, this in no way constitutes investment advice, and your own financial investments should be made in consultation with appropriate advisors.

If we can answer any other questions, or be of any assistance, please let us know.

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

January 4, 2021 at 3:24 pm

Posted in Uncategorized

Back rent problem — take 2

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In my previous post, I talked about the accumulated “back rent” problem stemming from the COVID recession. It’s a growing problem, and one which the newly signed COVID relief bill only partially addresses. Here’s what we know today about rental assistance forthcoming.

I would stress at the onset that state and local agencies will be the conduits for this relief, as was done in the previous CARES Act. Notably, it took weeks or months for many of these agencies to spin-up the actual relief payments. Hopefully they have some lessons learned from earlier this year, but don’t expect relief to come in the next few days.

Relief payments must be used to fund the following:

  • Rent and rental arrears
  • Utilities and other home energy expenses, but current and in arrears
  • Other pandemic-related housing expenses

Assistance may continue for up to 12 months, and in some circumstances for up to 15 months if situations warrant. Eligible tenant households must meet all of the following three criteria:

  1. An individual in the household has qualified for unemployment benefits or the household has experienced an income reduction, experienced significant pandemic-related costs, or can document other pandemic-related financial hardships. (Note: applicants must attest to this in writing.)
  2. One or more individuals in the household must demonstrate a risk of experiencing homelessness or other housing instability, such as a past-due utility or eviction notice or unsafe or unhealthy living conditions.
  3. The household income is less than or equal to 80% of the area median income, based either on total income for the year 2020 or confirmed monthly income at the time of the application.

Priorities will be given to households with income less than 50% of the area median and households where one or more persons have been unemployed for 90 days or more. Landlords may provide application assistance but will need to obtain the signature of the tenant, provide documentation of the application to the tenant for their records, and use any payments for current or past-due rent.

As noted, the conduit for all of this will be state and local government agencies and tribal units. Those agencies will be responsible for collecting and reporting certain documentation to the U.S. Treasury Department, including the number of eligible households receiving payments and average payments per household, the types of assistance provided, the acceptance rates, the average number of payments covered by the assistance, and the household income levels by median income category (e.g. — less than 30%, 30% to 50%, and 50% to 80%).

We’re all waiting to see how this pans out, and quite obviously this will not cure the problem. However, it is clearly a step in the right direction. Please stay in touch — we look forward to hearing from you all.

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

December 29, 2020 at 8:43 am

Posted in Uncategorized

How bad is the back rent problem?

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It is axiomatic that landlords do NOT want vacant space, and coupled with eviction moratoriums there is a growing backlog of unpaid rent, particularly by small businesses and residential tenants. Anecdotally, the problem is widespread and growing, but just how big is it? Experts differ, but generally agree it is huge and portends a huge humanitarian problem in 2021.

One of the most quoted experts on the topic is Mark Zandi, chief economist at Moody’s. He estimates that 11.4 million renters owe an average of $6,000 in back rent. Add to that late fees on utilities and such, and we’re probably looking at a $70 Billion problem, more or less. Most of this has accrued since the CARES Act expired last summer.

Even back in September, the overdue rent bill had already reached an estimated $34 Billion, according to a study commissioned by the National Council of State Housing Agencies. Note that this problem is not just limited to renters — Since August, the FHA mortgage delinquencies have been setting new records, at 15.6% on September 30th, the highest rate since 1979. Note that the peak during the Great Recession was between 14% and 15%. The Mortgage Bankers Association is tracking forbearances among lenders, and estimated that 5.5% of mortgages, or 2.7 million, were in some sort of forbearance in November. The delinquency rate in September was 7.6%, and while this is down from 8% in April, it is dangerously close to the 10% peak seen in 2009/10. The Credit Union Trends report released in late November forecasted delinquencies to “broadly rise in the fourth quarter and charge-offs to rise in the first quarter” of 2021.

The economy is definitely bifurcated right now. The upper tier has seen the value of their stock portfolios grow by well over $1 Trillion this year, but as Zandi notes, the renter population is at the bottom tier of the economy. They’ve already borrowed as much as they can. Over the weekend, the President signed the COVID relief package, but while the eviction moratorium continues, back rents continue to accrue. One recent study suggested that at present, as many as 14 million rental households are in arrears, and this number will clearly get worse over the winter. Another, issued by the National Low Income Housing Coalition, put this number at 6.7 million. The Census Bureau’s latest Housing Pulse Survey (from November) indicated that 11.6 million people would not be able to pay their rent or mortgage payment in December. Whatever the final number, at some point, the piper will need to be paid.

Notably, the bill signed yesterday includes $25 Billion in emergency rental assistance. Exactly how this will be distributed, and how much of the rental backlog this will actually assuage, will be seen in the coming days. Notably, when the CARES Act included such assistance, it took some state housing finance agencies months to actually enable rental aid programs.

Again, anecdotally, landlords have shown very real forbearance in this area. I would note that the rental market, ranging from single family housing to large apartments, are generally ultimately owned by individual investors. At the lower end of the spectrum (rental houses, for example), individual investors usually directly own and manage these properties. At the upper end, REITs or Trusts may own the properties, but the rental income flows to investors or their retirement accounts. Further, rental income employs property managers, maintenance people, and a host of other service providers. In short, this is a problem that reverberates across many sectors of the economy.

Written by johnkilpatrick

December 28, 2020 at 10:04 am

Posted in Uncategorized

So what do we know about COVID relief?

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I spoke with some folks “in the know” this morning, and the details are still unfolding. The real estate sector should pay very close attention to this, as so many aspects of the relief bill affect it.

First, what do we think we know? There are apparently 6 categories of aid in this package:

Supplemental Employment InsuranceWeekly payments of $300 (half of what was provided in the original CARES Act) for up to 11 weeks
Direct PaymentsOne time payment of $600 for individuals making under $75,000 and for each dependent child (again, half of the CARES Act)
Small Business ReliefPPP loans of $284B (about $100B less than CARES) plus $15B specially allocated to theaters and live entertainment venues
Rental Assistance$25 Billion, and the national moratorium on evictions extended until Jan 31
Vaccine Assistance$48 Billion for healthcare, and $20 Billion for vaccine distribution
Education$82 Billion for local schools, colleges, & child care plus $13 Billion for supplemental nutrition programs
Thanks to my friends at Marcus and Millichap for much of this information.

It is axiomatic that the lowest wage earners, who have generally been hit the worst by this recession, are most likely to be renters. Further, a large portion of rental properties are owned by small real estate investors. Hence, there is a bit of a two-edged sword here, in that some parts of this may flow directly to those landlords who are often retirees or others dependent on rent collection. From a practical perspective, the eviction moratorium isn’t nearly as powerful as it seems, because so many landlords would rather keep a non-paying tenant in place than to go thru the cost of eviction only to have an empty property.

It’s far too early to even conjecture as to how much (or little) impact this will have. Many businesses kept their doors open only due to the CARES Act PPP loans, but all too many of those have now shuttered permanently. For example, CNN Business reported last week that 10,000 restaurants have closed for good in the past 3 months. Every one of those restaurants had a landlord who is now not getting paid. Back in September, YELP reported that 163,735 small businesses that they track had shut their doors, and that almost 98,000 of those were projected to be permanent closings. Of course, large chain bankruptcies and closures are well publicized.

One intriguing study from suggests that apartment and rental housing vacancies vary widely according to location — inner city versus suburbs. Apparently, major cities are seeing an uptick in apartment vacancies (Manhattan’s has tripled), but suburban vacancy rates are actually down, suggesting renters are fleeing congested cities. Indeed, non-metro area vacancy rates are also down.

By the way, this is usually the week I re-visit our REIT Fund-of-Funds, ACCRE LLC, and report on the S&P correlations and other diversification benchmarks. Going forward, I’m going to consolidate the two ACCRE reports into one at the beginning of each month. This mid-month blog post will now be just about economic and real estate issues.

This is also my last post (I think!) before the Christmas holiday. All of us at Greenfield hope you and yours are enjoying a safe holiday season. I know we’ve lost all too many friends and colleagues this year, and we look forward to getting COVID under control in the very near future. Best wishes,

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

December 22, 2020 at 3:51 pm

Posted in Uncategorized

Trophy Property and the Pandemic

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I spend a significant amount of my time at two somewhat opposite ends of the real estate spectrum – “damaged” property (particularly environmentally damaged, such as brownfields) and “trophy” property. Neither of these sectors behave like “normal” real estate even in “normal” times. Damaged property may eventually be remediated, converted, or in some way improved into the normal market. Ironically, demand for some kinds of damaged property, such as foreclosures, may actually improve during recessions or other “normal” market disruptions.

Trophy property is typically any property in the top 2.5% of its subclass. The market for such properties transcends normal markets for that subclass. Consider all of the office buildings in a given city — even New York or London. Investments in Class C and B offices may appeal to local buyers, while Class A properties will typically be marketed to trusts, REITs, pension plans, or the like. However, at the very top — the “named” properties which really anchor the city as a whole — the investment market may be entities or individuals for whom the trophy investment will provide halo effects or collectable effects for the rest of the portfolio. Normal metrics — income or cash/on/cash rates of return and such — may not apply to trophy investments. Much like a fine painting or other object d’art, an investor may want to own a trophy property simply for the sake of owning it. Of course, it doesn’t hurt that over long periods of time, trophy real estate has a great history of maintaining and improving value. It doesn’t hurt that trophy property investors often have very long time horizons, perhaps even multi-generational.

So, how is trophy property faring during this pandemic-induced recession? As with any good analysis, it may be too early to tell, but some anecdotal info coming our way suggests that trophy investors look at this recession as a real opportunity to pick some low-hanging fruit. One case in point was the acquisition of the Viceroy L’Ermitage Beverly Hills Hotel in October by EOS Investors. Admittedly, this property had a “damaged” component — the property had been taken over by the U.S. Government as a result of prosecution of an international money laundering case. Further, hotels in general remain strained, with many transactions falling into the “damage” category. However, EOS ended up paying $100 million for the 116-room trophy property, nearly $1 million per room, a figure that bears almost no connection to the realities of the hospitality market today.

At the other corner of the country, Manhattan trophy residences recorded one of their best weeks of the year in late October, albeit with a fairly large inventory of top-tier properties coming on the market. As an example, a 30,000 square foot, 5-story home on West 11th Street in Greenwich Village sold this month for $45 million. Originally listed for $49.5 million in January, 2019, this was the second highest price residential sale in New York City this year, and the highest since the pandemic began. Another New York City trophy residence sale in late October was a Perry Street (Tribeca) 5-bedroom duplex, with a private pool, for $20 million. According to one source, the average sale-price-to-list-price discount for Manhattan trophy residences stands at 11%, and the average time on the market in this sector is about 2 years. The last week of October showed 5 New York City contracts at $10 million or more.

Finally, in the middle of the continent, trophy ranches continue to sell to investors looking for recreation, retirement, or just pure collection purposes. Recent top-tier sales include the Pole Mountain Ranch in Wyoming (2,300 acres, 8,000 square foot main home, $8 million), a vacant pond-side lot at the Elk Creek Ranch in Colorado ($1.1 million for 2,850 vacant acres), and the Winding River Ranch in Wyoming (376 acres, 1.5 miles of Platt River frontage, custom built 5-bedroom lodge, for $2.2 million).

In short, there is some disruption right now in the trophy property market, as many properties seem to be coming on the market and inventories are strong. However, buyers with cash and/or resources are definitely in the market, and are looking to cherry-pick trophies that come available.

Written by johnkilpatrick

December 11, 2020 at 10:01 am

Posted in Uncategorized


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This week, I sat thru a great presentation (virtual, of course) by John Chang, the Director of Research at Marcus and Millichap. Like any research report, it has to be taken in the context of all of the other information out there. However, I get a deluge of this stuff, and I thought Chang’s work on the subject was quite good.

He starts out by noting what we all pretty much know — four real estate subsectors were hit the hardest this year: Hotels, Senior Housing, Sit-Down Restaurants, and Experiential Retail. Three sub-sectors actually did quite well: Industrial (and I would note data-centers in particular), Self-Storage, and “Necessity” retail. Later in his presentation, he points out that Offices and Housing (I would note with the exception of student housing) also held onto some core value.

Chang comments — and I concur — that never in our memories have we seen a real estate recession that was so geographically broad and across so many sub-sectors. For example, the 2008/10 debacle was primarily focused on housing and the mortgage backed securities market, and while the entire real estate securities market declined, it was more related to correlations with the broader market than with underlying real estate fundamentals. Today, however, we’re seeing some very real systemic changes throughout the real estate economy.

So, what does 2021 look like? The first half of the year is, at best, a continuation of where we are right now. Small businesses, and the real estate that supports those businesses, are hanging on by fingernails. Chang suggests that a recovery in the 2nd half of 2021 depends on three variables:

  1. The size and quality of the next recovery package. In his opinion — and I agree — the mid-sized package would be in the range of $1.5 Trillion, and would include expanded unemployment, PPP expansion for small businesses, housing assistance, assistance for state and local governments, public health assistance, and provisions for vaccine distribution. If the next stimulus package is smaller than this, then business and real estate in the U.S. will face considerable headwinds.
  2. “How long” will a medical solution require? If a medical solution can be rolled out by mid-2021, then a 2nd half recovery may be in the offing. However, time is not our friend, and there will be continued attrition until a solution is in place.
  3. “How effective” will a medical solution be? There will undoubtedly be setbacks. How well will we overcome the medical road blocks along the way?

If all of this come to fruition in a timely fashion, then a recovery may come along slowly in the 2nd half. The “down” sectors, particularly tourism related and in regular tourist destinations like Orlando and Las Vegas, may see a slow recovery start up by the end of 2021. Other down sectors may see some light at the end of the tunnel. Conversely, sectors which enjoyed the greatest benefit during Covid (data centers, for example) may lag the market. Offices and housing should continue to hold their own.

Again, I don’t necessarily agree with everything Mr. Chang said, but his opinions are some of the best I’ve seen, and I wanted to share this with you all. If you have any questions, please don’t hesitate to reach out.

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

December 6, 2020 at 12:05 pm

Posted in Uncategorized

ACCRE, November, 2020

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The chart says it all — the past 3 months have been the worst stretch in the history of ACCRE. Ironically, it has been a very good period for the S&P and for REITs and real estate as a whole. Why, you ask? Simply put, we had positions adverse to student housing and other holdings that were laggards due to COVID, but the good news of November — which is good news for us all — caught us by surprise. Indeed, all of our losses happened in just a few days mid-month.

It is axiomatic not to be too aggressive in clawing back losses. We made a small portfolio adjustment, and December is already looking positive. We’ll probably take on some other positions in the coming days. Note that one of our principal strategies is to stay sane with our portfolio — historically, we’ve only beaten the S&P 50% of the time, on a month-to-month basis. However, we try to stay away from big market moves, enjoying the upside without suffering big bear market moves.

As always, our subscribers receive same-day notification of any portfolio changes. Best wishes to you all — we hope you had a great Thanksgiving, and you’re all looking forward to a great holiday season.

Written by johnkilpatrick

December 4, 2020 at 4:33 pm

Posted in Uncategorized

ACCRE Mid-Month Report

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It’s been a mixed-bag for REITs this month. While many sectors continue to lag, short positions can be dangerous. The market is hungry for good news, and leaps at anything tossed in the water. Case in point, we saw one REIT with terrible earnings projections, but the market price rebounded when Funds from Operations (FFO) came in “less bad” than previously forecasted. Another REIT has a spread of analysts targets of over 100% from bottom to top, proving that optimism has a home in the real estate sector.

This month, I’m going to provide both LAST month’s stats on ACCRE as well as this month, just to show what a difference a month makes:

September, 2020October 2020
S&P 500
Average Daily Excess Return0.0327%0.0290%
Standard Deviation1.3451%1.3429%
Sharpe Ratio2.4315%2.1576%
Average Daily Excess Return0.0455%0.0426%
Standard Deviation1.1540%1.1520%
Sharpe Ratio3.9436%3.6984%
Correlation (overall)56.4666%55.8996%
Correlation (monthly)73.4120%57.0514%
ACCRE Metrics as of October 31, 2020

ACCRE continues to out perform the S&P, both on an unadjusted (Average Daily Excess Returns) and a risk-adjusted (Sharpe Ratio) basis, the correlation between ACCRE and the S&P really whip-sawed in October. In the previous month, we had a very tight correlation (73%) which is actually higher than we want it. A correlation in the 50’s serves our two-pronged goal of outperforming the benchmarks in the long run and providing diversification for a mixed portfolio.

Our private newsletter subscribers received some trade alerts today, and there will probably be more soon. This market has a great deal of volatility, as well as election-year and end-of-year roiling. We avoid run-and-gun trading (REITs really don’t day-trade well!) but the market we see right now requires some close inspection.

As always, if you have any questions or comments, please let me know.

John A. Kilpatrick, Ph.D. —

Written by johnkilpatrick

November 18, 2020 at 4:06 pm

Posted in Uncategorized

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