Amazon and The Modern REIT
By: Zebra Finance
Tags: Consumerism, Stocks, Reit, Amazon, Investing

In the 1980’s the social place to be was the local “fast food joint”. This is where you would go to consume and chill, a skill which is given at birth in America :). The 80s were a time of drive-in movie theaters, rollerblade fast food spots, and Avon make-up products referrals. Some things never change, and one of those things is a zebras’ chart.

They say the bond “guys” are the smartest guys in the room. Well the smartest guys in the room, don't think that we are headed towards an era of inflation. Yields are so sought after in the fixed income space that a percent margin between U.S debt, European debt, or Japanese debt will open flood gates of investment from foreign firms. Allowing firms like AT& T to raise more Debt than ever while also paying their lowest coupon rate ever. This raises the question, where can one find yield. The simple answer is Return on Equity.

Not too long ago the market trade was long E-commerce and short retail that has turned into long WFH stocks and short cyclical. With E-commerce clearly winning over the hearts and minds of consumers who are stuck at home. This allows for a new S-curve to take place. One that is beloved to millennials/gen z ers (or I like to call them, the Billie Eilish generation) is life experiences.

LIFESTYLE / EXPERIENCE

The legendary investor Peter Lynch encouraged investors to beat Wall Street institutional investors by investing in what they know. He mentions that he made 15X his money in Dunkin Donuts, he describes that he can simply walk in, try the food, see others there, prescribing this experience a way to could really get a pulse on the health of the corporation. This type of investing helps retail investors understand what they own and reinforcing their strong conviction when the market is teetering between Rationality/Irrationality, Fundamentals/Technicals.- Peter Lynch the original diamond hands.

When we take a look at the American strip mall today we can offer investors insightful market research that Mr.Lych argues can beat Wall Street. A brief drive through my local NJ highway and the market quickly shows its hand. An endless series of fitness gyms, make-up brands, Fast and Fast-Casual options, deep discount dollar stores, and multi-purpose centers like tutoring, daycare, swim school. Operational business structures that can survive the wrath of Amazon.

These companies are revolutionizing the REIT space, utilizing the low-interest era to scale up to a national level. Allowing their franchisees ( not all cases) to hold the lease risk!!! While they collect a high margin relative to the Interest rate through their respective royalties, rent on their real estate, and sometimes margin on the COG provided. This model has previously been executed in the Hotel and Fast Food space, however, limited to a group of brand names. I argue this form of total return equity wrapper is not only tax-efficient by not forcing investors to pay gains on dividends(some do)but it will continue to grow when 1) they hit national/ global scale https://www.youtube.com/watch?v=ckbfS99N6jY 2) Interest rates remain low 3) generation of Millenials and Gen Z consumers reach peak earnings.

CAPTURED VIA https://magazine.wharton.upenn.edu/issues/anniversary-issue/stock-superstar-who-beat-the-street-peter-s-lynch-wg68/

Buy what you know :) the simple Lynchian advice has proven to be timeless, as the roller blades turn into drive-thru’s, Avon referrals turn in salons /make-up/skincare stores, and movie theaters turn into fitness centers/ghost kitchens. As one door closes another opens another zebra never changes …….