REIT Chat

This is set up for those wanting to chat about Real Estate Investment Trusts (REITs).

Try to keep this chat line open for REIT discussions–only rule is to leave politics aside.

68 thoughts on “REIT Chat”

  1. NRZ is paying preferred dividends this quarter. Slashing common dividend by 90%. This is good news though common holders won’t see it that way.

    CIM issued a positive statement saying they are undervalued. sounds good but somewhat meaningless.

    NLY and CIM preferred dividend pay date.
    AGNC preferred ex-div date. Some others too if they haven’t been suspended.

    1. Martin-
      A agree with your read but as a holder both of the preferred and the common, I’m not to up-tight about the reduction in the common for now. I rather see the company have the ability to get through the next three months than get a full payment. We have to see how this pays out. From Ti’m’s mriet table it appears that two of the preferred are up nicely . SC

  2. Bad news from NYMT last night:

    New York Mortgage Trust, Inc. (NYMT) (the “Company”) announced today that due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus, the Company and its subsidiaries (the “Company”) have received margin calls from repurchase agreement financing counterparties over the past week. Through Friday March 20, 2020, the Company timely met all margin calls received. However, due to the continued margin calls received for March 23, 2020, the Company has notified its financing counterparties that it does not expect to fund the existing and anticipated future margin calls under its financing arrangements in the near term.

  3. I don’t know if anybody is making arbitrage trades in this crash besides me. If you plan to hold REIT preferreds through the crash I highly recommend it. Price movement is so wild there’s several REIT’s I traded issues back and forth 2 or 3 times today for 5-10% profit. Nothing to brag about when they’re down 40%. But if they survive then those trades eventually pay off, and for now it offsets some of the loss.

    Today AGNCO topped AGNCN in price, and later dropped below AGNCP (swap O for N then swap P for O). CIM-B and CIM-D flipflopped all day long with me swapping back and forth between them. There’s also NLY action and NRZ action. If you intend to hold then by all means grab some of the free money to help offset your losses.

    1. For everyone, this may explain some things in case you hadn’t already seen it, regarding the slaughter in the mREIT space. Seems to mention AGNC and Two Harbors amongst others in the Dow Jones article

      “One spark for the selloff, according to Keefe, Bruyette & Woods Inc. research, was the announcement by UBS Group AG that it was closing down two exchange-traded notes tied to mortgage REITs. They were shut down because of requirements that they redeem shares once their value falls below a certain threshold, according to UBS.

      Still, “today’s performance appears more overdone,” relative to the small size of the UBS notes, said KBW analyst Melissa Roberts in a research report.

      Executives say the sector is still attractive and stands to rebound once the market turmoil ends. “As the dust settles, we expect this to be an incredibly attractive time for our business model,” said David Finkelstein, chief executive at Annaly, in a call with investors on Monday.”

  4. FYI- for any investors that like the REIT preferred sector, I have an account at Schwab and they allow you to screen REIT preferreds. This weekend I’ll be looking at some selections to see if there are any values out there at the present time. It’s pretty easy to use and the screening criteria has been very helpful to me in the past. There are some decent values out there at the present time, but my schedule is pretty full until April 15th. Perhaps I will write again on SA as time allows after that date.

    1. I look forward to your list but it could be out of date 10 minutes after it’s published. Price movements are too wild. This whipsaw action is drowning out my usual analysis. I’ve been making trades this week but it feels like flying blind.
      There’s plenty of values if the crash has run its course. There’s no values if we have a long way to go.

    2. NRZ
      holding both the common and the preferred. Listened to the CC on Friday and was comforted. That said, would be interested in the views of any others interested in the company. Overall MN seems to be a very bright and productive guy. Shifting to origination was right on. As such while the stock is getting trashed, does not seem to be called for. Am I missing anything? tia SC

      1. I’ve made $4/share trading between NRZ-B and NRZ-C on wild price divergences the last few weeks. Small consolation when the share price fell $8. With patience I hope to eventually turn a nice profit.

  5. RQI has completed its rights offering and shares were distributed at a price of 14.12. Now trading at 14.31 and a 7% discount to NAV, which is about average.

    Although price of RQI dropped after announcement of the rights offering (typical) it has fully recovered since and them some.

    Best CEF in the real estate space to my eye.

  6. Because of the asset coverage requirement and penalty rate, plus the fact that the company seems to be raising plenty of capital, I like BRG.PR.A and BRG.PR.C — possibly more than I should, of course. (BRG.PR.D does not have the penalty rate.)

    I expected that all of BRG.PR.A would be called in October and was surprised to hear management projecting only a partial call for it. From their conference call:

    the Series A Preferred which is at a quarter is coming up for redemption sometime in mid-October. But our guidance currently does not assume that we take it all out in one go. It assumes that we have a rolling redemption

    Then again, maybe management is just being conservative and they will indeed manage to take the whole issue out at one shot.

    1. Thanks for your post, Mike D. I was just going to ask if anyone follows BRG and I had missed that comment in the CC… I, too own BRG-A and C and was thinking as far as most recent price on A, it was sort of falling into no man’s land at its current price, on the high side as far as YTC for October is concerned, but not so compelling that a sell was mandatory.. You’re right though, maybe they’re just being conservative, but still it’s a good sign for now that selling BRG-A and having even more cash to deal with right now doesn’t necessarily have to be top priority…. Their closing of selling B shares and starting a new T series private issue convert with 6.15% coupon does give you pause to think they do easily have the room to plan to call 100% if they wanted to come October.

  7. RQI has a rights offering outstanding. Anyone holding the issue should be aware of the deadlines for opting in or selling their rights.

    I believe Feb 12 is the magic date.

    1. Bob-
      They will determine the price at the end of the day 2-13- applies whether you are using them or selling the rights.
      I took a gander in my Schwab acct as if I was going to exercise them- fee is waived- sweet.
      Price of rights dropped today. If you like the CEF, this looks like it could be a bargain

      1. RQI is 2 bucks off its 52-week high, the discount to NAV is right in the middle of the range, and the offer is to buy at 5% under market.

        The intrinsic value of the option (right) is easy to calculate. 5% of market price divided by 3 (3 rights required to buy 1 share). Intrinsic value is way above market price. Unless I’m missing something.

        Assuming RQI is similarly priced as 2-13 approaches (and NAV discount, too) I will be in.

  8. Not sure if many investors here have funds with the U-Haul Investors Club, but tonight they posted some new offerings. As I’m only 50 years old and have plenty of time, I like to invest in some of the longer term issues as I hope to consider them as kind of an “annuity” with no fees. Tonight they posted a new 6% issue on a property in NH with a 20 year term and I placed some of my remaining funds in the issue. Please note that funds invested are for the term of the note and 20 years is a long time for many investors – so this may not be the right investment for many people. However, it is a good choice for me as there are not many fixed income opportunities out there at the present time.

    1. KL: I saw that 20 year note posted today. I am 66 so I have been sticking with the 2 and 5 year notes. I have to have a sense of reality when it comes to longevity! I like the diversity of having some funds outside of banks and brokerages. I also like the fact that the payments on the notes are amortized over the life of the note so there is return of principal beginning with the first payment.

      1. Gary – when I get closer to your age, I’ll probably stick with the 2 and 5 year notes as well! Overall, I like the stability of the account values and like you – it is nice to have some funds outside of stocks and bonds. The fact that the notes amortize is also an added bonus.

    2. kaptain–I was disappointed that they dropped the short end (2 year)–but of course they aren’t going to pay more than they have too. Being quite a bit older than you I was happy with 3% on the 2 year–but now down to 2.5%. I have waded out to the 5 and 8 year issues more and more.

      1. Tim, when I first started with UIC back in 2016, the interest rates were better and they always had a real estate listing available – but times have changed with interest rates. The 2 year note at 3% was very attractive. Clearly their finance guy is looking at the interest rates and they lowered them due to current market conditions.

  9. Tim’s post on Gladstone Land has spurred me to ask more about it here. It is on the list for my parent’s Real Asset allocation but I’ve never pulled the trigger. Conceptually, I like the idea, I just haven’t been convinced enough to buy it. I’ve listened to podcasts of the mgmt team talking about it and it’s appealing, just can’t get comfortable enough for a 1% position. Any thoughts?

    1. While I’m not a big follower of Gladstone Land, I like the overall company and think they are well managed. Not many values out there at the present time, but put my parents into some MNR-C today at about 25.08. Close to a 6% coupon and they have long-term leases with Fed-Ex.

    2. I like the management and strategy of LAND and have owned the preferred for a while. Might buy a tiny position of the common to help me keep an eye on it. Because it is so small if got crushed in the Dec sell off so next sell off might offer great buying opportunity.

    3. Also…I think the other long term play they are making with LAND is in controlling water rights especially in the Western States.

  10. Looking to add to my existing reits dlr, lamr. Not much history on “cold” to evaluate. Any other industrial reit favourites?

    1. I have owned STAG for 3 years. Solid company, good growth and like the monthly dividends. Plan to continue to hold

      I recently started a small position in PLYM – much smaller industrial reit, much higher dividend. A little more risky than STAG but the potential reward is better

  11. I posted this in the Reader Initiated Alerts page, but there are daily posts under that heading. This morning, American Finance Trust (AFIN) reopened their 7.50% preferred issue AFINP and it appears they are going to use the proceeds to purchase more properties. While I would not buy the common stock due to fears of a dividend cut, I like and own a fair number of the preferreds and bought more this morning on the price dip. It’s not callable until March 2024.

    While there is probably some risk with the company, yesterday I noticed that DE was able to sell a 30 year bond with a rate slightly below 3%, so I’m fine with holdings in this medium-risk REIT.

    1. Thanks Kap. Their financials are concerning for sure and I share your issue re: the high dividend on the common. Good alert – thanks!

      1. Thanks Tim. I was really shocked yesterday when John Deere was able to get 30 year financing at about 2.9%, so I’m willing to take some risk as long as there are 30-40 holdings in my portfolio.

        1. kaptain–I noticed this morning when reviewing filings that corporations are all of a sudden piling into debt at ridiculously low rates. We are all going to have to lift our risky holding to earn any sort of a income flow.

          1. Tim, Particularly insidious here is that yields are lower, though overall enterprise risk remains the same in most cases.

            And the debt load as you point out keeps growing. If we combine this with an episode that results in yield spreads expanding…

  12. nareit is a good website to visit for investors interested in reits.
    I also own quite a few reits and been looking to invest in apartment reits
    but i believe they’re currently overvalued.

  13. My experience with Real Estate has been on the private side (private REITs, or LPs) given my day job. I’m strongly considering investing in two mortgage REITS (NLY & DX) that have been crushed by the flattening yield curve. I anticipate that the yield curve will steepen over the next 12-18 months and these two should be good ways to express that view.

    On my watch list are the three Brookfield partnerships (BPY/R, BEP, BIP). While the latter two aren’t REITS, they are income focused real asset plays. I’ve met the Brookfield real estate team and have allocated capital to the real estate LPs that are inside BPY/R. I missed my window at the end of 18 to make the investment in these three. I have a bit of concern about the former GGP properties given the retail apocalypse, and leverage, which is what has held me back from BPY/R. I’ve established prices for all three now so that I don’t miss them during the next downdraft.

    1. Mrinprophet

      I’ve owned BIP and BEP for a long time and have been very pleased with the performance. At this time, I think BEP is the better bet between the two.

      The higher debt level keeps many on the sidelines and sets a market price with a very nice sustainable yield. Many don’t take a moment to see that the debt is project specific and non-recourse. I like their wind power acquisitions and have noticed that the hydro power divisions have been very profitable in drought years.

      1. Thanks Greg… I’m just hoping we get a wash out and I can pick some up at my target levels (BEP<30, BIP<40). Agreed…BEP is what I'm most interested in. Do you have them in taxable or qualified accounts? I read that they don't generate UBTI, thus would be really nice in qualified accounts. Any chance you can confirm?

        1. Mrin

          I have them in taxable accounts and can’t speak to the UBTI. The pay-outs are QDI and return of capital and it works well with the taxable account.

          Looking at a 180 day chart of BEP, a target of $31.40 might be appropriate. Brookfield does a lot of unit purchase below $30 per share.

  14. I have held a large number of REITS in my portfolio – they are my second biggest sector after preferreds. Just to generate some discussion since this is a new area on Tim’s board, here is my list of REIT holdings. Now note, I have held many of these for some time and I am not suggesting they are buys at this time. In fact, I may need to lighten some. But it is important to note, I typically invest in these long term for income and thus do not try to time the market (which is why I haven’t lightened up on some to date but is also why some have grown to as big a position as they are). I am currently sitting on two losers, SKT which you will find wildly varied opinions on and TCO. I have held SKT for a while at an average cost of around $22 a share so it is my biggest loser. That said, I don’t fully buy into the bear case on SKT but at the same time, I am not adding to it and may bail if it drops much further. I have sat on losers before that turned into nice turnaround plays so we will have to see. TCO is the other loser and the one REIT I have held the shortest period of time, under a year and I have been second guessing myself some on this one (even though it is my smallest REIT position).

    I look for a lot of diversity so you can see my REITS spread out over various sectors. Here is my list in order of my largest to smallest REIT position

    Symbol Description
    WPC WP CAREY INC COM Diversified
    O REALTY INCOME CORP (MARYLAND) Retail
    VTR VENTAS INC Healthcare
    DLR DIGITAL RLTY TR INC COM Data Centers
    MPW MEDICAL PPTYS TR INC Healthcare
    HASI HANNON ARMSTRONG SUSTAINABLE INFL COM Infrastructure
    UHT UNIVERSAL HEALTH RLTY INCM TR SH BEN INT Healthcare
    IRM IRON MOUNTAIN INC COM Specialty
    IRT INDEPENDENCE REALTY TRUST INC COM USD0.01 Residential
    BPR BROOKFIELD PROPERTY REIT INC CL A Diversified
    KIM KIMCO REALTY CORP COM USD0.01 Retail
    LADR LADDER CAP CORP CL A Mortgage
    MNR MONMOUTH REAL ESTATE INVT CORP CL A Industrial
    BDN BRANDYWINE RLTY TR SBI NEW Office
    STAG STAG INDL INC COM Industrial
    BXMT BLACKSTONE MORTGAGE TRUST INC COM Mortgage
    STOR STORE CAP CORP COM Retail
    CONE CYRUSONE INC COM USD0.01 Data Center
    BRX BRIXMOR PPTY GROUP INC COM Retail
    SKT TANGER FACTORY OUTLET CTRS INC Retail – Outlets
    COR CORESITE REALTY CORP COM Data Center
    LTC LTC PPTYS INC Healthcare
    NRZ NEW RESIDENTIAL INVT CORP COM NPV Mortgage
    JCAP JERNIGAN CAP INC COM Mortgage
    TCO TAUBMAN CENTERS INC Retail – Mall

    Sorry if that formatting gets messed up – I tried to cut and paste from my spreadsheet.

    For those of you who also may be investing in REITS, I would be curious to know what your list looks like

    1. Maverick,
      that is an excellent portfolio! Have owned a number of those.
      Currently:
      CIM: Chimera Investment Corp
      LADR:Ladder Capital Corp
      AGNCM: AGNC Invesmtne Corp
      NRZ: New Residential Crop
      NRZB: NRZ Preferred
      STWD:Starwood Property Trust
      TRTX: TPG RE Fin Tr
      CIMPC: Chimera Preferred
      TWO: Two Harbors

    2. my REIT list is as follows; CDPYF ( a Canadian apartment REIT takes 15% of the distribution in a taxable account), ARI, NLY, O, NRZ, JPS (a fund for those of us tired of trying to screen REITs)

    3. Maverik, thanks for that list.
      I also use REITs along with preferred (and dividend stocks) to generate my yield, i tend to concentrate my REIT holding as opposed to spreading out my preferreds.
      Most of my REIT list:
      WPC
      MPW (one of my favorites)
      WELL
      EPR
      NNN
      KIM
      Prices have run up on a lot of these since i bought and prices have run up on others that i wanted to buy and still hope to. I also think VNO is worth another look at now and O and VTR are on my “must own* list.

      1. Thanks all. So posting that prompted me today to do some analysis and trimming .

        I lightened up on WPC which was my largest position because it has been on a big run as of late and I fear it is due for a pullback. I usually don’t play that game for the most part with long term income holdings, but it became quite oversized so took some off the table

        I also lightened up on UHT for the same reason

        And I decided to sell out of IRT completely.

        No new buys – I am looking at some but probably not the best time to be adding new REIT positions. But I would like to add another residential apartment REIT to replace IRT if I can find one that makes sense

        1. Any business/performance concerns with WPC specifically or you’re just taking some chips off the table? I’m up >30% on my position.

        2. Maverick, if you’re looking for a residential REIT, try my Canadian apartment CDPYF. If it’s in an IRA, I believe you will avoid the 15% surcharge on dividends.

          1. Thanks – i will take a look at it in more detail. Just curious why you like it. At a quick glance, it yields 2.6% which is low for most reits. Thanks

            1. Maverick, CDPYF is a long term holding in a taxable account with a large capital gain. I’m reluctant to sell because of the capital gain taxes and hadn’t realized how much the capital appreciation had eroded the current yield. I have the same situation with O. I only thought of CDPYF because you mentioned an apartment REIT. Probably not the best fit.

              1. Vinny – ok, thanks I appreciate it and can relate to the same situation with some other holdings

    4. Hi Mav, is any portion of HASI’s distribution characterized as return of capital? Incorrectly, I tend to think of HASI as a Yieldco, such as NEP and PEGI, that tend to pay return-of-capital distributions.

      1. I see Justin answered that for you. Thanks Justin

        Honestly for me, it doesn’t matter since it is in my IRA

    5. APLE
      STWD
      INN/PRE
      These are all I have in the REIT sector. I have been considering MNR/PRC and HT/PRE , do you think these two would be a addition to what I have ? Thanks

  15. What are your feelings overall about the Taubman Preferred Issues TCO-J and TCO-K. Thanks for the insights.

  16. Also just wanted to post another quick note this evening. For some of those of you that read on Seeking Alpha, I’m strongly avoiding a REIT called Tanger Outlets (SKT). Just my opinion, but I basically consider them a Class B or C outlet mall center as ALL of their tenants are clothing retailers. If occupancy levels drop – how in the world are they ever going to re-purpose those properties? Below is a link to their most recent quarterly supplement. Please take notice to their #1 tenant – ASNA (Ascena Retail) who currently is 6.5% of their base rent. ASNA common stock trades at under .50 cents per share and the top 25 tenants are located on page 9 of the supplement.

    http://investors.tangeroutlet.com/Cache/1500122398.PDF?O=PDF&T=&Y=&D=&FID=1500122398&iid=103061

    1. Lou, I responded to one of your posts but it never saw the light of day. Do me a favor please…If I do like Brad and recommend something daily that goes from $30 to $14 over 3 years and never concede the point (or ever admit the $30 reco price again) I may have made a mistake….Please publicly humiliate me.

      1. Grid – Seeking Amateurs website with $30 articles is clearly a place I would not take investment advice and I’m sure that many comments have been deleted to promote the “chosen ones” but I will kick your butt if needed. LOL.

        Bad Timing (BT) is just another poor writer that promotes stocks just for the fees and writes for $30 per article.

    2. As I noted in another post, I do own SKT and it is one of the 2 REIT losers in my portfolio. But I don’t fully subscribe to the bear case. Yes, retail is way out of favor, fear of Amazon, etc. But as to re-purposing their stores, a couple things to note:

      1. Most of the stores in each outlet are small – so easier to re purpose than malls with big department stores that leave
      2. Most of their outlets are located more as destinations – many near vacation destinations – rather than core stores in big cities – so they offer a unique experience different from malls
      3. Their management team has been in place and successful for some time – they were one of the few who did not reduce or suspend their dividends in 08-09 when the shit hit the fan.

      Now I am not saying run out and buy SKT – I am not adding to it. But I also think the bear case is overblown at this stage. So if you have a long term perspective, it could be a speculative buy. But since most people on this board are more conservative and income focused, SKT probably isn’t the best fit for many

  17. After a long search for income, today I started a very small position in KRG and will continue to watch the REIT over the next couple of months and add on prices dips especially if there is some tax loss selling like we saw last December. Any REITs related to “retail” are having a bad year in 2018, but KRG owns open air centers and their #1 tenant is Publix Super Markets, the large grocery chain in Florida with no long-term debt. The link below shows their most recent financial supplement wit the Top 25 tenants located on page 23. I clearly like Publix, The TJX Companies, Ross Stores and Lowe’s in the top 10. Not much of a fan of Bed, Bath and Beyond (remember Linens and Things??) or PetSmart – so there is some risk in their tenant roster. I’m normally well diversified with 40-50 positions and decided to take a little risk with KRG. Very little coverage of the company on Seeking Alpha – but maybe that is a good thing.

    http://ir.kiterealty.com/Cache/1001255303.PDF?O=PDF&T=&Y=&D=&FID=1001255303&iid=4092324

    1. KRG is also on my watch list Lou, they are streamlining to firm up the portfolio and having success replacing lost tenants. RPT (former Ramco-Gershenson) is also on my list, smaller open air focus- but same- doing streamlining etc. Also MAC, TCO. Every retail doom headline puts these all under pressure but besides yield, the value of their r/e could mean for mergers/combinations. The REIT sector is so strong it is hard to commit new money.
      REITs, MLPs, h/y, most CEF, pfds (even high grade) and bb bonds all took a huge swoon together last fall into Dec and that correlation keeps me extra vigilant to a similar selloff. When VNQ, PFF, HYG, JNK all start disgorging if the market goes unfavorable or even neutral on these sectors, doesnt matter what you own, the pressure is high to the downside.

      Of course selling begets bargains and that is where I am.. I’ll take 2% until something hits my target. I am probably going to put a limit order in on KRG at $14 soon. Bea

    2. Lou…be careful with KRG, it looks highly leveraged. Their current plan of selling assets to bring their debt/EBITDA ratio down to 6x does not seem like a winning strategy long term. If you like Publix, TJ Maxx, Lowes, etc. why not invest directly in those names?

Leave a Reply

Your email address will not be published. Required fields are marked *