President Biden ordered his cabinet secretaries to “aggressively execute” plans for federal employees to “work more in the office” earlier this month.
Axios reported that about 75% of federal office space is currently sitting empty, despite Biden pledging that “the vast majority of federal workers will again work in-person” in his State of the Union Address almost two years ago.
The federal government lags private businesses, where about 50% of employees are in the office on any given day. Since the start of the year (8 months), the in-office occupancy has been relatively flat in the 45-50% range.
(Parking lots at both of the MegaCorps that I worked for continue to be largely empty as they have apparently continued to let employees hide out at home).
If the current occupancy rates represent “the new normal”, it has significant implications for not only workers & employers, but also for real estate lenders & investors. Reuters reported last week that there may be as much as $800B in necessary write-offs coming against the $6.2T in commercial real estate values.
I’m thankful that we’ve avoided investing in that sector. One friend of mine got stung during the pandemic after investing a big sum in movie theater real estate projects. Another friend did well owning a storage garage business when everyone was buying boats and ATVs they needed to store somewhere safe.
The pandemic was certainly not on many investment bingo cards until it was suddenly here. Did you get caught in any of this investment mess?
Image: MidJourney Bot AI
MrFireStation 
I used to invest in Regional Amusement Parks and Disney. My investing theory was learned from a man who I consider one of the best business managers I ever worked for at a tourist attraction in Wisconsin Dells. I worked for the company during my first three summers after graduating high school and it paid the entirety of my first three years of college.
The excellent business manager told me that Wisconsin Dells was recession proof. During bad economic times, people who normally go to more expensive vacations such as Hawaii, downsize their vacations and go to Wisconsin Dells instead. During good economic times, people who have a hard time affording a vacation get to go to Wisconsin Dells. This was in the late 70s, when Jimmy Carter was President, so the country was definitely experiencing bad economic times.
I had two long term holdings in Cedar Fair ticker FUN and Disney. Both stopped paying dividends in early 2020. I had just retired in 2020, so losing the dividends really hurt. Cedar Fair thought that Covid-19 lockdowns would be short lived (I did too from reading up on the results of the Crystal Princess Cruise ship outbreak).
Cedar Fair suspended their dividend of .935 per quarter after March 2020 and started paying .3 per quarter effective August 30, 2022. Disney still has not reestablished paying a dividend. Instead of dividends, they started promising exciting future growth based on its new startup streaming business that ‘required’ significant investment. Disney is really looking bad these days. Conservative parents which make up about half the population and tend to have larger families are boycotting its amusement parks, streaming, and movies. Disney’s legacy television stations are an albatross because people are dumping the cable and satellite packages, which means no more carriage fees for channels that cannot make it on ad revenue alone.
I sold both stocks soon after they cut their dividends and picked up some other bargains. I ended 2020 with $1,000 more in monthly dividend income than I started the year with. This shows why you want to have a diverse basket of dividend paying stocks in diverse industries. You also want to pay close attention to changes in business conditions for your individual holdings. As a parting comment the well managed business that paid for my first three years in college, just closed its doors a year ago, after being in business for 70 years.
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Yes – the whole travel & hospitality business has been hit hard. I’m familiar with Cedar Fair as one of their parks is here in the Twin Cities, Valley Fair. Their stock looks like it is still sitting down about 20-25% versus the pre-pandemic 2019/2020. I’m not sure about their attendance, but your Wisconsin Dell’s bosses’ insightful read of regional tourism seems to make sense.
Disney’s woes are well documented, but the theme park revenues & profits are actually quite healthy. They are up about 15% from the pre-pandemic period (over the last 7 quarters). It’s the collapse of the TV/cable/movie theater model and high cost of building streaming that’s really hurting them. It doesn’t help that they only have 3/top 10 movies this year either.
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I just stopped paying affirmative action for woke television channels such as CNN and MSNBC by cancelling my satellite television service. The monthly savings are $83 monthly or $996 annually. The satellite television service helped my wife and I make the transition to streaming when they stopped carrying our favorite news channel. We found that we could pay $5 monthly directly for the news channel and view their shows without commercials or having to schedule recording. There is plenty of other content available a la carte without commercials if you go direct to them or buy through Amazon Prime Video.
Our final package will be an off-air antenna with a planned Channels based DVR, Amazon Prime Video, One America News, Acorn and AMC+, Paramount+ and Netflix for $45 per month. We will probably cycle AMC+, Paramount+, and Netflix and others when they carry content we like. We were already subscribing to the streaming channels, so I am considering my savings going forward as $996 per year.
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Take a look at the SuperBox (an Android box). It’s $300 on Amazon. I just bought one and it’s amazing!
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I have tended to stay clear of investments in travel and tourism stocks. Too volatile and subject to the whims of the fickle consumer. Disney in theme parks, hotels, streaming, sports (ESPN) and movies have gotten way overpriced, bloated with expensive executives and lack of detail to the bottom line.
Interesting read lately on small shopping plazas in suburbs due to work from home crowds. What is interesting is that high end malls are doing well as they are entertainment venues. I had said for many years that the REIT funded shopping venues from California to the Midwest all looked the same, Target, Dicks, Olive Garden etc. I do think unique downtown shopping and dining entertainment areas are the future and traditional malls will transition to apartment, medical and small retail enclaves but much change in zoning will need to happen
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We have 8 big indoor malls in the Twin Cities, including the nation’s first (Southdale) and current biggest (Mall of America). Some are doing phenomenally well and some are nearly empty. I agree that the ones that are the most unique/upscale/entertainment focused seem to be the ones succeeding right now. Some of them have also brought residential/hotels onto their sites.
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You are spot on when it comes to Disney’s former CEO, Bob Chapek paid himself a $32.5 Million bonus at the end of the year after stopping dividend payments that retirees such as myself live on. The same dynamics were not in place for regional attractions. The unprecedented Covid-19 shutdown caused the business that paid a good portion of my way through college to close its doors and liquidate its real estate during what should have been its 75th Anniversary. The owner / operator was a good guy who lives a comfortable life, but also measured his success by how many he helped get through college and how many met and married their future spouse working there.
We have a local Mall Operator, Westfield that has been doing a great job reinventing their properties to deal with the churn in tenants. They did a great job renovating Topanga Plaza by replacing churned tenants such a Sears with restaurants, movie theaters, a gym, and a Costco. They took some of their property out of operation by selling it to the LA Rams to be used as an HQ and training facility, plus some apartments. Here is where it gets sketchy. The weekend before last, Topanga Plaza had a smash and grab mob numbering around 50 storm Nordstroms and robbed it in broad daylight. This was bad enough that it made national news. This type of extra-curricular was so bad at Westfield’s San Francisco location that Westfield simply walked away from the property (each is set up as a separate LLC) and left the mortgage holders holding the bag. If this isn’t stopped, it will lead to urban blight.
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Klaus, don’t get me started on large corporations setting up their businesses as separate LLCs. They like to claim that they are the big secure entity when getting a deal but then walk away when the small operating unit doesn’t work out as intended. That along with the preferential depreciation tax treatment such that the same property gets depreciated multiple times yet because the seller buys other properties via 1031 exchanges they skirt income taxes.
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It would have been their 70th anniversary, if I’m thinking of the right Wisconsin Dells institution. One that I went to when I was a kid with my grandparents- and took my son with his grandparents.
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You were right about Tommy Bartlett’s Water Show. I found an archived article in the Milwaukee Journal. Fun place to work for a college kid during the summer.
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They put on a great show there. Beautiful spot on Lake Delton had to be worth a lot too $$$.
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