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>>> Gladstone Land Acquires Nut Orchard and Option to Purchase Stored Water in California
Yahoo Finance
October 12, 2021
https://finance.yahoo.com/news/gladstone-land-acquires-nut-orchard-123000093.html
MCLEAN, VA / ACCESSWIRE / October 12, 2021 / Gladstone Land Corporation (NASDAQ:LAND) ("Gladstone Land") announced that it has acquired 1,284 gross acres of farmland, including over 1,200 planted acres of pistachios and almonds (a portion of which is organic), located in Kern County, California, and 19,670 acre-feet of stored water (equal to approximately 6.4 billion gallons) located within the Semitropic Water Storage District water bank for a total of approximately $43.0 million. In connection with the acquisition, Gladstone Land entered into a 10-year, triple-net lease agreement for the farmland. This is the third and final closing of a previously announced three-part acquisition that will result in total consideration of approximately $84.2 million.
"We are happy to announce the closing of the third and final phase of this transaction in Kern County," said Bill Reiman, Executive Vice President of Gladstone Land. "We are looking forward to a successful future with this property and new tenant. From the day we closed the first phase of this deal, we realized benefits to our overall business, and we are excited about where this will lead us in the future."
"We are pleased to be expanding our relationship with a very fine tenant who has a long history of farming in the area," said David Gladstone, President and CEO of Gladstone Land. "All of our farms continue to have adequate water. We believe the additional water we're buying in this transaction will help the production on this farm continue at good levels for many years, while also providing additional security to other farms in the area if there is ever a need for additional water."
About Gladstone Land Corporation:
Founded in 1997, Gladstone Land is a publicly traded real estate investment trust that acquires and owns farmland and farm-related properties located in major agricultural markets in the U.S. and leases its properties to unrelated third-party farmers. The company, which reports the aggregate fair value of its farmland holdings on a quarterly basis, currently owns 159 farms, comprised of over 108,000 acres in 14 different states and 45,000 acre-feet of banked water in California, valued at approximately $1.4 billion. Gladstone Land's farms are predominantly located in regions where its tenants are able to grow fresh produce annual row crops, such as berries and vegetables, which are generally planted and harvested annually. The company also owns farms growing permanent crops, such as almonds, apples, cherries, figs, lemons, olives, pistachios, and other orchards, as well as blueberry groves and vineyards, which are generally planted every 10 to 20-plus years and harvested annually. The company may also acquire property related to farming, such as cooling facilities, processing buildings, packaging facilities, and distribution centers. Gladstone Land pays monthly distributions to its stockholders and has paid 104 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The company has increased its common distributions 23 times over the prior 27 quarters, and the current per-share distribution on its common stock is $0.0451 per month, or $0.5412 per year. Additional information, including detailed information about each of the company's farms, can be found at www.GladstoneLand.com.
Owners or brokers who have farmland for sale in the U.S. should contact:
Western U.S. - Bill Reiman at (805) 263-4778 or bill.r@gladstoneland.com, or Tony Marci at (831) 225-0883 or tony.m@gladstoneland.com
Mid-Atlantic U.S. - Joey Van Wingerden at (703) 287-5914 or joe.v@gladstoneland.com
Southeastern U.S. - Bill Frisbie at (703) 287-5839 or bill.f@gladstoneland.com
Lenders who are interested in providing Gladstone Land with long-term financing on farmland should contact Jay Beckhorn at (703) 587-5823 or Jay.Beckhorn@GladstoneCompanies.com.
For stockholder information on Gladstone Land, call (703) 287-5893. For Investor Relations inquiries related to any of the monthly dividend-paying Gladstone funds, please visit www.GladstoneCompanies.com.
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>>> Zillow Pauses Home Purchases as Snags Hit Tech-Powered Flipping
Bloomberg
By Patrick Clark
October 17, 2021
https://www.bloomberg.com/news/articles/2021-10-17/zillow-pauses-home-purchases-as-snags-hit-tech-powered-flipping?srnd=premium
Online listing giant bought 3,800 houses in second quarter
Email says iBuyer operation has ‘hit its capacity’ for 2021
Zillow is best known for publishing real estate listings online and calculating estimated home values.
Zillow Group Inc. is taking a break from buying U.S. homes after the online real estate giant’s pivot into tech-powered house-flipping hit a snag.
Zillow, which acquired more than 3,800 homes in the second quarter, will stop pursuing new home purchases as it works through a backlog of properties already in its pipeline.
“We are beyond operational capacity in our Zillow Offers business and are not taking on additional contracts to purchase homes at this time,” a spokesperson for Zillow said in an email. “We continue to process the purchase of homes from sellers who are already under contract, as quickly as possible.”
Zillow is best known for publishing real estate listings online and calculating estimated home values – called Zestimates – that let users keep track of how much their home is worth. The popularity of the company’s apps and websites fuels profits in Zillow’s online marketing business.
Why Zillow Went From Online Real Estate Ads to Flipping Homes
But more recently, it has been buying and selling thousands of U.S. homes. In 2018, the company launched Zillow Offers, joining a small group of tech-enabled home-flippers known as iBuyers. In the new business, Zillow invites homeowners to request an offer on their house and uses algorithms to generate a price. If an owner accepts, Zillow buys the property, makes light repairs and puts it back on the market.
With the pandemic setting off a housing frenzy marked by cash bids and fast closings, Zillow’s pitch of speed and convenience has started to resonate with consumers who want to sell their homes quickly as they try to buy a new property.
The iBuying process is powered by algorithms and large pools of capital, but it’s also reliant on humans. Before Zillow signs a contract to buy a house, it sends an inspector to make sure the property doesn’t need costly repairs. After it buys a property, contractors replace carpets and repaint interiors.
Finding workers for those tasks has been challenging during a pandemic that has stretched labor across industries. Staffing shortages have been exacerbated by Zillow’s willingness to let customers set a closing date months into the future, meaning it could agree to buy a house in August and begin renovating it in November.
“Given unexpected high demand, Zillow Offers has hit its capacity for buying homes for the remainder of the year,” an employee who works in the company’s home-buying operation in two states wrote in an email to a business partner that was viewed by Bloomberg.
Pausing new acquisitions will allow the company to work through its backlog. It’s not the first time that the company has halted purchases. Zillow stopped buying homes in the early days of the pandemic, as did its main competitor, Opendoor Technologies Inc. While the companies ultimately benefited from the housing boom that started when early economic lockdowns lifted, it took Zillow several months to resume purchasing homes at its pre-pandemic pace.
In recent months, Zillow has fended off online controversy and laid the groundwork to accelerate purchases. The company borrowed $450 million in an August bond offering that was the first of its kind, and priced a second $700 million offering in September.
For now, the company plans to refer potential customers to traditional real estate agents. While the pause should help Zillow work through the backlog, it may lose business to competitors, including its main rival.
“Opendoor is open for business and continues to serve its customers with a simple, certain, fast and trusted home move,” a spokesman for the company said in an email.
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>>> Here’s the best new asset class in real estate: Tricon Residential CEO
Yahoo Finance
by Thomas Hum
October 8, 2021
https://finance.yahoo.com/news/heres-the-best-new-asset-class-in-real-estate-tricon-residential-ceo-145713574.html
The housing market continues to be characterized by low inventories and soaring prices, with year-over-year deceleration not expected until January 2022. Within this hot real estate market, Tricon Residential (TCNGF, TCN.TO) President and CEO Gary Berman believes that the best new asset class may be single-family rental properties.
“Single-family rental — we think this is potentially the best new asset class in real estate, both for investors and consumers,” Berman told Yahoo Finance Live. “And it provides an unbelievable opportunity for consumers as well who may be struggling in the pandemic with affordability.”
Berman joined Yahoo Finance Live on Tricon Residential’s U.S. listing day to discuss the state of the housing market as well as the forward outlook for real estate investment in areas such as the Sun Belt. A Toronto-based real estate company which has also been trading publicly in Canada, Tricon Residential invests in single-family rental and multi-family rental homes, and owns about 33,000 properties across the U.S. and Canada.
The company focuses on the middle market, Berman said, and invests heavily in properties located in the Sun Belt.
“People are challenged looking for housing during the pandemic, and we provide what we think is a hotel-ready product and a maintenance-free lifestyle with affordable rent. And we think it's exactly what the market needs,” Berman said. “And it's a real win, a real victory, we think, both for the consumer or renter and obviously our investors as well.”
'Insatiable demand' for housing
The California housing market is expected to remain solid if the pandemic is kept under control, but structural challenges may still persist. Existing single-family home sales in the state are forecasted to decline 5.2 percent from 2021 to 2022, and California’s median home price is also expected to rise 5.2 percent to $834,400 next year. This follows a projected 20.3 percent increase to $793,100 in 2021.
According to Berman, in order to satisfy the “insatiable demand” currently seen in the housing market, Tricon Residential is going to focus on doubling its single-family rental holdings.
“Right now, we own about 25,000 single family homes throughout the Sun Belt. We want to double that to 50,000 homes over the next three years,” he said. “And really, at the end of the day, there's so much demand for what we're doing. It's a high-class problem.”
With eviction moratoriums formally ending in states around the country such as California, Berman said that Tricon Residential remains cognizant of the challenges that its customer base has been and continues to experience as the economic ramifications of the pandemic persist.
“A priority at the company [is] what we call self-governed or limited renewal increases,” Berman said. “So our renewal increases during the pandemic have been anywhere from 0 percent to maybe 5 percent in an environment where we could probably be passing on renewal increases of 10 percent to 12 percent.”
In the long run, he said, striving for low turnover benefits both the company’s tenants as well as its investors.
“We're really trying to put ourselves in the shoes of our residents and really drive the best low turnover model we can,” Berman said. “We don't want to force our residents out of their homes. We want them to stay with us and really be long-term renters. And we think in the long-term, that's the best thing for investors as well.”
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Gladstone Land - >>> 3 Stocks That Cut You a Check Each Month
These stocks make it easy to earn passive income.
Motley Fool
by Matthew DiLallo
Sep 19, 2021
https://www.fool.com/investing/2021/09/19/3-stocks-that-cut-you-a-check-each-month/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Key Points
Agree Realty switched to a monthly payout this year.
Gladstone Land has steadily increased its monthly dividend over the years.
Pembina Pipeline offers a big yield with longer-term growth potential.
Motley Fool Issues Rare “All In” Buy Alert
Dividend stocks are a great way to start earning passive income. However, one minor inconvenience of most dividend stocks is that they only cut checks quarterly. Because of that, the dividend income can be somewhat lumpy.
One solution to this issue is to buy monthly dividend stocks. Three excellent monthly payers worth considering are Agree Realty (NYSE:ADC), Gladstone Land (NASDAQ:LAND), and Pembina Pipeline (NYSE:PBA).
Collect rental income without any work
Agree Realty is a real estate investment trust (REIT) that owns a portfolio of free-standing retail properties. While retailers face headwinds from e-commerce, Agree Realty focuses on very specific tenants, enabling it to generate steady rental income.
First, it focuses on leasing space to essential retailers less likely to experience disruption from e-commerce. Its top tenants include grocery stores, home improvement stores, tire and auto service centers, convenience stores, dollar stores, and pharmacies. Further, it primarily focuses on retailers with investment-grade credit ratings (68% of its rental income comes from IG-rated retailers), which suggests they have the strength to meet their financial obligations during an economic downturn. Finally, Agree Realty utilizes triple-net leases, where the tenant bears responsibility for real estate taxes, building insurance, and maintenance.
Meanwhile, the REIT complements its solid portfolio with a strong financial profile, including an investment-grade credit rating and a conservative dividend payout ratio for a REIT. Those factors give Agree Realty the financial flexibility to expand its portfolio. That steady growth has enabled the REIT to consistently increase its dividend, which it started paying monthly earlier this year. Agree Realty has grown its payout at a 5% compound annualized rate over the last 10 years and should be able to keep increasing it in the future as it acquires more cash-flowing free-standing retail properties. At a 3.6% dividend yield, Agree Realty is an excellent income stock.
A steadily growing dividend
Gladstone Land is also a REIT. It specializes in owning farmland and farm-related facilities that it triple-net leases to farmers. The company primarily buys farms used to grow healthy foods like fruits, vegetables, and nuts. These crops tend to generate steadier income for farmers than commoditized products like corn, soybeans, and wheat.
Gladstone has been steadily growing its farmland portfolio by acquiring new properties. It purchased 13 farms and more than 20,000 acre-feet of banked water for $79.7 million during the second quarter. Those farms should generate steadily growing rental income due to annual rent escalations, CPI adjustments, or participation rents (a share of the crops' profits). This year, the company has started acquiring water rights to reduce the draught risk for some of its farms. That should help further stabilize its rental income.
Gladstone's growing farm portfolio has enabled it to steadily increase its dividend. The REIT has boosted its payout in 23 of the last 26 quarters, expanding it by 50.3% overall. The company aims to continue increasing its dividend at a rate that outpaces inflation, driven by steadily rising rents and additional farm acquisitions. At a 2.4% dividend yield, Gladstone offers an above-average monthly income stream.
A steady flow of dividends
Pembina Pipeline is a Canadian energy infrastructure company. It operates pipelines, processing plants, storage terminals, and export facilities. The company, in a sense, operates an energy toll booth, collecting a steady stream of fees as oil and gas flow through its integrated system. That stable cash flow supports Pembina's 6.1%-yielding monthly dividend.
While climate change concerns are forcing the global economy to shift toward cleaner alternatives, this energy transition will take decades. Because of that, demand for oil and gas will continue growing in the coming years, providing Pembina with additional opportunities to expand its energy infrastructure footprint. The company has more than $1 billion of commercially secured expansion projects under construction or ready to go. In addition, it has billions of dollars of potential expansion projects further along in the pipeline.
One notable project is the Alberta Carbon Grid, a joint venture with fellow Canadian energy infrastructure company TC Energy to build a world-scale carbon dioxide transportation and sequestration system in Western Canada. Projects like that will help reduce the energy industry's carbon footprint. Meanwhile, Pembina is exploring other cleaner alternatives like wind energy, cogeneration, and hydrogen.
Future investments (organic expansions and acquisitions) should give Pembina the fuel to continue growing its dividend. While the company hasn't increased its dividend since early 2020 due to the pandemic, it had a long history of consistent dividend growth before that blip. As market conditions improve and its current slate of expansions come online, Pembina should be able to start growing its monthly payout again.
Excellent options for monthly income
Monthly dividend stocks make it easier to earn passive income that you can use to offset a regular expense. While only a small group of stocks cut checks each month, investors have some attractive options in Agree Realty, Gladstone Land, and Pembina Pipeline. All three companies offer dividend yields well above the S&P 500 and have a history of steadily increasing their payouts.
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>>> Equinix (EQIX) Expands in India, Acquires 2 Data Centers
Zacks Equity Research
September 3, 2021
https://finance.yahoo.com/news/equinix-eqix-expands-india-acquires-141002393.html
Boosting its presence in the India market, Equinix, Inc. EQIX completed the acquisition of India operations of GPX Global Systems, Inc. for an all-cash transaction of $161 million. With the move, the company expanded its portfolio with a fiber-connected campus in Mumbai with two data centers. It has appointed Manoj Paul as the managing director for Equinix India operation.
With the completion of the transaction, the new International Business Exchange (“IBX”) data centers form a network-dense data center campus, with more than 350 international brands and local companies.
The two acquired data centers, referred to as Equinix MB1 and MB2, offer an initial capacity of 1,350 cabinets, with an additional 500 cabinets to buildout. At the full build, the facilities will add more than 90,000 square feet of colocation space to Platform Equinix.
The acquisition seems a strategic fit as India is expected to grow, witnessing a 21% compound annual growth rate, and become a $2-trillion digital economy by 2030. With the rollout of 5G, and information and communications technology policy reforms of the government, digitalization and cloud adoption in India is expected to rise.
Equinix’s effort to bolster its presence in the country will add scale and strengthen its position in the region, while helping it benefit from the accelerations in digital infrastructure transformations.
Upon the completion of the business integration, the company plans to offer its full spectrum of interconnection and digital infrastructure services, comprising Equinix Connect, Equinix Internet Exchange, Metro Connect, Equinix Fabric and Network Edge in the new data centers, and help them connect in real-time, directly and privately to more than 10,000 companies.
Equinix enjoys a solid presence in the AsiaPacific region, operating 49 IBX data centers across 13 metros in Australia, China, Hong Kong, India, Japan, Korea and Singapore. Globally, the company remains well-poised to bank on the robust demand in the data center space with its Platform Equinix, which comprises more than 230 data centers across 65 metros and 27 countries.
Robust growth in cloud computing, the Internet of Things and big data, and a greater call for third-party IT infrastructure are spurring the demand for data-center infrastructure. Moreover, growth in artificial intelligence, autonomous vehicle and virtual/augmented reality markets is anticipated to be robust over the next five to six years.
As infrastructure providers for the rapidly-growing digital economy, data-center providers such as Equinix, Digital Realty Trust DLR, CyrusOne Inc. CONE and CoreSite Realty Corporation COR are well-placed for sustainable growth.
Shares of Equinix have gained 44.9% over the past six months, outperforming the industry's growth of 22.8%.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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>>> Innovative Industrial Properties Acquires Property in Maryland and Expands Real Estate Partnership With Harvest
Yahoo Finance
August 16, 2021
https://finance.yahoo.com/news/innovative-industrial-properties-acquires-property-203000699.html
SAN DIEGO, August 16, 2021--(BUSINESS WIRE)--Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property in Hancock, Maryland, and entered into a long-term lease with a subsidiary of Harvest Health & Recreation Inc. (Harvest) (CSE: HARV, OTCQX: HRVSF).
The purchase price for the property was approximately $16.6 million (excluding transaction costs). Harvest is expected to complete additional tenant improvements for the property as a regulated cannabis cultivation and processing facility, for which IIP has agreed to provide reimbursement of up to $12.9 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property is expected to be approximately $29.5 million. Earlier this year, IIP acquired a Florida property and executed a long-term lease with Harvest, which comprises approximately 295,000 square feet and for which IIP expects its total investment to be approximately $41.7 million, assuming full reimbursement for tenant improvements.
Founded in 2011, Harvest is a leading vertically integrated U.S. multi-state operator with licensed operations in Arizona, California, Colorado, Florida, Maryland, Nevada and Pennsylvania, including 44 retail locations, 11 cultivation and processing locations and over 1,600 employees across its operations. In May 2021, Trulieve Cannabis Corp., another IIP tenant partner in Florida and Massachusetts, announced that it had entered into an agreement to acquire Harvest, subject to the satisfaction of certain conditions.
"We are excited to further expand our long-term real estate partnership with Harvest in Maryland," said Paul Smithers, President and Chief Executive Officer of IIP. "Harvest continues to execute well on its business plan, with a tremendous vertically integrated footprint across some of the strongest regulated cannabis markets in the United States. We look forward to working closely with Harvest as they further build out their production capacity in Maryland to meet the continued strong growth in demand from patients across the state, as well as potential for expansion of the current program to regulated adult-use in the nearer term."
As the pioneering real estate investment trust (REIT) for the regulated cannabis industry, IIP partners with experienced, regulated cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
Maryland implemented its medical-use cannabis program in 2017, with limited licenses to cultivate, process and dispense cannabis. Qualifying medical conditions for the program include, among others, anorexia, conditions resulting in a patient receiving hospice or palliative care, PTSD, seizures, chronic pain, severe nausea and severe or persistent muscle spasms, as well as other chronic, severe medical conditions if other treatments have been ineffective and the recommending healthcare professional believes medical cannabis can provide some relief. Similar to other states, state regulatory authorities have expanded the program over time, including allowing physician assistants to make recommendations for medical cannabis patients and expanding the forms by which medical cannabis can be consumed. According to the Maryland Medical Cannabis Commission, there were approximately $140 million in medical cannabis sales during the three months ended June 30, 2021. In addition, according to a Goucher College poll conducted in February of this year, approximately two-thirds of Maryland residents support the legalization of adult-use cannabis. Last month, Maryland House Speaker Adrienne Jones pledged that lawmakers would pass a bill to put the question of legalization of cannabis for adult use to voters as a referendum on the 2022 ballot. Including this property, IIP owns two properties in Maryland, comprising approximately 184,000 rentable square feet (including square footage under redevelopment) and representing a total investment, including commitments to fund future tenant improvements, of approximately $51.9 million.
As of August 16, 2021, IIP owned 74 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of approximately 6.9 million rentable square feet (including approximately 2.5 million rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 16.6 years. As of August 16, 2021, IIP had committed approximately $1.7 billion across its portfolio, including capital invested to date (excluding transaction costs) and additional capital commitments to fund future construction and tenant improvements at IIP’s properties, but excluding an $18.5 million loan from IIP to a developer for construction of a regulated cannabis cultivation and processing facility in California.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
About Harvest Health & Recreation Inc.
Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a vertically integrated cannabis company and multi-state operator. Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries. Through organic license wins, service agreements, and targeted acquisitions, Harvest has assembled an operational footprint spanning multiple states in the U.S. Harvest's mission is to improve lives through the goodness of cannabis. We hope you'll join us on our journey: https://harvesthoc.com.
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>>> Like Growth? You'll Love These REITS
Motley Fool
Jul 26, 2021
by Reuben Gregg Brewer
https://www.millionacres.com/real-estate-investing/articles/like-growth-youll-love-these-reits/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Real estate investment trusts (REITs) are structured specifically to pass income on to shareholders. However, some landlords have a heavier focus on growth. If that sounds interesting to you, take a quick look at these three growth-minded REITs. One is an old hand, the others are relatively new players, but all of them have substantial growth prospects ahead.
1. A brand-new industry
Innovative Industrial Properties (NYSE: IIPR) primarily owns marijuana growing facilities. It uses the net lease approach, which means that the lessee has to pay for most of a property's operating expenses. The REIT generally buys assets from a pot company and then leases them right back to the former owner in what's called a sale/leaseback transaction.
That's important because the slow process of legalization has left marijuana companies with limited access to capital. Innovative Industrial has, basically, stepped into the void. And, because of the marijuana industry's limited financing options, it has been able to ink deals at very attractive returns.
The REIT has grown quickly, expanding from one property at the end of 2016 (the year it IPOed) to 69 in May. It paid its first dividend of $0.15 per share per quarter in mid-2017 and declared a dividend of $1.40 per share per quarter in June 2021.
At this point, it has a first-mover advantage in this niche sector that should allow it to remain a major player even if marijuana legalization increases funding options for pot companies. Notably, Innovative Industrial expects the marijuana industry to more than double between 2020 and 2025, so there should be plenty of opportunity ahead. The current yield is a modest 2.6% or so, but if growth is important to you, that shouldn't dissuade you from stepping aboard.
2. A big bet
VICI Properties (NYSE: VICI) also uses the net lease approach, only it applies it to the gambling industry. It was spun off from Caesars Entertainment in late 2017 with a portfolio of 19 properties. At the end of the first quarter, it owned 28 properties. That may not sound like a huge change, but these are giant facilities that include gaming, hotels, restaurants, and more. It has relationships with some of the biggest names in the gambling industry.
It paid its first dividend in 2017 at $0.15 per share per quarter. It declared a dividend of $0.33 per share in June. There's a couple of interesting levers for growth here.
First, the REIT hopes to continue buying casinos. Second, it also owns some entertainment properties that aren't casinos, including four golf courses and an investment in the Chelsea Piers in New York City. Adding more nongaming properties is a huge opportunity. And, third, it owns 34 acres of undeveloped land in Las Vegas on which something fun could eventually be built. The yield here is around 4.2%, which actually makes it a decent mix of growth opportunity and yield.
3. In all the right places
The first two names here are probably acquired tastes, given their youth and focus on emerging REIT niches. The last company is a bit different, having been around for decades in an industry that has existed since well before there were REITs to own the properties.
Today, Prologis (NYSE: PLD) is the largest publicly traded warehouse landlord you can buy. Warehouses may not be as exciting as marijuana grow houses or casinos, but they are a vital link in the global economy. Prologis, for its part, focuses its portfolio of nearly 1,700 properties in key transportation hubs around the world. Its portfolio would be impossible to replace.
But here's the exciting part. Prologis has built nearly half of its portfolio from the ground up, and it currently has enough land to support what it believes could be $17 billion worth of growth projects. The growth of online retail has increased the need for warehouses and the interconnectedness of the world, both of which support Prologis' growth prospects.
That said, warehouses are hot right now, and Prologis' yield is a miserly 2% or so. The dividend, which was cut during the deep 2007 to 2009 recession, has increased from $1.12 per year per share in 2013 to $2.32 in 2020. Still, for those looking for growth, this REIT has a huge built-in opportunity to keep expanding without the need to buy another property. And, for reference, the company estimates that its ground-up construction efforts have resulted in an average return of around 20%. That might just be worth a premium price.
Going for growth
While most investors look to REITs for the income they generate, that doesn't mean it's the only way to view landlords. Innovative Industrial, VICI, and Prologis all take a slightly different approach to the space that highlights growth. And that can turn out to be pretty rewarding for investors over the long term, given the dividend growth that often comes with it.
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>>> Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.
Slate
BY ELENA BOTELLA
JUNE 19, 2021
https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html
The median price of an American house has increased by 28 percent over the last two years, as pandemic-driven demand and long-term demographic changes send buyers into crazed bidding wars.
Might the fact that corporate investors snapped up 15 percent of U.S. homes for sale in the first quarter of this year have something to do with it? The Wall Street Journal reported in April that an investment firm won a bidding war to purchase an entire neighborhood worth of single-family homes in Conroe, Texas—part of a cycle of stories drumming up panic over Wall Street’s increasing stake in residential real estate. Then came the backlash, as cool-headed analysts reassured us that big investors like BlackRock remain insignificant players in the housing market compared with regular old American families.
The truth is between the two: We can panic and acknowledge Wall Street’s small role at the same time. Although the number of houses being purchased by mega-investors is currently not enough to move the market in most parts of the country, these firms’ underlying structural advantage is profound and growing.
Let’s focus on Invitation Homes, a $21 billion publicly traded company that was spun off from Blackstone, the world’s largest private equity company, in 2017. Invitation Homes operates in 16 cities, with the biggest concentration in Atlanta, where it owns 12,556 houses. (Though that’s not much compared with the 80,000 homes sold in Atlanta each year, Invitation Homes bought 90 percent of the homes for sale in some ZIP codes in Atlanta in the early 2010s.) While normal people typically pay a mortgage interest rate between 2 percent and 4 percent these days, Invitation Homes can borrow money for far less: It’s getting billion-dollar loans at interest rates around 1.4 percent. In practice, this means that Invitation Homes can afford to tack on an extra $5,000 to $20,000 to the purchase price of every home, while getting the house at the same actual cost as a typical homeowner. While Invitation Homes uses a mixture of debt and cash from renters to buy houses, its offers are almost always all cash, which is a big leg up in a competitive market.
One way to think about Invitation Homes’ business strategy is to consider the value of the properties the firm is buying, relative to the rents they charge. According to a recent SEC disclosure, Invitation Homes’ portfolio of homes is worth of total of $16 billion (after renovations), and the company collects about $1.9 billion in rent per year. That means it takes only about eight years of rental payments to pay back a typical house that Invitation Homes has bought. The usual rule of thumb for evaluating a fair sale price, says Kundan Kishor, professor of economics at University of Wisconsin-Milwaukee, “is that price to rent ratios are around 20 to 1.” When price-to-rent ratios are very high, it makes more sense for consumers to rent than to buy, and when they are low, it makes more sense to buy than to rent. That Invitation Homes is getting deals twice as good as a typical homebuyer shows that it’s not just buying any homes: It’s buying the specific houses with the greatest potential to be wealth-building for the middle class.
It’s not exactly accurate that investors are “buying every single-family house they can find,” as some have suggested. If that were true, their market share in the United States wouldn’t be a piddling 15 percent. They’re really buying up the stock of relatively inexpensive single-family homes built since the 1970s in growing metro areas. They mostly ignore bigger and more expensive houses, especially ones that are move-in ready: Wealthy boomers and the nation’s finance and tech bros nab those properties. And they’re also ignoring cities with stable or shrinking populations, like Providence and Pittsburgh.
But investors are depleting the inventory of the precise houses that might otherwise be obtainable for younger, working- and middle-class households, in the cities where those workers can easily find good-paying jobs, like Atlanta (22 percent of home purchases according to Redfin data), Charlotte (22 percent), and Phoenix (20 percent). More importantly, they’re able to scour those markets scientifically and systematically to make cash offers on the most attractively priced properties. While normal people buy houses when they actually need to move somewhere, (savvy) investors buy houses several years before a bunch of people need to move to an area. Whether they’re tracking where major employers are building new offices or looking at public school enrollment data, being ahead of the market gives big firms a big leg up.
And in case you were assuming that converting houses to rentals would flood the market and bring down rents, don’t get your hopes up: As Invitation Homes tells its investors, “We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential.”
While renting might make sense for some people, especially people who move a lot, it often sucks, particularly in the United States, where we don’t have especially strong protections for tenants. The business strategy of the country’s biggest landlords, Invitation Homes and American Homes 4 Rent, does not seem to be, “Make renting with us so delightful that if my tenants have to move cities, they’ll specifically seek out another property owned by our company.” Based on reports from Reuters, the New York Times, and the Atlantic, it appears to be closer to “Squeeze our tenants for every penny, avoid making repairs, let black mold and raw sewage accumulate, and count on the fact that moving is a huge, expensive hassle.”
Our current system of encouraging homeownership is by no means perfect, and it places a lot of unnecessary risk onto the “balance sheets” of the middle class, but it’s worked out financially for most of the people who have been lucky enough to own a home. The implicit and explicit subsidies the government has given to Americans buying their first homes have been the biggest handout the American middle class has ever received (a handout notably denied to Black Americans for much of the 20th century, one explanation for the current size of the racial wealth gap).
Laurie Goodman, vice president of housing finance policy at the Urban Institute, points out that policymakers could take steps to level the playing field between investors and the rest of us. She told me that buyers who need to borrow money using Federal Housing Administration loans, or those who need a rehab loan for a fixer-upper, have a particularly tough time competing against Wall Street firms. FHA paperwork often gets delayed, slowing down the purchase process, so home sellers often don’t want to sell to FHA buyers, even if their bids are competitive. That’s a solvable problem. And loans for properties that need renovations, Goodman says, are both cumbersome and expensive. Rethinking the processes for FHA and rehab loans could, “put individuals on a more equal footing,” she explained.
If you don’t want all of America’s land and housing to end up in the portfolios of the 1 percent, there’s ultimately one very simple solution: Tax the rich. After all, the companies buying the houses are ultimately owned by people (or in some cases, universities and churches, which are their own cans of tax-advantaged rich-people worms). At the same time that the working-class is going hungry, rich people are doing so outstandingly well that they are running out of easy places to park their cash, which is why they’re buying 2,000 square-foot houses in the Phoenix suburbs via their ownership stakes in these funds.
This is all part of a long-standing trend: As inequality in the United States increases, the financial elite invests less in the types of things that could create jobs, like R&D or new factories, and more into directly extracting wealth from the working class. One way to do that? Becoming their landlords.
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>>> Same Shady People Who Own Pharma and Media Want Your House
Analysis by Dr. Joseph Mercola
July 14, 2021
https://articles.mercola.com/sites/articles/archive/2021/07/14/blackrock-buying-houses.aspx?ui=cb65499db52abec6a9a590992872244905bf545afdb5f24bd660a43f2e592f19&sd=20150424&cid_source=dnl&cid_medium=email&cid_content=art1ReadMore&cid=20210714&mid=DM935706&rid=1208171249
STORY AT-A-GLANCE
In the first quarter of 2021, 15% of U.S. homes sold were purchased by corporate investors — not families looking to achieve their American dream
The average American has virtually no chance of winning a home over an investment firm, which may pay 20% to 50% over asking price, in cash, sometimes scooping up entire neighborhoods at once.
BlackRock, one of the largest asset management firms, is among the firms buying up U.S. houses; they also control the media and Big Pharma
If the average American is pushed out of the housing market, and most of the available housing is owned by investment groups and corporations, you become beholden to them as your landlord
This fulfills part of the Great Reset’s “new normal” dictum — the part where you will own nothing and be happy; this isn’t a conspiracy theory — it’s part of WEF’s 2030 agenda
Homeownership has long been considered an important tool for building financial security and wealth, but it’s becoming more difficult for Americans to achieve. Younger generations are less likely to own a home than those from older generations, with millennials’ homeownership rate 8% lower than that of generation X and baby boomers at the same age.1
If the rate had remained steady, about 3.4 million more people would own homes in the U.S. today but, instead, younger adults are increasingly choosing to either rent or live with their parents. There are a number of reasons why homeownership has become less attainable than it was decades ago, from rising debt in younger generations to increased cost of living.
A report by the Urban Institute found half those aged 18 to 34 were spending upward of 30% of their income on rent, making them “rent-burdened.”2 Meanwhile, median housing prices increased 28% in the last two years,3 pricing some out of the market. However, the shift is not all happenstance.
In the first quarter of 2021, 15% of U.S. homes sold were purchased by corporate investors4 — not families looking to achieve their American dream. While they’re competing with middle-class Americans for the homes, the average American has virtually no chance of winning a home over an investment firm, which may pay 20% to 50% over asking price,5 in cash, sometimes scooping up entire neighborhoods at once so they can turn them into rentals.6
BlackRock Is Buying Up US Houses
BlackRock is one of a number of companies mentioned by The Wall Street Journal in a recent exposé. “Yield-chasing investors are snapping up single-family homes, competing with ordinary Americans and driving up prices,” they warned.7 The question is, why would institutional investors and BlackRock, which manages assets worth $5.7 trillion,8 be interested in overpaying for modest, single family homes?
To understand the answer, you must look at BlackRock’s partners, which include the World Economic Forum (WEF),9 and their extreme political and financial clout. In a Twitter thread posted by user Culturalhusbandry, it’s noted:10
“Black Rock, Vanguard, and State Street control 20 trillion dollars worth of assets. Blackrock alone has a 10 billion a year surplus. That means with 5-20% down they can get mortgages on 130-170k homes every year. Or they can outright buy 30k homes per year. Just Blackrock.
… Now imagine every major institute doing this, because they are. It can be such a fast sweeping action that 30 yrs may be overshooting it. They may accomplish feudalism in 15 years.”
If the average American is pushed out of the housing market, and most of the available housing is owned by investment groups and corporations, you become beholden to them as your landlord. This fulfills part of the Great Reset’s “new normal” dictum — the part where you will own nothing and be happy. This isn’t a conspiracy theory; it’s part of WEF’s 2030 agenda.11
The unstated implication is that the world’s resources will be owned and controlled by the technocratic elite, and you’ll have to pay for the temporary use of absolutely everything. Nothing will actually belong to you, including your home. All items and resources are to be used by the collective, while actual ownership is restricted to an upper stratum of social class. The wealth transfer has already begun.
BlackRock’s Unrivaled Control
The New York Times and a majority of other legacy media are largely owned by BlackRock and the Vanguard Group, the two largest asset management firms in the world, which also control Big Pharma. And it doesn’t end there.
BlackRock and Vanguard are at the top of a pyramid that controls basically everything, but you don’t hear about their terrifying monopoly because they also own the media. You can watch all the details about BlackRock’s monopoly in this video, but Humans Are Free summed it up this way:12
“The power of these two companies is beyond your imagination. Not only do they own a large part of the stocks of nearly all big companies but also the stocks of the investors in those companies. This gives them a complete monopoly. A Bloomberg report states that both these companies in the year 2028, together will have investments in the amount of 20 trillion dollars. That means that they will own almost everything.
Bloomberg calls BlackRock ‘The fourth branch of government,’ because it’s the only private agency that closely works with the central banks. BlackRock lends money to the central bank but it’s also the advisor. It also develops the software the central bank uses.
… BlackRock, itself is also owned by shareholders … The biggest shareholder is Vanguard … The elite who own Vanguard apparently do not like being in the spotlight but of course they cannot hide from who is willing to dig. Reports from Oxfam and Bloomberg say that 1% of the world, together owns more money than the other 99%.
Even worse, Oxfam says that 82% of all earned money in 2017 went to this 1%. In other words, these two investment companies, Vanguard and BlackRock hold a monopoly in all industries in the world and they, in turn are owned by the richest families in the world, some of whom are royalty and who have been very rich since before the Industrial Revolution.”
BlackRock May Control the World’s Economic Future
To put this into perspective, BlackRock, an investment firm, has more power than most governments on Earth, and it also controls the Federal Reserve, Wall Street mega-banks like Goldman Sachs and the WEF’s Great Reset, according to F. William Engdahl, a strategic risk consultant and lecturer who holds a degree in politics from Princeton University.13
Engdahl believes that, left unchecked, BlackRock will soon control the economic future of the world, and states, “BlackRock is the epitome of what Mussolini called Corporatism, where an unelected corporate elite dictates top down to the population.”14 For instance, three influential economic appointees of the current administration come from BlackRock.
“There is a definite pattern and suggests that the role of BlackRock in Washington is far larger than we are being told,” Engdahl says.15 The Campaign for Accountability also released a report in 2019 detailing how BlackRock “implemented a strategy of lobbying, campaign contributions, and revolving door hires to fight off government regulation and establish itself as one of the most powerful financial companies in the world.”16,17
BlackRock founder and CEO Larry Fink also has close ties to WEF’s head Klaus Schwab, and joined WEF’s board in 2019. According to Engdahl:
“Fink … now stands positioned to use the huge weight of BlackRock to create what is potentially, if it doesn’t collapse before, the world’s largest Ponzi scam, ESG [Environment, Social values and Governance] corporate investing. Fink with $9 trillion to leverage is pushing the greatest shift of capital in history into a scam known as ESG Investing.
The UN ‘sustainable economy’ agenda is being realized quietly by the very same global banks which have created the financial crises in 2008. This time they are preparing the Klaus Schwab WEF Great Reset by steering hundreds of billions and soon trillions in investment to their hand-picked ‘woke’ companies, and away from the ‘not woke’ such as oil and gas companies or coal.
… Oil companies like ExxonMobil or coal companies no matter how clear are doomed as Fink and friends now promote their financial Great Reset or Green New Deal … And we can expect that the New York Times will cheer BlackRock on as it destroys the world financial structures.”
Blackstone Is the Largest Landlord in the US
Another giant private equity firm, Blackstone, is also deeply entrenched in U.S. real estate. Blackstone is the largest landlord in the U.S. as well as the largest real estate company worldwide, with a portfolio worth $325 billion.18 In June 2021, Blackstone agreed to buy Home Partners of America, a company that rents single-family houses, and its 17,000 houses, for $6 billion.
Blackstone and BlackRock sound alike for a reason. Blackstone’s co-founder, billionaire Steve Schwarzman, said during an interview on Squawk Box that he and Fink “started in business together. We put up the initial capital.” BlackRock used to be called Blackstone Financial, but Fink went off on his own. Schwarzman said, “Larry and I were sitting down and he said, 'What do you think sort of about having a family name with ‘black’ in it,'"19 and BlackRock was born.
Blackstone became notorious for swooping in after the housing bubble burst and buying tens of thousands of homes at deeply discounted prices. They then turned them into single-family rentals, taking advantage of the recession. In 2017, Bloomberg reported:20
“Blackstone built its rental-home business with an advantage few if any other buyers could match: billions of dollars in credit from large banks. Its Invitation Homes subsidiary quickly became the largest single-family home landlord in the U.S., with 50,000 properties. Altogether, hedge funds, private-equity firms and real estate investment trusts have raised about $20 billion to purchase as many as 200,000 homes to rent.”
Now, with many struggling due to yearlong business shutdowns and lockdowns, and home prices rising, many Americans are having difficulty finding affordable single-family homes to buy.21
BlackRock Owns Your House, Gates Owns Your Farmland
Both BlackRock CEO Fink and Bill Gates are pushing for “net zero” carbon emissions.22 But as BlackRock is busy buying up houses, Gates is hard at work amassing farmland and is now the largest owner of farmland in the U.S.23
By 2030, Gates is pushing for drastic, fundamental changes, including widespread consumption of fake meat, adoption of next generation nuclear energy and growth of a fungus as a new type of nutritional protein.24 The deadline Gates has given to reach net zero emissions is 2050,25 likely because he wants to realize his global vision during his lifetime.
But according to Vandana Shiva, in order to force the world to accept this new food and agricultural system, new conditionalities are being created through net zero “nature-based” solutions. Navdanya’s report, “Earth Democracy: Connecting Rights of Mother Earth to Human Rights and Well-Being of All,” explains:26
“If ‘feeding the world’ through chemicals and dwarf varieties bred for chemicals was the false narrative created to impose the Green Revolution, the new false narrative is ‘sustainability’ and ‘saving the planet.’ In the new ‘net zero’ world, farmers will not be respected and rewarded as custodians of the land and caregivers, as Annadatas, the providers of our food and health.
… ‘Net Zero’ is a new strategy to get rid of small farmers in first through ‘digital farming’ and ‘farming without farmers’ and then through the burden of fake carbon accounting.
Carbon offsets and the new accounting trick of ‘net zero’ does not mean zero emissions. It means the rich polluters will continue to pollute and also grab the land and resources of those who have not polluted — indigenous people and small farmers — for carbon offsets.”
A New Wave of Colonization
Ultimately, we’re heading for a new wave of colonization in the name of sustainability and net zero carbon emissions. The solutions are complex. Some have suggested that one solution is to make building homes less expensive, so that new construction homes become less expensive. This, in turn, would drive down the cost of existing homes.27
The video at the top of this article goes into detail about another solution: ending the Federal Reserve to stop the central planning of our money supply and interest rates, which are artificially suppressed in a way that is most taken advantage of by the top 1%, contributing to growing wealth inequality.28
This engineered pandemic has catalyzed the transfer of wealth to the rich and, while the major players pushing for the Great Reset are still emerging, BlackRock and Blackstone are names to keep your eye on.
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>>> Citing COVID-19, mall REIT Washington Prime Group lands in bankruptcy court
Retail Dive
June 14, 2021
Daphne Howland
https://www.retaildive.com/news/citing-covid-19-mall-reit-washington-prime-group-lands-in-bankruptcy-court/601754/
Washington Prime Group on Sunday filed under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. Thanks to "extensive hard-fought, arm's-length negotiations," the REIT — which launched when Simon Property Group spun off a collection of properties in 2014 — has a restructuring support agreement in hand, per court documents.
The restructuring agreement, led by investment firm SVP Global, would knock nearly $950 million off its balance sheet through the equitization of unsecured notes, and the use of $190 million to pay down its revolving credit and term loan facilities, per a press release. The RSA also contemplates a $325 million equity rights offering, which would go toward paying off secured debt.
Washington Prime Group said it's also secured $100 million in new debtor-in-possession financing from the creditors to support day-to-day operations during the bankruptcy process.
Washington Prime Group in its press release blamed the pandemic for its financial woes, but like the many retailers that have gone bankrupt over the last year and counting, its troubles likely started well before.
In fact, they may have begun on day one, considering that its properties are Simon rejects plus struggling properties acquired later in 2014 from Glimcher Realty Trust, which together form "essentially a pile of very weak and vulnerable malls," according to Nick Egelanian, president of retail development firm SiteWorks?. Egelanian calls such retail centers "junk malls."
"This is surely part of the story, i.e., the investors lose again," he said by email regarding the Washington Prime Group filing. "The other part of the story is the properties themselves. There may not be a single A or B property in the entire portfolio — meaning that we at SiteWorks rate them all as likely to be eventually liquidated. In this context, the fact that they are not spinning off enough revenue to keep the parent company solvent is not surprising at all."
The company's plans include two possible exit strategies: a debt swap or sale of assets, according to court documents.
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>>> Mall owner Washington Prime Group files for bankruptcy
Yahoo Finance
Rebecca Falconer
June 14, 2021
https://news.yahoo.com/mall-owner-washington-prime-group-002459139.html
Mall owner Washington Prime Group has filed for Chapter 11 bankruptcy protection, saying the "COVID-19 pandemic proved insurmountable."
Malls have been on the decline for years due to consumer demand shifting online. The pandemic has accelerated the trend for some operators grappling with disappearing foot traffic from shutdowns, and struggling tenants who've stopped paying rent or filed for bankruptcy themselves.
The big picture Washington Prime Group operates 102 malls across the U.S.
The company said in a statement late Sunday that a fresh $100 million loan will keep its malls operating during bankruptcy proceedings.
Washington Prime Group is the third major U.S. mall owner to file for bankruptcy during the pandemic after Pennsylvania Real Estate Investment Trust and CBL.
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>>> 3 REITs You Need in Your Real Estate Portfolio
Motley Fool
May 06, 2021
by Reuben Gregg Brewer
https://www.fool.com/millionacres/real-estate-investing/articles/3-reits-you-need-in-your-real-estate-portfolio-may-2021/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article#
Real estate is an excellent way to generate income, but owning a diversified portfolio of physical properties is a huge endeavor. If you've invested in some rental assets but would like more diversification, including real estate investment trusts (REITs) in the mix is a quick, easy way to achieve your goal. If that sounds like a plan, you need to look at industry-leading names Ventas (NYSE: VTR), Realty Income (NYSE: O), and Digital Realty Trust (NYSE: DLR).
1. A tough time
If you want to put some money to work today, Ventas is a great REIT to look at. The company owns a diversified collection of healthcare properties, with exposure to senior housing, medical office buildings, medical research facilities, and hospitals, among other things. It's one of the largest names in the healthcare space.
That said, the coronavirus pandemic has been difficult and basically resulted in a roughly 45% dividend cut in 2020. At this point, however, it looks like business is starting to turn higher thanks to an aggressive vaccine rollout.
The big story here, however, is the long-term demographic trend of an aging population. While COVID-19 was a clear speed bump, it hasn't changed the fact that baby boomers are cresting into retirement in huge numbers. That will lead to a massive increase in the senior population, a group that simply needs extra medical care than younger groups. To put a number on that, Ventas estimates that the senior population will grow 11 times faster than the general population in the coming days.
This diversified healthcare REIT is struggling today but is poised to serve the growing senior population for years to come. Buy today, and you can collect a 3.19% yield while you wait for Ventas' business to turn around.
2. Big and getting bigger
Net lease specialist Realty Income is one of the largest REITs around, but it just inked a deal to buy smaller peer VEREIT (NYSE: VER) to create a $50 billion market cap industry giant.
Net lease REITs own single-tenant properties for which the tenants are responsible for most property-level expenses. It's generally considered a low-risk approach in the real estate sector. Realty Income focuses on retail assets, which make up around 85% of its portfolio (that number will remain about the same after the acquisition is consummated near the end of 2021). The rest today is in industrial and office properties, but after the deal, the office assets will be spun off. So, it's probably best to look at Realty Income as a retail and industrial REIT.
Scale brings benefits in the net lease space (lower financing costs and the ability to take on bigger deals, for example), so this is a pretty good deal. And it's expected to add to adjusted funds from operations (FFO), a REIT metric similar to earnings for an industrial company, in the first year.
Meanwhile, Realty Income has increased its monthly pay dividend annually for 25 consecutive years, making it a Dividend Aristocrat. There is a lot to like here, even without the VEREIT acquisition. The yield today is around 4%, about the middle of the yield range over the past decade. While hardly a bargain, it's a fair price for a great REIT that's about to get even better.
3. The technology future
The last name here is Digital Realty, which owns a globally diversified collection of data centers. Essentially, it provides the backbone of the internet, as companies increasingly look to use the cloud for their storage, processing, and client interaction needs. It's one of the largest, oldest players in the space, with material plans for continued growth. In fact, it's seeing increasing demand from customers thanks to the coronavirus pandemic pushing more people onto the internet for work and pleasure.
Digital Realty has increased its dividend for 16 consecutive years. The yield today is around 3%. This is a potential problem, especially if you have a value bias, since that puts the yield near the lowest levels in the company's history. That doesn't mean you shouldn't own it; it just means that if you don't own it, you should put it on your wish list for now and wait for a better entry point (perhaps around a 4.5% yield).
The key here is that this is a growth-oriented industry leader that doesn't get cheap very often, so keep an eye on it if you want to catch a good price. But given the trends in the technology space, it's a name you'll likely want in your portfolio at some point soon.
Three important names
The tough year Ventas lived through in 2020 has left the REIT in turnaround mode and a decent bargain at current levels. Realty Income is fairly priced right now and is about to make a huge leap forward in scale. Digital Realty is kind of pricey, but it doesn't go on sale often so it's worth putting on your wish list -- this way, you don't miss out when it does go on sale.
All three are big players in their respective niches and operate in areas in which a regular property owner would have a harder time competing. If you're looking to add some diversification to your real estate holdings, do yourself a favor and perform a deep dive on this trio of REITs today.
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>>> Better Buy: Americold Realty Trust vs. Extra Space Storage
Motley Fool
May 17, 2021
by Reuben Gregg Brewer
https://www.fool.com/millionacres/real-estate-investing/articles/better-buy-americold-realty-trust-vs-extra-space-storage/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article#
Although real estate investment trusts (REITs) are generally considered income vehicles, that doesn't mean investors can't focus on names with a growth bias. That's the case for Americold Realty Trust (NYSE: COLD) and Extra Space Storage (NYSE: EXR). Which helps explain why their dividend yields, at 2.3% and 2.7%, respectively, are so low. But is one of these fast-growing REITs a better option than the other? Here's some things to consider while you make your decision.
1. Very different businesses
The most obvious disparity between Extra Space Storage and Americold is what they own. Extra Space is focused on self-storage properties, where people put the "junk" they own when they have no more room in their homes. It's a fairly sticky business, since most people don't want to change storage units just to save a few bucks a month in rent. Americold, meanwhile, owns temperature-controlled warehouses. These are generally where things like groceries get stored as they are moved around the country to the stores that ultimately sell the products. It is a vital cog in the distribution chain.
Clearly, if you're looking for a self-storage REIT, then Americold won't fit your needs. And if you're looking for an industrial REIT, then Extra Space won't work for you. But if you are simply looking for a growth-oriented landlord, then either one might do just fine.
2. Dividends
As noted, the yields on offer here are pretty tiny. But there's more to the dividend story than just the yield. For example, Americold has only been public since early 2018. It paid a partial dividend in its first quarter that year, but it has basically been increasing the dividend four cents per share per year since 2019. That includes an increase in pandemic-hit 2020. The quarterly dividend has increased over that span from $0.19 per share per quarter to $0.22, which isn't really much to write home about on an absolute basis, but the last hike was roughly 5%. Solid, but not huge. The company appears more focused on expanding its business than passing income on to shareholders, which is a fair tradeoff so long as you go in knowing what to expect. The REIT's adjusted funds from operations (FFO) payout ratio was roughly 73% in the first quarter.
Extra Space Storage has a longer history as a public company, IPOing in mid 2004. It started paying a dividend in 2005, only to cut it during the deep 2007 to 2009 recession. It got back on track in the second quarter of 2011 and has increased the dividend every year since. The dividend has increased from $0.10 per share per quarter when it was reinstated in 2011 to $1.00 per share after the most recent hike. That's a little more exciting as far as dividend increases go, with the last hike tallying in at 11%. If you're looking for dividend growth, Extra Space seems like the better option. The adjusted FFO payout ratio was 66% in the first quarter of 2020, which is even better than Americold.
3. A look at growth
Since going public in early 2018, Americold has increased its portfolio from 146 properties to 233. That's come largely from acquisitions. Extra Space owns 1,206 properties and manages 763 self-storage assets for others, bringing its total owned and operated count to nearly 1,969. It started life with a portfolio of around 110 owned properties. A lot has obviously happened since the IPO, with acquisitions and ground-up construction both notable contributors.
In fairness, a temperature-controlled warehouse is a much different building than a self-storage facility. So the absolute numbers here don't necessarily tell the whole story. However, the big takeaway is that both of these REITs are focused on building out their portfolios. Extra Space has had more time to do that, and the properties it owns are, perhaps, simpler assets, so its growth has been fairly rapid. And that has translated into notable dividend growth for investors, at least after it worked past the hit from the 2007 to 2009 recession.
4. The market take
The low yields here suggest that investors are placing a fairly high value on these shares, given that REITs are specifically designed to pass income on to investors. That said, since the start of 2020, Americold's shares are only up around 8%, while Extra Space Storage's shares have risen 37% or so. But there's more to the picture here.
Using the first-quarter adjusted FFO of $1.50 per share as a run rate, Extra Space Storage's price to adjusted FFO ratio is roughly 24 times. Americold's first-quarter adjusted FFO was $0.30 per share; used as a run rate, that puts the price to adjusted FFO ratio at around 31 times. That's not shocking, however, given that logistics assets are seen as hot commodities considering the boom in online sales. However, it suggests that Extra Space Storage, while perhaps not cheap, is still offering investors a better value today even after a big price run. Americold's modest stock price increase, meanwhile, suggests it may have to grow into its valuation.
The final call
Value-conscious investors will probably want to avoid both Americold and Extra Space Storage. So, too, will those focused on maximizing their dividend income. That said, for investors with more of a growth focus, Extra Space Storage probably comes out ahead in this pair-up. It has a more impressive dividend growth history, a more compelling valuation, a pretty sticky business model, and has expanded at an impressive clip. That's not to suggest Americold is a bad REIT, but it looks like investors are pricing in a lot of positives that have yet to show up in the company's performance just yet.
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>>> Prologis' 2 Can't-Miss Insights for Real Estate Investors
Motley Fool
May 18, 2021
by Matthew DiLallo
https://www.millionacres.com/real-estate-investing/articles/prologis-2-cant-miss-insights-for-real-estate-investors/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Prologis (NYSE: PLD) is a global leader in logistics real estate. The industrial REIT, or real estate investment trust, operates more than 4,700 buildings, with nearly 1 billion square feet of space, leased to 5,500 customers across 19 countries. That makes it one of the largest REITs in the world. It's significantly bigger than its next industrial REIT rival, Duke Realty (NYSE: DRE), which operates 543 logistics properties with 162 million square feet across the U.S.
Given its mammoth size and global scale, Prologis knows the industrial real estate market better than anyone. That's why investors should listen to what its management team has to say about what they see in the sector. With that in mind, here are two crucial insights they recently made that real estate investors won't want to miss.
Demand is blistering hot
Prologis CEO Hamid Moghadam made a jaw-dropping statement in the company's recent earnings report. He said that:
The robust demand from the fourth quarter has carried into 2021 and is as strong as I have seen in my career. Global supply chains are pushing to keep pace with accelerating economic activity, retooling for faster fulfillment and resilience. With our well-positioned portfolio, differentiated customer offerings and abundant investment capacity, we expect to continue to outperform while delivering exceptional customer service.
When Moghadam states that demand for logistics space is "as strong as I have seen in my career," he's making a bold statement, given his illustrious career. He co-founded Prologis' predecessor, AMB Property, in 1983. He led that company through its initial public offering in 1997 and its merger with Prologis in 2011. Suffice it to say, he's seen his share of boom markets, and the current one stands out to him as the strongest thus far.
He noted two tailwinds are driving red-hot demand. First, accelerating economic activity coming out of the pandemic is stretching the global supply chain thin. That's forcing companies to secure space to store inventory so they can keep up with demand. Second, the accelerating adoption of e-commerce is driving demand for additional warehouse space so that companies can fulfill orders even faster.
Because demand is so strong, Prologis expects higher occupancy, rental rates, and development starts this year. As a result, it boosted its full-year forecast.
Inflation is heating up
Another nugget came from CFO Tom Olinger on the accompanying conference call. He stated that: "We've begun to see a rapid acceleration in replacement costs. In the U.S., we expect replacement cost to increase 20% to 25% over the two-year period through 2021, the fastest rate ever."
This statement implies that it's getting increasingly expensive to build new supply as inflation drives up the cost of things like steel. Olinger also noted that "many of our markets faced shortages of land [for] logistics uses" in the quarter.
These inflationary and scarcity issues make existing facilities increasingly more valuable, especially in the face of tailwinds like "strengthening demand and ultra-low vacancies," which Olinger reported on the call. That's "leading customers to increasingly compete for space, which is translating into pricing power."
As a result, Prologis is enjoying strong rent growth. Overall, the company now expects 6% global rent growth this year, driven by its ability to capture significant rate increases as contracts on existing space expire.
A mega trend investors won't want to miss
Demand for industrial real estate is red-hot right now. Moreover, the dual tailwinds driving it are unlikely to abate for several years, implying significant growth potential for the industry. Because of that, real estate investors should seriously consider increasing their exposure to this sector, since it could prove to be a big winner in the years ahead.
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>>> U.S. Home Prices Surge the Most on Record in Buying Frenzy
Bloomberg
by Prashant Gopal
May 11, 2021
https://finance.yahoo.com/news/u-home-prices-surge-most-141744748.html
(Bloomberg) -- The median price for a single-family home in the U.S. rose the most on record in the first quarter, as buyers fought over a dearth of inventory, according to the National Association of Realtors.
Prices jumped 16.2% from a year earlier to a record high of $319,200. The growth eclipsed the 14.8% rate in the fourth quarter, which was the highest in data going back to 1989, the group said in a report Tuesday.
Americans are taking advantage of low mortgage rates to buy homes in the suburbs and in less-costly cities across the country, where supplies are tight and bidding wars are common.
“The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off-the-radar in prior years for many home-seekers,” said Lawrence Yun, the group’s chief economist.
The metropolitan area with the largest increase from a year earlier was Kingston, New York, a picturesque Hudson Valley town about 90 miles (145 kilometers) north of Manhattan. Prices there soared 35.5%. Fairfield County, Connecticut -- home to Greenwich -- followed, with 34.3%.
Of the 183 metro areas measured by the group, 163 had double-digit price gains, up from 161 in the fourth quarter. Springfield, Illinois, was the only area where prices fell.
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>>>> I Put Half Of My Net Worth Into These Hard Asset Investments
Seeking Alpha
Nov. 14, 2020
by Jussi Askola
https://seekingalpha.com/article/4388468-i-put-half-of-net-worth-hard-asset-investments
Summary
Most investors put their net worth in financial assets like stocks, bonds and cash.
I prefer to invest mine in hard assets.
You can get exposure to hard assets through publicly-traded vehicles.
Below I explain why I have 60% of my net worth in hard assets, and why you should do the same.
Most investors have the vast majority of their net worth in financial assets. Typically stocks, bonds and cash. These assets are extremely easy to invest in, which explains their popularity. But they come with a lot of downside too. From volatility to returns that barely beat inflation, they come with various disadvantages, depending on which asset class you’re talking about.
Let’s take each of the three most popular financial assets one by one.
Cash. This is like throwing money down the drain. The average savings account has only a 0.06% interest rate according to the FDIC. With inflation running at 2%, you’re losing purchasing power at that rate.
Bonds. They pay nothing or next to nothing after inflation and taxes. They’re better than cash, don’t get me wrong. But all you’re doing with bonds is maintaining your net worth, you’re not growing it. Long-term corporate bond ETFs (VCLT - BLV) yield just around 3%.
Stocks. Stocks tend to outperform cash and bonds over time. But they’re extraordinarily complex. To truly understand a stock, you need to understand all the moving pieces of a business that may have dozens of subsidiaries, subsidiaries with subsidiaries of their own, foreign operations, and more. And the risk is significant. Putting a large chunk of your net worth in the next Enron is a sure way to evaporate your savings. Finally, today's valuations are astronomically high with the S&P 500 (SPY) trading at 36x earnings, which is over 2x its historical average. Put differently, stocks are now priced at a 2.7% earnings yield even as we go trough a major crisis:
So, if all of the above assets have major problems with them, where do you put your net worth?
Hard Assets.
“Hard assets” is a term for tangible assets that have physical substance. Hard assets physically exist in the world and typically have some practical real-world use. The total list of hard assets would be far too long to reproduce here. But some good examples include:
Real estate.
Pipelines.
Farmland.
Timberland.
Airports.
Toll roads.
Other miscellaneous types of infrastructure.
All of these assets fulfill a real-world need and therefore often have stable, dependable cash flows. Not all hard assets are equal in terms of their income potential. Some are more dependable than others. But as a class, they offer high yield with relatively lower risk.
You might say: “sure, hard assets are good, but I can’t afford a second mortgage… so how do I get my exposure?”
The answer is simple: Through publicly-traded vehicles like REITs. REITs trade on exchanges like stocks but are built on portfolios of hard assets. They typically have mandates specifying that they pass a certain amount of their net income on to investors in the form of dividends. And they’re run by management teams, so you don’t need to worry about physically managing the properties yourself. By buying REITs and other REIT-like entities, you can get quick exposure to a diversified portfolio of hard assets. This is where I have over half of my net worth today, and I don’t plan on changing that any time soon.
Why Favor Hard Assets Over Stocks, Bonds, and Cash?
Reason #1: Yield
The cold hard truth is that there’s just not a lot of yield out there these days. The 10-year Treasury yields a minuscule 0.83%, while the SPDR S&P 500 ETF (SPY) yields 1.6%. The Nasdaq, meanwhile, is lagging both: The Invesco QQQ Trust ETF (QQQ) yields just 0.51%. In this market, the yield is hard to come by.
Unless that is, you look into REITs. REITs as measured by the Vanguard Real Estate ETF (VNQ) yield around 4%. That’s the market as a whole. Individual REITs can yield anywhere from 6% to 8%. If you’re really adventurous, you can find REITs yielding as much as 10%.
Our Core Portfolio is heavily invested in REITs and other hard assets. We target an ~8% yield a ~75% payout ratio. Generally, our actual portfolio yield and payout ratio are close to these targets.
Reason #2: Higher Total Returns
It’s possible to generate very high total returns with hard assets. If you buy real estate with a 6%-7% cap rate and finance half at 3%-4%, you get a 10% yield. That’s a strong return even with no price appreciation in the equation. Throw in a modest 2%-3% annual gain in there, and you’ve got a 15% a year investment.
You can do the same by buying hard assets through REITs and other publicly traded hard asset companies. Case in point: Brookfield Asset Management (BAM). Over the past 30 years, it has earned a 16% annualized return, compared to just 7% for the S&P 500.
Another example: Realty Income (O) has nearly quadrupled the returns of the S&P500 since its IPO in 1994:
On average, REITs have outperformed nearly every other asset class over the past 20 years leading up the COVID-19 crisis. When you earn high dividends, not much growth is needed to earn double-digit total returns:
Reason #3: Valuation
Finally, we get to valuation. The sad truth about the markets these days is that steep valuations are starting to become the norm. The vast majority of tech stocks trade at more than 10 times book value. Big players like Netflix (NFLX) and Amazon (AMZN) trade at anywhere from 70 to 120 times earnings. These kinds of valuations can’t persist forever. Even with strong earnings growth, it’s hard to justify a 120X multiple. And with tech making up an ever-larger percentage of the S&P 500’s market cap, we’re really talking about “stocks” as a whole here.
Hard assets, by contrast, are cheap relative to cash flow at the moment, particularly if you get your exposure through REITs. In many cases, REITs are down for the year in 2020, and priced at up to 50% discounts to the underlying value of their assets. To be sure, REITs ran into some collections problems that dampened earnings early in the pandemic. But they’re beginning to turn that around even as valuations remain opportunistic.
Smart Money is Rushing into Hard Assets
If you want to know where to invest, you need to look at where institutional investors are putting their money. Institutional investors own about 80% of the public equity market, and a growing share of investments in hard assets.
That institutional investors are increasing in clout is obvious. From 2008 to 2018, institutional capital nearly tripled. It’s expected to rise to $100 trillion by 2030.
That a large share of this capital is going into hard assets also is evident. Many pension funds and other big institutions favor yield in their portfolios as income is paramount for institutions with regular cash expenses. As mentioned above, there’s barely any yield these days in stocks and Treasuries. So yield-hungry institutions will likely move into hard assets in the years ahead. That may include direct investments as well as positions in REITs.
How to Profit from Hard Assets
Once you’ve decided you want exposure to hard assets, there are several asset classes you can look into. In no particular order:
Commercial real estate. Investments in apartment communities, e-commerce warehouses, data centers, or even casinos. AvalonBay Communities (AVB) and Digital Realty (NYSE:DLR.PK) would be classic examples.
Airports. Believe it or not, there are publicly-listed airports you can buy today on equity markets. Grupo Aeroportuario del Pacifico (PAC) is an example of one.
Timberland and farmland. You can invest directly in Timberland and Farmland through LPs and REITs like Gladstone Land (LAND) and Catchmark Timber (CTT).
Energy pipelines. Companies that transport oil and gas by pipe systems. Examples include the 10%-yielding Enterprise Product Partners (EPD) and Energy Transfer (ET).
Windmills. You can invest in alternative energy projects through partnerships like Brookfield Renewable Partners (BEP).
All of the hard assets listed above have high-income potential and have delivered steady growth over time. With a diversified portfolio consisting of these types of assets, you could outperform the markets.
That’s not to say there aren’t risks with hard assets. On the contrary, there are several you need to look out for. Retail REITs are vulnerable to industry trends like e-commerce, which has wreaked havoc on lower quality mall REITs CBL (CBL) and Washington Prime Group (WPG). Pipelines are subject to regulatory scrutiny and often find their projects delayed for long periods. Airports see revenue dip during recessions. The value of windmills decreases over time.
Because of these risk factors, you need to be careful about which hard assets you invest in. It’s not a simple matter of buying any hard asset and hoping it will deliver a good return. Nor is it as simple as buying a REIT ETF (VNQ) — with VNQ, you won’t get the 6%-8% yields mentioned earlier. Instead, you need to be selective and build a reasonably diversified portfolio of hard assets with the desired characteristics.
Our Hard Asset Portfolio
Over the years, we have built a portfolio of REITs and REIT-like entities that delivers on three key metrics:
High Yield
Low Payout Ratio
Substantial Discount to NAV
With this portfolio, we generate approximately $10,000 in annual income on just $160,000. You can see how this breaks down in the table below.
These are the characteristics of our Core Portfolio in November 2020. In today’s market, this is quite achievable. However, you may struggle to build a portfolio with these characteristics if you wait too long. With ultra-low interest rates, capital will flood into hard assets. Valuations will surge and yields will compress. Put simply, the smart money is getting into hard assets today — not waiting for tomorrow.
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>>> Global X Data Center REITs & Digital Infrastructure ETF (VPN)
https://finance.yahoo.com/quote/VPN/profile?p=VPN
>>> The investment seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Data Center REITs & Digital Infrastructure Index. The fund invests at least 80% of its total assets, plus borrowings for investments purposes, in the securities of the Solactive Data Center REITs & Digital Infrastructure Index and in ADRs and GDRs based on the securities in the index. The index is designed to provide exposure to companies that have business operations in the fields of data centers, cellular towers, and/or digital infrastructure hardware. The fund is non-diversified.
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Prologis - >>> 3 Great Stocks for Low-Risk Investors
These companies with low-risk businesses will hold up over the long run.
Motley Fool
Jim Crumly
Feb 28, 2021
https://www.fool.com/investing/2021/02/28/3-great-stocks-for-low-risk-investors/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
The average stock in the S&P 500 index is selling for 22 times earnings expected by analysts in the upcoming year, which is higher than at any time since the dot-com crash of 2000-2002. The market's valuation has some investors nervous now. If you're looking for stocks with lower risk, you're not alone.
No one really knows how the market will move next, but investors can avoid a lot of risk by simply being patient, buying stocks of strong businesses, and holding for the long term. The longer an investor holds shares, the more the quality of the business overshadows fluctuations in valuation.
Here are three high-quality stocks that should appeal to investors who want growth but are concerned about a downturn. The shares of these companies could go down in a market correction along with almost everything else, but their low-risk businesses should outperform in the long run, rewarding patient shareholders.
Abbott Laboratories
Healthcare stocks tend to be "defensive," meaning that their businesses tend to hold up well during downturns in the economy. Abbott Laboratories (NYSE:ABT) is one of the most consistent growth stocks you'll find in the sector. The highly diversified seller of medical devices, diagnostics, pharmaceuticals for emerging market countries, and nutrition products puts together one solid quarter after another and hasn't had an earnings disappointment in over a decade.
Abbott's fourth-quarter results got a big boost from COVID-19 testing. Sales growth of 28% over the period a year ago would be flat if you subtracted the $2.4 billion of sales related to coronavirus testing. But sales of routine diagnostics and medical devices were depressed during the quarter as medical procedures around the world dropped due to the late-year surge in the pandemic. Abbott thinks the demand for COVID-19 testing hasn't peaked yet and will remain strong beyond 2021. Meanwhile, a rebound in routine medical procedures will cause the rest of its business to bounce back, and sales of its FreeStyle Libre continuous glucose monitor are growing more than 40%.
Looking forward, Abbott expects 2021 earnings per share of $5.00, a level that analysts hadn't projected the company to hit until after 2023, and it thinks it will continue to grow profits from there, even after the pandemic. The company continued its streak of 49 years of dividend hikes when it recently boosted the payout by 25%, resulting in a yield of 1.5% and helping investors in this blue chip stock sleep at night.
Prologis
The pandemic accelerated the shift in retail from brick-and-mortar stores to e-commerce, and one consequence has been a boom in demand for warehouse space. That trend created a tailwind for Prologis (NYSE:PLD), a real estate investment trust that's the global leader in logistics real estate. Stable long-term cash flows had made the company an attractive choice for low-risk investors long before that.
Prologis owns almost a billion square feet of logistics real estate housed in 4,700 buildings in 19 countries. The value of the goods passing through its properties represents fully 2.5% of the world's gross national product. That produces a huge and stable base of rents that grows as space in key locations becomes more valuable and the company develops new properties. Core funds from operations per share grew 15% in 2020 and the dividend rose 9.4%, with shares now yielding 2.3%.
An economic recovery aided by stimulus checks and vaccines means that warehouse space will remain in high demand in 2021. Prologis says that inventory levels compared with sales are near record lows and that there are signs that businesses are restocking their inventories to prepare for higher consumer spending and more growth of e-commerce.
The pandemic exposed weaknesses in global supply chains, and Prologis thinks that long-term investments to position goods closer to consumers and make supply chains more resilient will result in incremental demand for 200 million square feet of logistics space in the U.S., a trend that will take several years to play out.
The strong trends fueling Prologis' growth and the durable nature of its cash flows make the business attractive to risk-averse investors.
Generac Holdings
A glance at a chart of the share price of Generac Holdings (NYSE:GNRC) over the last couple of years might lead you to believe that the company is a high-flying tech stock. Shares rose 226% in 2020 and are up 38% already this year. But the maker of industrial equipment for over 60 years is in the sweet spot of some important trends and gives investors the opportunity to tap into long-term growth with less risk than you'd have in many tech stocks.
Generac is the leader in backup generators for home and industrial use. Sales of those products surged during the hurricanes and wildfires of 2019, got a boost from the working-from-home trend in 2020, and will surely benefit from the massive grid failure in Texas this month. The aging U.S. electrical grid and a greater urge to invest in disaster readiness among consumers are powerful tailwinds for the business that should last for years. Residential sales boomed 55% in the fourth quarter, leading to 29% top-line growth and a 39% increase in net profit.
But Generac is moving into new markets in the energy security business that should open up important new opportunities for growth. The company has created a residential clean energy solution that combines solar power generation with high-capacity batteries, the industry's largest inverter for converting direct current to the alternating current that the grid uses, and a load management system. The company's PWRcell energy storage system keeps a whole home functioning off the grid during outages, and when integrated with generators later this year, will be able to keep a home powered indefinitely during grid failures. Sales went from zero to $115 million in 2020 and the company expects 50% to 75% growth in 2021.
Generac also has an opportunity during the global 5G roll-out to sell more power backup systems for cell tower installations, where it's the leader in market share in the U.S. Longer term, the company aspires to help utilities meet peak demand through "virtual power plants," the ability to remotely turn on commercial and residential standby generators and feed power back into the grid, earning income for their owners from assets that sit idle most of the time.
Shares of the stock aren't cheap at 37 times expected 2021 earnings, but Generac's dominance of its niche gives low-risk investors a rapidly growing but easy-to-understand business that has a long runway ahead.
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>>> REITs as an inflation play
Real estate investment trusts can help generate income and hedge against inflation.
BY FIDELITY LEARNING CENTER
04/28/2021
https://www.fidelity.com/learning-center/overview
Key takeaways
In an inflationary environment, real estate investment trusts (REITs) offer investors a unique combination of potential for capital appreciation, inflation hedging, and income.
REITs invest in a wide variety of types of real estate. Among the potential winners: REITs that invest in industrial real estate, data centers and communication-tower properties..
REITs also have unique tax and reporting complexities that other types of investments may not.
Careful security selection by active managers can help manage the risks of investing in REITs.
With inflation rising and interest rates still near historic lows, investments that have historically performed well in inflationary times are appealing and so are those that can deliver income despite low rates.
Historically, when inflation has risen, stocks and real estate have tended to fare relatively well compared with bonds. While past performance offers no guarantees about what may happen in the future, the track record of both stocks and real estate may make this a good time to find out more about REITs, which are companies that own, operate, or finance income-generating real estate including offices, apartments, shopping centers, hotels, and more.
Most REITs are publicly traded and enable investors to earn dividends from real estate without having to buy individual properties. REITs offer the potential for capital appreciation of stocks (and the potential exposure to stock market volatility), income in the form of dividends, and also the benefit of exposure to underlying real estate that has tended to gain in value during inflationary times. Furthermore, after a year of COVID-related restrictions which emptied many commercial buildings of tenants and customers, many REITs are trading at modest valuations even as economic growth revives.
Why REITs?
Besides its historical role as an inflation hedge and a source of income, real estate can also provide diversification within the equity portion of an investor's portfolio. While it's difficult and expensive to get exposure to real estate by buying and managing a building or developing a piece of land, buying shares of REITs that purchase and bundle buildings or land offer a practical and relatively liquid means of doing so. Keep in mind, though, that diversification and asset allocation do not ensure a profit or guarantee against loss.
"I find REITS to be quite attractive and we're adding them," says Adam Kramer, lead manager of the Fidelity® Multi-Asset Income fund and co-manager of the Fidelity® Strategic Dividend Income fund. "It's a really interesting time for real estate in so many ways, because we've had this huge retreat from offices, an acceleration of the retreat from brick and mortar shopping, and now at least some things are coming back."
Potential winners and losers
While REITs overall may be attractive, though, would-be investors need to understand that not every REIT is equally attractive. REITs typically specialize in certain types of properties such as retail or apartment buildings and COVID-19 has accelerated trends that are transforming real estate markets, benefiting some types of properties and disfavoring others.
Steve Buller, manager of Fidelity® Real Estate Investment ETF says 2 of the most significant trends he's watching are the ongoing decline of brick-and-mortar retail properties and the accompanying growth in demand for industrial real estate driven by the growth of e-commerce. He says that owners of data-center and communication-tower properties have also experienced rapid demand growth as telecommuting has gone mainstream over the past year.
That same trend toward telecommuting is also raising questions about the future of office real estate. Buller expects a likely reduction in future demand for office space and is also watching to see how the shift toward remote work could influence demand for apartments as telecommuters reconsider where they are able to live while still earning a living.
Value and income
Kramer says that many REITs still have a lot of this uncertainty priced into them and because so much bad news took place last year a lot of companies already cut their dividends. He feels more comfortable about dividends actually growing from the low single digits to the mid single digits next year. "When you consider dividend yield, dividend growth, and potential for multiple expansion, REITs look more attractive to me than other income-oriented asset classes," says Kramer. "So that's why we've been looking across the full spectrum, but not only in the US. I'm finding opportunities in Canada as well. Canada is way behind the US in terms of the vaccine rollout and there’s more uncertainty around the reopening and use of some of the properties that these REITs own."
Managing the unique risks of REITs
Careful security selection by active managers can help manage the risks of investing in this distinctive and highly variegated asset class. One of the unique characteristics of REIT shares is that they are liquid assets that derive their value partly from the ownership of illiquid assets. That can pose operating challenges because changes in real estate values or economic downturns can have a significant negative effect on real estate owners. REITs also have unique tax and reporting complexities that other types of investments may not. Experienced managers with deep knowledge of individual companies and real estate markets can help investors avoid some of the risks while gaining the benefits of diversification, income potential, and inflation hedging.
Finding ideas
Many investors may have some exposure to REITs through diversified mutual funds and ETFs. Those who want to further diversify their portfolios with REITs should determine their existing level of exposure, consider the risks and complexities, and research professionally managed mutual funds and ETFs. You can run screens using the Mutual Fund and ETF Evaluators on Fidelity.com. Below are the results of some illustrative mutual fund screens (these are not recommendations of Fidelity).
Mutual funds that invest in REITs
Fidelity funds
Fidelity® Real Estate Investment Portfolio (FRESX)
Fidelity® International Real Estate Fund (FIREX)
Fidelity® Real Estate Income Fund (FRIFX)
Fidelity® Multi-Asset Income Fund (FMSDX)
Non-Fidelity funds
MFS Global Real Estate Fund (MGLAX)
American Century Global Real Estate Fund (ARYVX)
Franklin Real Estate Securities Fund (FREEX)
Exchange-traded funds
Alps Active REIT ETF (REIT)
Fidelity® Real Estate Investment ETF (FPRO)
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>>> 3 ETFs Riding Housing Sales Surge
Yahoo Finance
October 27, 2020
https://finance.yahoo.com/news/3-etfs-riding-housing-sales-184500318.html
Rarely has the U.S. housing market been so strong. Last week, the National Association of Realtors (NAR) released data on existing home sales that showed a booming market, unlike anything seen since the housing bubble burst in 2006.
According to NAR, existing home sales spiked 9.4% month over month in September to a seasonally adjusted annual rate of 6.54 million.
That puts home sales 21% higher than the year-ago level and at their loftiest point since May 2006. As can be seen from the chart below, this sales acceleration leaves the housing market in rarified air.
US Existing Home Sales
Other data points released by NAR paint the same story of a housing market firing on all cylinders. In September, housing prices were up 15% year over year, according to the association, and housing inventories hit a record-low 1.47 million units, equal to 2.7 months of demand (also a record low).
Lawrence Yun, chief economist of NAR, attributed the strength in the market to low interest rates and the pandemic environment.
"Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season," he said. "I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home."
Bullish Homebuilding Environment
Robust demand and tight housing supply bode well for the builders of new homes. Every incremental new house on the market is likely to be sold quickly in this environment. It’s why we’ve seen a run to record highs for the iShares U.S. Home Construction ETF (ITB) and the SPDR S&P Homebuilders ETF (XHB), which are up 27.9% and 23.7%, respectively, this year.
ITB, which is a market-cap-weighted fund with $2.4 billion in assets under management, holds two-thirds of its portfolio in homebuilder stocks like D.R. Horton, Lennar and NVR Inc. Building products and home improvement retailer stocks, such as TopBuild and Home Depot, make up about a quarter of the fund.
Meanwhile, the equal-weighted XHB, with $1.5 billion in assets, holds 37% of its portfolio in building products, 29% in homebuilders; 20% in home improvement and home furnishing retailers; and the rest in home furnishings and household appliance manufacturers.
According to NR’s Yun, homebuilders have moved “to ramp up supply,” but there is “a need for even more production,” making for a bullish environment for the industry.
Housing ETF Newcomer
While homebuilders are the traditional beneficiaries of a booming housing market, a new breed of companies has evolved to facilitate the homebuying process in the digital age. Companies like Zillow and Redfin, which provide home discovery, home listing, brokerage and iBuying services, have hit record highs in the past few months.
The Hoya Capital Housing ETF (HOMZ), a 1-1/2-year-old fund with $36 million in assets, holds a notable 20% of its portfolio in companies like these. This bucket of housing-related “home financing, technology and services” companies also includes mortgage lenders and servicers, as well as property, title and mortgage insurers.
Another 20% of HOMZ’s portfolio is in home improvement and furnishings companies, which not only includes mainstays like Home Depot, but digital newcomers like Wayfair.
About 30% of HOMZ’s holdings are allocated to homebuilders and construction stocks, and 30% is in home ownership and rental operations, primarily residential real estate investment trusts.
This eclectic mix of housing-related holdings has fueled HOMZ to an 8.3% gain for the year, in line with the 8.9% gain for the S&P 500 in the same period.
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Digital Realty - >>> I Almost Never Buy the Dip, but Digital Realty Trust Might Be an Exception
Here's an exciting tech company that doesn't deserve to be trading for a discount.
Motley Fool
Matthew Frankel, CFP
Dec 5, 2020
https://www.fool.com/investing/2020/12/05/i-almost-never-buy-the-dip-but-digital-realty-trus/
Over the past month or so, we've been bombarded with coronavirus vaccine data, and it's all been very positive. Few people expected the leading vaccine candidates to be over 90% effective with no major safety concerns. As a result, it looks like the world may be able to get back to normal sooner than many expected.
While this has been a positive catalyst for so-called "reopening" stocks like airlines, hotels, and retailers, just to name a few, it has also caused investors to pump the brakes on stocks that benefited from the stay-at-home economy we've been living through for much of 2020. One of these stocks is data center real estate investment trust Digital Realty Trust (NYSE:DLR), which is down by about 20% from its peak. Digital Realty is already one of the largest stock positions in my own portfolio, and I rarely add to already large investments just because shares drop, but this is one I might make an exception for.
Digital Realty certainly benefited from the stay-at-home economy
When you access an online-based software program, upload a video to your social media, or stream a movie, all of that data is stored in the cloud. But it isn't actually floating around in the air -- it all needs to physically live somewhere. And that's where data centers come in.
Data centers provide a secure and reliable environment for servers and other networking equipment. And as the pandemic started, the volume of data flowing around the world grew dramatically as millions were forced to work from home, learn from home, and access entertainment from home.
Throughout most of the pandemic, companies that own and operate data centers like Digital Realty Trust were some of the market's top performers, especially out of the real estate sector. At one point at the depth of the market crash in March, I checked my portfolio and Digital Realty was the only stock that was higher for the year.
The need for data is growing, pandemic or not
The key point investors need to know is that while the need for video conferencing, home fitness solutions, and other things that have helped get us through 2020 could certainly see demand fall (at least somewhat) in the post-pandemic world, the volume of data flowing around the world is a long-term trend with massive growth potential. While I'd be cautious about buying some of the high-flying tech stocks that have been 2020's biggest winners, I'm not at all worried about the data center industry.
Simply put, the number of connected devices around the world is growing rapidly, and the gradual wide-scale rollout of 5G and other technological advances will allow these devices to become more data-heavy over time. Just to name a few things that should drive data center demand going forward, the artificial intelligence industry is expected to grow from an $11 billion market in 2019 to $90 billion by 2025. Over the next three years, the volume of virtual and augmented reality devices sold is expected to grow to roughly 10 times their 2019 level, and these are extremely data-heavy.
Digital Realty is one of the largest players in the data center space and the largest in terms of how many data centers it owns. It has excellent credit quality and financial flexibility to pursue growth opportunities as they arise. And the company has a fantastic track record of delivering value for shareholders -- since its 2004 IPO, Digital Realty has produced average total returns of about 22% annualized for investors, more than doubling the performance of the S&P 500.
Buy the dip?
To be perfectly clear, I'm convinced that the drop in Digital Realty's stock price is a result of an investor rotation into "reopening" stocks, rather than any fears about data center demand going forward. With a discounted share price, strong history of dividend growth and excellent returns, and a massive market opportunity, Digital Realty is once again near the top of my buy list.
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>>> Where Will Innovative Industrial Properties Be in 5 Years?
Motley Fool
Nov 26, 2020
by Liz Brumer
https://www.fool.com/millionacres/real-estate-investing/articles/where-will-innovative-industrial-properties-be-in-5-years/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Innovative Industrial Properties (NYSE: IIPR) is the first, and currently the only, real estate investment trust (REIT) to provide real estate capital to the medical marijuana industry. IIPR has grown tremendously since it first became public in 2016. Investors who first purchased shares of this company shortly after it became public have been handsomely rewarded, with share prices up 339% since its 2018 highs. But where is the company headed? Let's take a deeper dive into Innovative Industrial Properties' growth plan and see where it may be in five years.
Where Innovative Industrial Properties is today
Innovative Industrial Properties now owns and/or manages 63 properties in 16 states with $126.1 million in annualized revenues. The company largely acquires properties through their sale-leaseback program, which allows existing, qualified, and licensed businesses in the cultivation, processing, distribution, and retail medical cannabis fields to gain liquidity by selling the property to IIPR while maintaining their operations through a long-term triple net lease.
Revenues as of the third quarter of 2020 were up 196% when compared to the same quarter of the previous year. Adjusted funds from operations (AFFO) increased 192% from the same quarter the previous year. Dividends also increased 10% from the previous quarter and are up 50% from Q3 2019 dividend prices. Innovative Industrial Properties is also extremely well-positioned financially, with virtually no debt beyond $143.7 million of unsecured debt, making for a 9.4% debt-to-gross-assets ratio. Rent collection averaged 100% from July to October of 2020, a period of time in which many REITs struggled with occupancy and rental collections. Their average remaining lease term is 16.2 years with a well-established, diverse range of tenants.
Where Innovative Industrial Properties seems headed
Right now, Innovative Industrial Properties is the only publicly traded REIT investing in medical cannabis facilities, but another cannabis real estate company recently announced their plans to become a publicly traded REIT. Despite new competition, there is still plenty of demand to go around. 2019 medical cannabis sales grew 37% from 2018, and sales are projected to increase 40% in 2020 from 2019. Medical cannabis is being used to treat both minor and major chronic illnesses including arthritis, cancer, HIV/AIDS, Alzheimer's, and beyond.
In the recent election, two new states, South Dakota and Mississippi, approved the use of medical marijuana, bringing the total number of states having legalized the use of medical marijuana to 36 states and 4 territories. ArcView Market Research estimates that all states will have legalized medical cannabis by 2025 and estimates that sales will reach $34 billion by the same year. There's clearly a strong and increasing demand for this field, and IIPR's growth strategy allows them to serve the expanding industry.
If the company continues to maintain its current growth trends, which have exceeded 143% or more year over year since 2017, we can expect to see revenues around $563 million or more by 2025, assuming an average increase of 75% over the next five years to compensate for increased competition and scale. With that, expect AFFO and dividends will continue to grow in line with revenues. With that being said, those projections are rather conservative given the company's track record. It's very likely IIPR could surpass these figures.
Dividends for the company have increased by $1.02, or 680%, since 2017 with payout ratios ranging from 71% to now around the 90% to 92% range providing roughly 3.2% to 3.6% return for investors. Based on the company's current balance sheet, I expect it to maintain similar ratios and returns for investors as revenues grow.
2025 looks strong for Innovative Industrial Properties
As more and more states legalize medical cannabis, the company will have further opportunities to expand into new markets. While IIPR hasn't publicly shared a specific growth plan, based on current activity, it appears they will continue to utilize their sale-leaseback structure while expanding their current partnerships with existing tenants to help fuel growth. I personally own shares in IIPR and would love to buy more. Their growth prospects look strong, and the opportunity for the marijuana industry remains optimistic.
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Cannabis retail dispensaries - >>> As retail vacancies rise, landlords should reconsider their aversion to this ‘recession-proof’ business
Market Watch
May 11, 2020
By Joe Caltabiano
https://www.marketwatch.com/story/as-retail-vacancies-rise-landlords-should-reconsider-their-aversion-to-this-recession-proof-business-2020-05-08?siteid=bigcharts&dist=bigcharts
5 reasons renting to retail cannabis operations makes sense
With major retail chains such as J.Crew and Pier One filing for bankruptcy and closing stores, landlords may finally be ready to warm up to the cannabis dispensary sector.
Historically, cannabis dispensaries have faced hurdles in finding their ideal retail space. A lot of this has to do with cultural stereotypes about cannabis, as well as the industry’s gray area of legality at the federal level. And it hasn’t helped that dispensaries operate in a business sector with little banking access. Whether because of these factors or others, many of the larger commercial brokers have little to do with renting their property sites to cannabis businesses of any kind — medical or adult-use.
Meanwhile, the COVID-19 pandemic has shuttered retail businesses in a way not seen since the Great Depression. With the possibility of large-scale retail vacancies on the horizon as restaurants, clothing stores and other businesses fail or cut back, now might be the time for landlords to take a closer look at the legal cannabis industry to fill these soon-to-be empty storefronts.
This is a business sector that has had no problem in paying its bills during the coronavirus pandemic, including the rent and taxes. Many experts predict that cannabis will be recession-proof, and both consumers and state governments have proclaimed retail cannabis as essential in the same way as grocery stores, fire departments and pharmacies. And while Wall Street has appeared to sour on many cannabis investments MJ, -0.29%, the overvaluation of cannabis stocks is reminiscent of the 2000 dot.com crash, which saw the actual consumer marketplace shift into overdrive just as investors bailed.
The coronavirus pandemic has illustrated how the cannabis economy is fundamentally different than what many landlords may have previously thought. Here are 5 reasons why landlords should rethink their views on this sector when they are considering who to take on as a tenant:
1. Cannabis businesses are essential. In the 33 states that legally regulate marijuana, long lines at cannabis dispensaries during the pandemic showed how strongly consumers view cannabis as vital to their well-being. Most governments at the state and local level took note. They ensured that retail cannabis operators were allowed to remain open because of their essential role in serving the health needs of communities. Even with the challenges of staffing with social-distancing, these businesses kept making sales from day one of the crisis.
From the perspective of any landlord, it’s probably apparent that these businesses were, and are, better able to cover their rent obligations than the untold thousands of other companies that have been forced closed since mid-March.
2. Government needs the tax revenue from legal cannabis businesses. Make no mistake: Even if the post-pandemic economic recovery were to take hold in earnest today, state governments could see a $200 billion shortfall in 2020. The businesses that continue to pay their taxes will be significant drivers of any economic recovery in cash-strapped states. Additionally, taxpaying companies are less likely to run afoul of IRS laws that could result in business closures (and, with them, missed rent payments).
3. Retail cannabis is a business sector with tremendous growth potential. Most landlords who already rent to cannabis companies know this is an emergent industry that faces a lot of regulatory and legal issues that differ from state to state. But it also is one in which sales of legal cannabis, which topped $12.2 billion in 2019, are forecast to hit an estimated $31 billion by 2024, according to The State of Legal Cannabis 2020 Update. In fact, the coronavirus pandemic brought a notable spike in cannabis sales, one that shows little indication of dissipating as the crisis continues.
4. Retail cannabis companies like big spaces. Cannabis dispensaries tend to favor large, open commercial spaces. Many retail cannabis dispensaries today are capable of supporting anchored retail sites from 1,500 square feet to a roomier (and costlier) 7,000 square feet in size.
A recent survey conducted by National Association of Realtors showed that states that regulate legal cannabis saw an increased demand of 18% for storefronts. However the same survey found a majority of commercial members were not currently leasing to marijuana-related businesses, making cannabis tenants some of the largest rental potential in the economy, with their numbers only expected to grow as legalization continues to spread.
5. Retail cannabis businesses are high-security, safe operations. Legal cannabis is produced, packaged and sold under the constant surveillance of security cameras and in secure buildings with armed guards. These visible safety measures make any site rental a more secure one, regardless of whether the location is for a cannabis dispensary or an agricultural operation. This safety can extend to the physical site and any other nearby tenants.
Today’s cannabis industry still has significant challenges involving banking access, zoning issues, insurance and so much more. All of these issues are of legitimate concern to any potential landlord gauging the risk of renting to a retail cannabis establishment. But the public perception of cannabis has undergone a remarkable change in recent years as both legalization and consumption have expanded. Cannabis is more widely — and properly — viewed as a beneficial health asset, not a mind-numbing vice or a Cheech & Chong punchline of yesterday.
As the world tries to regain its economic footing in the wake of the COVID-19 pandemic, landlords should take note and roll out the welcome mat accordingly. It will be profitable business for them, and it will be good for the nation’s economic recovery as well.
Joe Caltabiano is a co-founder of Cresco Labs, a Chicago-based publicly traded medical marijuana company, and was its president from 2013 until he resigned in March. He previously was senior vice president of mortgage banking at Guaranteed Rate, a Chicago-based residential mortgage company.
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AMT, IIPR - >>> The 3 Safest REITs to Buy Right Now
Motley Fool
Nov 11, 2020
by Marc Rapport
https://www.fool.com/millionacres/real-estate-investing/articles/the-3-safest-reits-to-buy-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo#
Real estate investment trusts (REITs) are by their very nature structured to be reasonably safe investments. They’re required to pay out some 90% of their net income, after all, so as long as they make money, you do, too.
But these are not normal times, and many REITs have suspended dividends -- and seen share prices tank -- while their businesses reel from the economic effects of the coronavirus pandemic.
And now, we have a new administration coming in to preside over the government of the largest economy in the free world. President-elect Joe Biden already is putting a task force in place to take on the pandemic. That might make you feel a bit safer, or not. Either way, here are three REITs that also seem like safe bets going forward.
Broadband expansion and American Tower
Biden promised throughout his campaign to expand broadband access to all Americans, especially rural areas. He won the election, so why not consider an investment bet on a company primed to profit from such an infrastructure expansion?
American Tower (NYSE: AMT) is the perhaps the largest publicly traded REIT of them all but still has room to grow, as 5G networks mature and broadband itself reaches areas it’s never been before.
American Tower develops, owns, and operates multitenant communications real estate, with a portfolio of over 170,000 communications sites. Those aren’t just the familiar cell towers that dot the landscape. The Boston-based company also provides in-building and outdoor distributed antenna systems, managed rooftops, and services that speed network deployment.
Like the other two in this trio of safe stocks, Boston-based American Tower has weathered the pandemic economy well, posting a total one-year return of 18.54% based on its Nov. 6 closing price of $242.15. The company has also been steadily raising its dividend since 2013, reaching $1.14 per share in the third quarter, good for a current yield of 1.88%.
That’s not a huge yield, but it’s just below the 2.16% currently posted by the six REITs in the Nareit infrastructure cluster, and with a stock price that’s still nearly 11% off its 2020 high, taking a stake in American Tower feels comfortable but not exciting. And comfortable isn't so bad nowadays.
Easterly Government Properties is Uncle Sam’s landlord
Easterly Government Properties (NYSE: DEA) buys, develops, and manages Class A commercial properties it leases to the U.S. government through the General Services Administration.
Easterly is the sole owner of 76 operating properties across the country, with an average remaining lease of 7.8 years. Its latest acquisitions and redevelopments include a 76,112-square-foot FBI field office in Mobile, Alabama, and a 200,000-square-foot FDA facility in Atlanta, respectively.
Also pointing to its steadiness is Easterly’s payouts. It’s paid a dividend of $0.26 per share every quarter since the fourth quarter of 2017, giving it a current yield of 4.85%.
The company’s stock hit a 52-week high of $29.70 earlier this year, and it closed on Friday, Nov. 5, at $21.43, so there could be some upside there, too, although this feels more like a growth-and-income stock than a growth play.
And while it’s not as secure as buying a government bond, of course, in its third-quarter earnings call on Nov. 2, chairman Darrell Crate said, “You will not find a single U.S. REIT with better tenant credit quality than Easterly.”
Innovative Industrial Properties capitalizes on cannabis
Add Arizona, Montana, New Jersey, and South Dakota to the roster of states where adult recreational use of marijuana has been legalized. That means, as of the Nov. 3 election, 15 states have approved pot for that purpose. Meanwhile, 36 states and the District of Columbia allow medical marijuana. A Nov. 6 CNN article cites a market analyst who says the U.S. cannabis industry will post $19 billion in sales this year, $24 billion next year, and $45 billion by 2025.
There are multiple ways to invest in the marijuana market, and what looks like a safe bet is this REIT: Innovative Industrial Properties (NYSE: IIPR). Considered an industrial REIT, IIPR is the only REIT that specializes in owning and leasing facilities for the production of medical-use marijuana.
The San Diego-based company was only founded in 2016 but already owns 63 properties in 16 states, properties it’s operating with triple net leases that have an average remaining lease of 16.2 years, and they’re nearly fully leased.
IIPR just boosted its dividend to $1.17 a share as it continues a growth trend there that began with its initial payout of $0.15 a share in the middle of 2017. That’s a yield of 2.78% based on its Nov. 6 closing price of $152.38. Nareit’s yield for all 14 industrial REITs was 2.56% on Oct. 31, but IIPR is at that average with a stock price that has nearly quadrupled after bottoming out at around $40 a share in the spring.
In fact, IIPR’s stock has jumped 30% so far in November alone, testament to the optimism the market has in this industry and this company. I tend to agree.
Each of these REITs presents their own reasons for feeling safe. For instance, whether that political promise of broadband access comes to fruition, the simple fact remains that mobile and internet service and the infrastructure that supports them will continue growing in demand. American Tower investors can expect to continue profiting from this investment meeting that challenge.
Easterly Government Properties stands to benefit from the prospect of increased government spending on itself and has the full faith and backing of the federal government (and all us taxpayers) to keep the rent going.
And Innovative Industrial Properties seems especially well-positioned to take advantage of the legal cannabis business, especially if the federal government relaxes its stance on legal banking within the industry and more states jump on the legalization bandwagon, which now seems more likely. On that one, the voters have spoken.
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Duke Realty - >>> 3 High-Dividend Real Estate Stocks to Buy in November
Motley Fool
Nov 10, 2020
by Matthew DiLallo
https://www.fool.com/millionacres/real-estate-investing/articles/3-high-dividend-real-estate-stocks-to-buy-in-november/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo#
Dividend yields have come down over the years as some sectors have prioritized share buybacks instead of paying dividends. However, one industry where payouts are still pretty high is real estate. That's mainly due to the rules regarding real estate investment trusts (REITs), which must distribute at least 90% of their taxable income to shareholders to remain in compliance with IRS rules.
Because of that, the sector has hundreds of companies that pay dividends with higher yields than the S&P 500's current average of 1.8%. Three that stand out as excellent buys this month are Agree Realty (NYSE: ADC), Camden Property Trust (NYSE: CPT), and Duke Realty (NYSE: DRE).
A rock-solid retail real estate play
Agree Realty is a retail REIT that currently checks in with a nearly 3.9%-yielding dividend. While the retail sector has been under lots of pressure in recent years from e-commerce -- made worse by the COVID-19 outbreak -- Agree Realty's portfolio is immune to these issues. That was clear during the third quarter as the company collected 97% of the rent it billed and signed deferral agreements covering another 2%.
Two factors are driving the company's strong rental collection rates. First, roughly two-thirds of its tenants have investment-grade credit, which gives them more financial flexibility during tough times. On top of that, the REIT focuses on owning freestanding properties secured by triple net leases with retailers less sensitive to disruptions from economic downturns and e-commerce (e.g., home improvement, grocery stores, pharmacies, and convenience stores). Add in its top-notch balance sheet, and Agree Realty's dividend is one of most durable in the retail real estate sector.
A well-located apartment portfolio
Apartment-focused residential REITs have also been under some pressure this year. Tenants in high-cost coastal markets like San Francisco, New York City, and Boston have been taking advantage of their ability to work remotely during the pandemic by moving to lower-cost areas. That has hammered occupancy and rental rates in those cities' urban cores, weighing on REITs with heavy exposure to those areas.
However, Camden Property has been immune to these trends because it has avoided those high-cost areas, opting instead to own a more diversified apartment portfolio. That paid dividends during the third quarter as the REIT's FFO held up much better than its rivals. Because of that and its top-notch balance sheet, Camden's 3.6%-yielding dividend is on one of the firmest foundations in the sector.
High-demand real estate
One real estate subgroup that hasn't been under any pressure this year is logistics properties. Because of that, industrial REIT Duke Realty is thriving. The company recently reported excellent third-quarter results, driven by strong rent collection and increased occupancy. Those factors gave Duke Realty the confidence to increase its dividend by 8.5%, boosting its yield to an above-average 2.7%.
Demand for industrial real estate is so strong that Duke is on pace to exceed its initial pre-pandemic guidance for 2020. That's because the outbreak is driving higher e-commerce sales and forcing companies to carry higher inventory levels to combat future supply-chain disruptions. As a result, the company started two more speculative development projects to help meet future projected demand growth. Add that upside to the company's already extensive pipeline of pre-leased and speculative projects, and it has lots of growth ahead. That should give it plenty of fuel to keep increasing its dividend.
Excellent ways to collect higher yields backed by real estate
While 2020 has been a tough year for the real estate sector, it hasn't been a complete washout. Companies with the right portfolio or focused on the right subsector have thrived this year. That's certainly been the case for Agree Realty, Camden Property Trust, and Duke Realty. Because of that, they stand out as great buys right now for investors looking for above-average dividend payments from the real estate sector.
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>>> A New Marijuana REIT Rival for Innovative Industrial Properties Is Coming to the Market
Two cannabis-focused entities -- Inception REIT and Subversive Real Estate Acquisition REIT -- will merge in a qualifying transaction at the end of October.
Motley Fool
Eric Volkman
Oct 20, 2020
https://www.fool.com/investing/2020/10/20/a-new-marijuana-reit-rival-for-innovative-industri/
Since its debut on the stock market in late 2017, Innovative Industrial Properties (NYSE:IIPR) has been the only publicly traded cannabis-focused real estate investment trust (REIT). But in the near future, a new kid will arrive on the block.
Like Innovative, this company will concentrate solely on the grow spaces, processing facilities, retail stores, and other real estate required by the marijuana industry.
The new kid -- just what name it will go by remains something of a question mark -- will come to the public market via a special purpose acquisition company (SPAC) now called Subversive Real Estate Acquisition REIT (OTC:SBVR.F).
In a move that has become trendy in finance lately, an existing company -- in this case, Inception REIT -- will park itself within Subversive in a nearly $183 million "qualifying transaction" that will merge the two. This maneuver is essentially a backdoor initial public offering that should be completed next Friday, Oct. 30.
The resulting company will be significantly smaller than Innovative. At the moment, Subversive's portfolio consists of 12 properties under binding agreements and five first-lien loans; these are located in nine U.S. states, chiefly California. According to the SPAC, this real estate is worth $201 million.
Inception REIT, meanwhile, holds three properties and one mortgage to a retail store, all located in southern California.
By comparison, as of Sept. 21, Innovative had 63 properties in a portfolio. Its real estate assets totaled more than $815 million at the end of its most recently reported quarter.
Similarly to Innovative, the new company will concentrate on sale-leaseback transactions. Such deals are popular with cannabis companies because they unlock capital that operators in the cash-strapped and frequently money-losing marijuana industry sorely need.
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>>> EastGroup Properties, Inc. (NYSE: EGP), an S&P MidCap 400 company, is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina. The Company's goal is to maximize shareholder value by being a leading provider in its markets of functional, flexible and quality business distribution space for location sensitive customers (primarily in the 15,000 to 70,000 square foot range). The Company's strategy for growth is based on ownership of premier distribution facilities generally clustered near major transportation features in supply-constrained submarkets. EastGroup's portfolio, including development projects and value-add acquisitions in lease-up and under construction, currently includes approximately 45.7 million square feet.
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>>> Rexford Industrial Acquires Two Industrial Properties For $27.6 Million; Sells Three Industrial Properties For $44.2 Million
MarketWatch
October 15, 2020
https://finance.yahoo.com/news/rexford-industrial-acquires-two-industrial-211500618.html
- Two Value Add Investments in Prime Infill Southern California Markets -
- Dispositions Harvest Premium Value from Non-Core Properties -
- 2020 Acquisitions total $374.6 Million -
LOS ANGELES, Oct. 15, 2020 /PRNewswire/ -- Rexford Industrial Realty, Inc. (the "Company" or "Rexford Industrial") (NYSE: REXR), a real estate investment trust focused on creating value by investing in and operating industrial properties located in Southern California infill markets, today announced the acquisition of two industrial properties for $27.6 million and the disposition of three properties for $44.2 million. The acquisitions were funded using cash on hand.
"We are pleased with our recent transaction activity, demonstrating our ability to source accretive investment opportunities while efficiently recycling capital through strategic dispositions within infill Southern California, the nation's lowest-vacancy and highest-demand industrial property market," stated Howard Schwimmer and Michael Frankel, Co-Chief Executive Officers of the Company. "These investments represent strong examples of Rexford's value-add repositioning and redevelopment expertise. Following their near-term in-place lease expirations, these sites will be repositioned into highly-functional, higher-value industrial assets designed to appeal to a deep universe of tenants within submarkets demonstrating an extreme lack of supply of similar quality space. As we look forward, we believe the Company is well positioned with strong internal growth prospects combined with an active pipeline of investment opportunities fueled by a low-leverage, fortress-like balance sheet to increase shareholder value into future periods."
The Company acquired 12133 Greenstone Avenue, located in Santa Fe Springs within the LA – Mid Counties submarket, for $5.5 million, or $26 per land square foot, through an off-market transaction in July. The 100% leased, single tenant container storage facility contains a 12,586 square foot truck terminal building on 4.8 acres with excess land serving highly sought-after truck parking. Following the near-term expiration of the current lease, the Company intends to reposition the property to provide greater functionality and increase rents to higher market rates. According to CBRE, the vacancy rate in the 112 million square foot LA – Mid Counties submarket was 2.2% at the end of the third quarter 2020.
On October, 14, 2020, the Company acquired 12772-12746 San Fernando Road, located in Sylmar within the LA – San Fernando Valley submarket, for $22.1 million, or $78 per land square foot. The property is 56% leased and comprises a 6.48 acre development site currently containing two legacy industrial buildings totaling 140,840 square feet. Following a short-term lease period, existing improvements will be removed and the site will be redeveloped with a new 145,000 square foot single-tenant Class A industrial building providing modern functionality that is expected to command premium rents within a submarket otherwise lacking similar quality available product. According to CBRE, the vacancy rate in the 175 million square foot LA – San Fernando Valley submarket was 2.7% at the end of the third quarter 2020.
During the third quarter, the Company sold a single tenant vacant building at 3927 Oceanic Drive in Oceanside within the San Diego – North submarket for $10.3 million or $188 per square foot. The Company also sold a multi-tenant building located at 121 West 33rd Street in National City in the San Diego – South submarket for $13.5 million or $176 per square foot. Finally, the Company sold a two-tenant building at 2700-2722 South Fairview in Santa Ana within the Orange County – Airport submarket for $20.4 million or $175 per square foot.
The Company expects to recycle the proceeds from the three dispositions utilizing tax deferred 1031 exchanges to fund future acquisition activity.
About Rexford Industrial
Rexford Industrial, a real estate investment trust focused on creating value by investing in and operating industrial properties throughout Southern California infill markets, owns 232 properties with approximately 27.9 million rentable square feet and manages an additional 20 properties with approximately 1.0 million rentable square feet.
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>>> 3 Equity REIT Stocks Poised to Escape COVID-19-Led Industry Scare
Zacks
by Moumita Chattopadhyay
Wed, October 21, 2020
https://finance.yahoo.com/news/3-equity-reit-stocks-poised-144502558.html
Social distancing or rather physical-distancing measures to curb the spread of coronavirus have resulted in a deviation between different sectors of the economy on one side, involving low face-to-face contact, showing resilience and even gaining, and the other side with higher risks for infection significantly bearing the brunt.
Similarly, with the Zacks REIT and Equity Trust - Other industry offering the real estate structure for several economic activities, be it real or virtual, there are pockets of strengths even amid the pandemic-induced industry weakness. Particularly, with concerns about face-to-face contact spurring online interactions and purchases, data-center REIT Digital Realty (DLR) and industrial REITs, including Rexford Industrial Realty (REXR) and EastGroup Properties (EGP), that support digital economy are likely to continue benefiting.
About the Industry
The Zacks REIT and Equity Trust - Other industry is a diversified group, covering REIT stocks from different asset classes like industrial, office, lodging, healthcare, self-storage, data centers, towers and others. The REITs rent spaces in these properties to tenants and earn rental incomes.
Notably, the performance of Equity REITs depends on the underlying asset dynamics and hence, delving into the fundamentals of those asset categories is all the more essential before making any investment decision. It is also highly important to figure out whether or not the social-distancing related behaviors will create only short-term impact or induce long-term structural changes.
What’s Shaping Future of the REIT and Equity Trust - Other Industry?
REITs involving low levels of face-to-face interactions to gain: The pandemic and concerns about face-to-face contact have significantly prompted online interactions and purchases. This shift from in-person communication and commerce to the electronic platform is helping sectors like industrial, infrastructure, and data centers to prosper, a trend that is likely to continue in the foreseeable future. However, social-distancing requirements have also propelled the work from home wave. Along with the overall economic turbulence and job losses, the remote working wave has substantially affected demand for office spaces. Office-using employment has shrunk, affecting occupancy level and resulting in significant negative absorption. This is expected to prevail in the near term, and affect asking rents amid soft tenant demand and increasing available spaces for leases.
REITs having high potential exposure to infection to suffer: The present situation is challenging for lodging/resort REITs, which have the highest potential exposure to the COVID-19 virus due to the face-to-face interactions. This sector is unlikely to see a full recovery until the crisis dissipates or a vaccine is rolled out. In addition, though personal and vacation travel might recover and create demand for lodging spaces, business travel will likely be slower to recapture its lost ground, thanks to the online meetings and teleconferences substituting a number of in-person events. For healthcare REITs, demand for life-science real estate has been picking up with effective diagnostics, testing, therapies and vaccines being required to fight the pandemic. Nevertheless, with senior housing assets constituting a majority of REIT portfolios, there is a strain on occupancy level and rate. Also, expenses are going up for providing a safer environment in case of senior housing, skilled nursing and medical office buildings.
Macroeconomic Issues, Soft Rental Demand and Rent Collection Woes: The real estate sector’s prospects get a boost when economy progresses. This is because growth in the economy translates into greater demand for real estate, higher occupancy levels and landlords’ greater power to ask for higher rents. And even though the economy managed to recover in the third quarter following a drastic decline in the second, households and businesses are yet to gain more confidence as any solution to control the pandemic has not been found yet. Therefore, the pace of recovery in the interim period is likely to remain sluggish. Amid this, rental demand for a number of asset categories will continue being soft, initial lease-up of new deliveries might be challenging in the days to come, and rent discounting as well as use of concessions will be rampant. Furthermore, amid protracted economic recovery, stress on tenants’ financial capacity might prevail and result in rent-collection issues. Therefore, REITs with a better balance-sheet position and ample liquidity are well poised to sail through the challenging times and bank on the solid opportunities.
Low Rate Environment: Nevertheless, Equity REITs will continue benefiting from the Fed’s low-rate stance because REITs depend on debt for business. Thus, these companies benefit from the lower borrowing costs in a low-rate environment. Additionally, low interest rates contribute to higher valuations. Further, REITs are often treated as bond substitutes for their high-dividend paying nature. Also, REITs offer protection from inflation as both rents and valuations get a boost when prices flare up, in turn, supporting cash flows from their properties and driving dividend growth. Apart from this, Equity REITs have been proactive in the capital market in recent years. These companies have opportunistically used the low-rate environment to make their financials more flexible, which is encouraging down the line for the REITs’ operational efficiencies.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks REIT and Equity Trust - Other industry is housed within the broader Finance sector. It carries a Zacks Industry Rank #223, which places it at the bottom 12% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative funds from operations (FFO) per share outlook for the constituent companies in aggregate. Looking at the aggregate FFO per share estimate revisions, it appears that analysts are losing confidence in this group’s growth potential. Over the past year, the industry’s FFO per share estimate for 2020 and 2021 moved 22.8% and 5.6% south, respectively.
Before we present a few stocks that you might want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Mixed on Stock Market Performance
The REIT and Equity Trust - Other Industry has outperformed the broader Zacks Finance sector but lagged the S&P 500 composite in a year’s time.
The industry has depreciated 11.8%, during this period,as against the S&P 500’s rally of 14.2%. Meanwhile, the broader Finance sector has lost 12%.
One-Year Price Performance
Industry’s Current Valuation
On the basis of the forward 12-month price-to-FFO ratio, which is a commonly-used multiple for valuing REIT - Others, we see that the industry is currently trading at 18.76X compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 22.10X. The industry is trading above the Finance sector’s forward 12-month P/E of 15.72X. This is shown in the chart below.
Forward 12 Month Price-to-FFO (P/FFO) Ratio
Over the last five years, the industry has traded as high as 19.33X, as low as 14.32X, with a median of 16.14X.
3 Equity REIT – Other Stocks to Keep a Close Eye on
Digital Realty Trust Inc.: Digital Realty Trust offers data-center, colocation and inter-connection solutions for domestic and international tenants through its portfolio of data centers located throughout North America, Europe, Asia and Australia. Remarkably, data centers are poised to gain from the heightening reliance on technology and acceleration in digital-transformation strategies by enterprises amid the coronavirus pandemic. Capitalizing on such factors, this data-center REIT is expanding its portfolio on accretive acquisitions and development efforts. Such moves are supported by a healthy balance sheet.
Digital Realty currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the 2020 and 2021 FFO per share moved north to $6.08 and $6.54 over the past two months, reflecting positive sentiments. The company’s shares have rallied roughly 30% so far in the year.
Rexford Industrial Realty: This industrial REIT is focused on acquisitions, ownership and operation of industrial properties situated in the Southern California in-fill markets. This Zacks #2 Ranked company is poised to benefit from its unmatched portfolio in the nation’s largest, most sought-after industrial property market. It delivered better-than-expected performance in terms of FFO per share and revenues in the July-September quarter. The REIT gained from growing tenant demand from a variety of industries, including the exponential rise in e-commerce.
The Zacks Consensus Estimate for the 2020 and 2021 FFO per share have been revised nearly 1% and 3% upward over the past 60 days to $1.28 and $1.35, respectively, indicating year-on-year improvement of 4.1% and 5%. The stock has appreciated 23.4% over the past six months.
EastGroup Properties, Inc.: This REIT is focused on developing, acquiring and operating of industrial properties in key Sunbelt markets throughout the United States. The company particularly gives weightage to states like Florida, Texas, Arizona, California and North Carolina. It is well poised to benefit from the likely shift toward carrying more inventory, faster population growth in the Sunbelt markets and the increased e-retail demand. It currently carries a Zacks Rank of 2.
Over the past month, the Zacks Consensus Estimate for FFO per share for 2020 and 2021 witnessed northward revisions to $5.32 and $5.50, respectively, calling for year-over-year growth of 6.8% and 3.5%. The stock has also rallied roughly 33% over the past six months.
Note: Funds from operations (FFO) is a widely used metric to gauge the performance of REITs rather than net income as it indicates cash flow from their operations. FFO is obtained after adding depreciation and amortization to earnings and subtracting the gains on sales.
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>>> Equinix Unveils Fully Automated and Interconnected Bare Metal Service
Yahoo Finance
October 6, 2020
https://finance.yahoo.com/news/equinix-unveils-fully-automated-interconnected-120100647.html
Equinix Metal™ Empowers Digital Leaders to Deploy Physical Infrastructure at Software Speed
REDWOOD CITY, Calif., Oct. 6, 2020 /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company, today announced the availability of Equinix Metal™, a fully automated and interconnected bare metal service. Equinix Metal provides digital businesses with an automated, "as-a-service" deployment method to build their foundational infrastructure and take advantage of the global reach, interconnected ecosystems and trusted partners available on Platform Equinix®. Equinix Metal is available today in Equinix International Business Exchange™ (IBX®) data centers across four global metros (Amsterdam, New York, Silicon Valley and Washington, D.C.), and is expected to be available in 14 global metros by early 2021.
With this new service, companies have the option to deploy the physical infrastructure of their choice at software speed across Equinix's trusted platform. Together with other digital infrastructure building blocks in the Equinix portfolio, customers now have a broad range of physical and virtual deployment alternatives to place infrastructure wherever they need it and connect to everything they need to succeed.
Featuring native integration with Equinix Cloud Exchange Fabric®, which has been renamed Equinix Fabric™, Equinix Metal helps enterprises seamlessly deploy hybrid multicloud architectures and quickly access thousands of networks, enterprises and clouds on Platform Equinix. By delivering high-performance dedicated servers in minutes via popular developer tools in both on-demand and reserved models, Equinix Metal helps businesses extract greater value from Platform Equinix's rich ecosystems more quickly, more easily and in more places than ever before.
Building upon the recent acquisition of Packet—as well as technologies developed at Equinix—the addition of Equinix Metal expands Equinix's ability to help more companies gain digital advantage. By combining Packet's expertise in API-first, hardware automation and provisioning with Equinix's global reach, interconnection prowess and proximity to valuable ecosystems, Equinix Metal offers a powerful infrastructure building block on which digital leaders can deploy and scale their preferred infrastructure with agility and confidence.
Highlights/Key Facts:
With Equinix Metal, digital leaders can gain competitive advantage by building foundational infrastructure to directly and securely connect people, locations, clouds and data that matter most to their business. Key features of Equinix Metal include:
Equinix Metal can address a broad set of use cases that value global reach and participation within digital ecosystems, including:
Quotes:
Raj Dutt, Founder and CEO, Grafana Labs
"Grafana provides its mission-critical observability platform to the largest companies in the world. By deploying Grafana Cloud on Equinix Metal and adding direct, private connectivity through Equinix Fabric, our customers can more easily and securely interact with their metrics, logs and dashboards across on-prem, public or private cloud, or at the edge."
Chris Wright, Senior Vice President and Chief Technology Officer, Red Hat
"Red Hat has championed an industry vision for open hybrid cloud architectures, with a consistent foundation from bare metal to virtualized infrastructures and the cloud, enabling customers to truly build any app anywhere. Collaborating with partners like Equinix to help enable our customers' hybrid cloud success is a key part of that vision, which is why we are pleased to be working with them to deliver Red Hat OpenShift on the Equinix Metal service."
Mark Bowker, Senior Analyst, ESG
"With COVID-19 we've seen enterprises accelerate their digital transformation plans from years to months. Today's digital leaders are increasingly gaining a competitive advantage by leveraging infrastructure choices that meet their exact needs and can be deployed globally and interconnected. By augmenting its portfolio of foundational services with high-performance, fully automated compute, the addition of Equinix Metal can help digital businesses extract greater value from Platform Equinix's rich ecosystems and global interconnection fabric and rapidly deploy the physical infrastructure of their choice."
Sara Baack, Chief Product Officer, Equinix
"Equinix Metal is another important step forward in our product portfolio, enabling enterprises to bring together and interconnect hybrid multicloud infrastructures at global scale on Platform Equinix. With Equinix Metal integrated with Equinix Fabric, infrastructure customers can move at software speed, and tap into the global reach, interconnection value, and unparalleled community of ecosystem partners that digital leaders have come to expect from Equinix."
Additional Resources
Powering Digital Leaders [e-book]
Equinix Metal: Bare Metal and More! [blog]
Equinix Metal [website]
Equinix Completes Acquisition of Bare Metal Leader Packet [press release]
Equinix to Acquire Bare Metal Leader Packet [press release]
About Equinix
Equinix (Nasdaq: EQIX) is the world's digital infrastructure company, enabling digital leaders to harness a trusted platform to bring together and interconnect the foundational infrastructure that powers their success. Equinix enables today's businesses to access all the right places, partners and possibilities they need to accelerate advantage. With Equinix, they can scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value.
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>>> Equinix Completes 13 Data Center Buyouts, Expands in Canada
Zacks
October 5, 2020
https://finance.yahoo.com/news/equinix-completes-13-data-center-142302411.html
Equinix, Inc. EQIX announced the completion of the previously-announced acquisition of a portfolio of 13 data centers across Canada from BCE Inc. ("Bell") for $780 million.
The all-cash transaction is immediately accretive to the company’s adjusted funds from operations (“AFFO”) per share (excluding integration costs). Moreover, the assets are anticipated to generate $112 million in annualized revenues.
The data centers will add 1.2 million gross square feet of space and more than 600 customers, of which 500 are new ones.
Other than strengthening relationships with customers, the acquisition solidifies Equinix's position as a preeminent digital infrastructure provider in Canada. In fact, with the newest capacity addition through the buyout, the company’s expanded portfolio consists of 15 high-quality International Business Exchange (“IBX”) data centers throughout Canada.
Additionally, under the terms of the agreement, Equinix and Bell will start a partnership, leveraging on the combined ecosystem of both parties. The joint offering will bring together Bell's telecommunications services and technology expertise with Equinix's global, interconnected data-centers platform and rich business ecosystems. This offers global expansion opportunities to local businesses and the scope for multinational corporations to pursue growth and innovation in the Canada market.
Moreover, it will accelerate enterprises to shift from traditional to digital businesses, providing rapid scaling of infrastructure as well as the seamless adoption of hybrid multi-cloud architectures. The spending on digital transformation in Canada is projected to grow in the near term, thereby, increasing the reliance on data centers. Hence, the buyout is a strategic fit.
Notably, as people are working remotely and maintaining stringent social distancing measures, cloud businesses have been gaining popularity and emerged as a key technology to fight the battle against the coronavirus outbreak. This along with the increasing need for digital transformation positions data centers well to benefit from the rising reliance on technology. Thus, data-center REITs like Equinix, Digital Realty Trust DLR, CyrusOne Inc. CONE and CoreSite Realty Corporation COR will keep witnessing significant demand.
Hence, Equinix’s global-expansion strategy, and focus on enhancing cloud and network density bode well. Although such moves are a strategic fit, integration costs related to acquisitions will likely impede the company’s bottom-line growth.
Shares of Equinix have rallied 34.7% as against the real estate market’s decline of 12% over the past year.
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American Tower, Digital Realty Trust - >>> 3 Stocks to Buy Ahead of the Next Market Crash
If the market keeps dropping, here are three stocks you'll want to own.
Motley Fool
Matthew Frankel, CFP
Sep 22, 2020
https://www.fool.com/investing/2020/09/22/3-stocks-to-buy-ahead-of-the-next-market-crash/
The stock market is sharply higher than its March lows, but has started to pull back again recently. Since peaking in early September, the S&P 500 has lost nearly 5% of its value. The Dow Jones Industrial Average and Nasdaq Composite indices are significantly lower as well.
In short, another market crash hasn't arrived. Not yet, anyway. If another full-blown stock market crash comes, there will likely be plenty of stocks that will take a major hit, but these three should hold up quite well.
An excellent long-term play on communication
Wireless communication has been a major growth trend over the last couple of decades, but it could be just getting started. Not only is the wide-scale rollout of 5G technology coming, but the number of internet-connected devices is also growing exponentially. Think about it this way: If someone told you a decade ago that your doorbell, vacuum cleaner, slow cooker, refrigerator, and thermostat would all be wirelessly connected to the internet, you probably would've been skeptical.
American Tower (NYSE:AMT) is a great way to play the long-tailed (and recession-resistant) trend. The largest real estate investment trust in the world, American Tower owns more than 180,000 communications towers (also commonly called cell towers) all over the world. It leases the space at the tops of these towers to some of the largest telecommunications companies in the world. There's still tons of room to grow, especially in emerging markets. The gradual rollout of 5G could be a major tailwind for American Tower over the next decade or so whether the stock market crashes or not.
The work-from-home economy is a major tailwind for data centers
Once the dust settled from the initial coronavirus crash, I worked up the courage to check how my stock portfolio held up. As of April 1, there was one stock in my portfolio that was not just back to even, but actually higher for the year: data center REIT Digital Realty Trust (NYSE:DLR).
Think of data centers as the physical "homes" of the internet. When you save a document to the cloud, upload pictures to your social media, or stream video content, all of those files need to be physically stored somewhere. That's where data centers come in. A data center is a facility designed to house servers and networking equipment in a secure and reliable environment.
The same trends that are likely to be tailwinds for American Tower are also likely to keep Digital Realty's income rising no matter what the stock market or U.S. economy is doing. As the volume of data flowing around the world keeps growing, it will create a growing need for these properties. As one of the industry leaders, Digital Realty is in a great position to take advantage.
Still a great long-term stock to buy
Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) took a major hit during the pandemic, with its stock down by nearly 30% for the year at the low point. And unlike the other two stocks on the list, it didn't snap back quickly. In fact, Berkshire remained down more than 20% for the year until well into August.
While there were several reasons for the decline, one major headwind was that Berkshire went into the pandemic sitting on a mountain of cash ($137 billion at the start of the year), and didn't take advantage at all during the market crash. In fact, Berkshire was a net seller of stock during the first half of the year, even selling all of its airline stock positions at close to the worst possible time. A big part of the thesis for owning Berkshire is that its CEO Warren Buffett and his team are very good at capitalizing on opportunities -- and it didn't look like that was happening.
In the second half of the year, it appears this has changed. Berkshire has acquired Dominion Energy's natural gas business, increased its Bank of America stake by more than $2 billion, invested billions in several Japanese conglomerates, and recently participated in the red-hot Snowflake IPO. So it seems like Berkshire is ready and willing to put its money to work. Berkshire remains a tremendous long-term compounding machine and is a great stock to own whether a market crash hits or not.
Great businesses in good times and bad (even during pandemics)
Obviously, nobody has a crystal ball. In a full-blown market panic like we saw in March, it's entirely possible that these stocks could take a hit. Even the best-performing out of the three mentioned here, Digital Realty, very briefly plunged about 30% from its pre-pandemic peak before the market came to its senses and realized what a stay-at-home economy would mean for data centers.
However, these are three well-run companies that are recession-resistant and positioned to thrive no matter what the economy is doing. Even if they fall in a market crash, they'll likely snap back quicker than most.
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>>> Innovative Industrial Properties Acquires Florida Property and Expands Real Estate Partnership with Parallel, a U.S. Cannabis Company
Yahoo Finance
September 21, 2020
https://finance.yahoo.com/news/innovative-industrial-properties-acquires-florida-110000546.html
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property in Lakeland, Florida from an affiliate of Parallel, one of the largest privately-held multi-state cannabis operators in the U.S. Parallel is the corporate parent company to Surterra Wellness, its market leading retail brand in Florida and one of the original licensed vertical operators in the Sunshine State, which has a rapidly growing footprint that includes 39 retail dispensaries across the state and multiple industrial-scale cultivation, production, kitchen and research facilities.
The purchase price for the property was approximately $19.6 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement for the property with a subsidiary of Parallel, which intends to continue to operate the property as a regulated medical cannabis cultivation and processing facility. The property consists of approximately 65,000 square feet of industrial and greenhouse indoor cultivation and production space currently in operation, and Parallel expects to develop an additional approximately 155,000 square feet, resulting in a total of approximately 220,000 square feet of industrial and indoor cultivation space. IIP has agreed to provide reimbursement for this development of up to approximately $36.8 million; assuming full reimbursement, IIP’s total investment in the property will be $56.4 million.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
"We are pleased to expand our relationship with Beau and Parallel’s strong team of dedicated professionals with this newest long-term real estate partnership," said Paul Smithers, President and Chief Executive Officer of IIP. "With its footprint of 39 operating dispensaries in Florida, Parallel has established a presence of physical access for patients to the large majority of Florida residents. We expect the significant enhancements to Parallel’s Wimauma and Lakeland facilities to drive Parallel’s continued strong growth and enable them to continue to produce high quality medical cannabis products for patients throughout Florida, spanning the range of products now permissible in the state."
Parallel is one of the largest privately-held multi-state cannabis operators in the U.S., with leading positions in several of the largest and fastest-growing markets, including Florida, Massachusetts, Nevada and Texas. Parallel’s operations include 42 retail dispensaries, a robust portfolio of proprietary consumer brands and innovative products, and state-of-the-art cultivation, production and research facilities. Parallel has over 1,600 employees nationwide, and has raised more than $400 million in capital to date. Parallel’s highly accomplished management team is led by Chairman and CEO William "Beau" Wrigley, Jr., who previously served as the Chairman and CEO of global gum and confectionery leader the Wm. Wrigley Jr. Company, which was acquired by Mars, Inc. in 2008 for $23 billion.
"We are thrilled to team once again with IIP as our long-term real estate partner, as we continue to significantly enhance our production capacity and product diversity in Lakeland to meet the tremendous demand from Florida patients throughout the state. This transaction opens up additional significant capital for us to reinvest in our growth and commercial expansion across our five markets," said Beau Wrigley, Jr., Chairman and CEO of Parallel. "While we have multiple cultivation and production facilities in Florida, this Lakeland facility stands out as a state of the art indoor, environmentally controlled facility, which helps us achieve our goal of consistent, high quality, high yield flower throughout the year. In addition, Lakeland houses our commercial-grade kitchen for producing our cannabis edibles to meet our patients’ demand for more variety of products in the expanding Florida market."
Florida represents one of the largest and one of the fastest growing medical-use cannabis markets in the U.S. After authorizing the sale of flower in 2019, Florida authorities further expanded its medical cannabis program last month by allowing the sale of edibles, which is expected to account for an additional $250 million in sales in 2021, according to Marijuana Business Daily. According to the Florida Office of Medical Marijuana Use (OMMU), as of September 11, 2020, there were over 410,000 qualified patients and nearly 2,600 qualified physicians in the medical-use cannabis program. Including this property, IIP owns three properties in Florida, comprising approximately 713,000 rentable square feet (including square footage under development) and representing a total investment, including commitments to fund future development and tenant improvements, of approximately $116.9 million.
As of September 21, 2020, IIP owned 63 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.9 million rentable square feet (including approximately 1.9 million rentable square feet under development/redevelopment), which were 99.3% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.1 years. As of September 21, 2020, IIP had invested approximately $877.3 million in the aggregate (excluding transaction costs) and had committed an additional approximately $274.2 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $10.0 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenant at that property may not elect to have IIP disburse those funds to the tenant and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
About Parallel
Parallel is one of the largest privately held, vertically integrated, multi-state cannabis companies in the world with a mission to pioneer well-being and improve the quality of life through cannabinoids. Parallel owns and operates retail dispensaries in four medical and adult-use markets: Surterra Wellness in Florida and Texas; New England Treatment Access (NETA) in Massachusetts, and The Apothecary Shoppe in Nevada. Parallel also has a license under its Goodblend brand in Pennsylvania for vertically-integrated operations and up to six retail locations, in addition to a medical cannabis research partnerships with the University of Pittsburgh School of Medicine. The Company has a diverse portfolio of high quality, proprietary and licensed consumer brands and products including Surterra Wellness, Coral Reefer, and Float. Parallel operates over 40 retail stores nationwide, including cultivation and manufacturing sites across the four states. The Company conducts advanced cannabis science through Molecular Infusions (Mi), a cannabis-based biopharmaceutical company, and conducts R&D for new product development in its facilities in Texas, Massachusetts, Florida, and Budapest, Hungary. Parallel follows rigorous operations and business practices to ensure the quality, safety, consistency and efficacy of its products and is building its business by following strong values and putting the well-being of its customers and employees first. Find more information at www.liveparallel.com, or on Instagram and LinkedIn.
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Innovative Industrial Properties - >>> Here's the Dividend Stock Most Likely to Double by 2022
The path to making it happen is straightforward.
Motley Fool
by Keith Speights
Sep 20, 2020
https://www.fool.com/investing/2020/09/20/heres-the-dividend-stock-most-likely-to-double-by/
What do you think of when you hear the phrase "dividend stocks"? For many investors, the answers probably include something along the lines of "low-growth" and maybe even "boring." Those descriptors apply to quite a few dividend stocks, but not all of them.
I can think of one stock that offers a relatively high dividend yield that's anything but low-growth and boring. In my view, it's arguably the one dividend stock most likely to double by 2022. The stock I have in mind is Innovative Industrial Properties (NYSE:IIPR).
How the stock can double
Innovative Industrial Properties (IIP) ranks as the leading real estate investment trust (REIT) focused on the medical cannabis industry. It's the first and, so far, only cannabis-focused REIT to list its shares on the New York Stock Exchange.
I like companies with simple and solid business models. IIP checks both boxes. The company buys properties from medical cannabis operators, and then leases those properties back to the operators. Those leases nearly always are for long durations: The weighted-average remaining lease term for IIP's properties is around 16 years.
If you think a cannabis-focused REIT stock can't double in a short period of time, think again. Take a look at IIP's performance over the last three years.
My view is that IIP can easily double (or more) by the end of 2022. How? All IIP has to do is keep doing what it's been doing -- i.e., reinvesting any cash it accumulates into new properties to lease back to medical cannabis operators. At the end of 2018, IIP owned 11 properties. A year later, that number jumped to 46; today, it stands at 62.
There are two reasons why I think IIP will keep growing. First, the U.S. cannabis industry is smoking hot. Thirty-three states have already legalized medical cannabis. More could do so in the upcoming November elections. Second, the Federal Reserve Board intends to keep interest rates near zero through 2023. That means IIP's borrowing costs will remain low.
An added bonus
I fully expect IIP's number of properties to at least double by the end of 2022, driving its revenue, earnings, and stock price higher in the process. And, as they say on the TV infomercials, "But wait... there's more!"
Remember that IIP is a REIT. That means the company must return a minimum of 90% of taxable income to shareholders in the form of dividends. So if IIP's earnings double or more within the next 27 months, so will its dividend payout.
Here's the great thing: IIP's dividend yields north of 3.7% right now. Investors who buy the stock now could very well have an effective yield of more than 7% in a little over two years. Sure, the stock's appreciation would likely keep the dividend yield from rising to that level. However, anyone who bought the stock at the current price would receive much higher dividends from their initial investment.
By the way, IIP's dividend has grown more than its share price over the last three years. Quite a bit more, actually.
Dividends boost total returns. IIP stock really wouldn't have to double by the end of 2022 for investors to double their initial investment, especially with dividend increases along the way.
What could get in the way
Are there any potential gotchas? There are risks that apply to any stock, such as scandals and major geopolitical crises. I also think there's another possible stumbling block that could reduce IIP's prospects of doubling by 2022: marijuana legalization in the U.S.
IIP has enjoyed so much success partly because it doesn't have significant competition from big players. Larger REITs have stayed away from the cannabis industry because of federal anti-marijuana laws. But if cannabis is legalized at the federal level, it could pave the way for more companies to enter the market. This increased competition would likely cause the lease rates charged to medical cannabis operators to fall.
It's possible that the U.S. could be on the path to legalize medical cannabis at the federal level and change laws to recognize states' rights to enforce their own recreational marijuana laws. My view is that's exactly what will happen if the Democrat Party retakes the White House and the Senate.
However, even if more rivals come onto the scene, I still think IIP has a pretty good chance of doubling before 2022 is over. While U.S. marijuana legalization could increase competition for the company, it would also likely expand IIP's market opportunities significantly. IIP should be the exact opposite of a boring, low-growth company over the next couple of years.
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>>> American Tower is a real estate investment trust (REIT) that owns and operates cellular towers and the land on which they stand. Wireless providers and other telecoms rent space on American Tower's towers to mount equipment like antennas.
American Tower's share price has -- with few exceptions -- been steadily increasing over the last 10 years. That's in large part because American Tower's customers sign long-term inflation-adjusted contracts to mount their equipment on its towers, ensuring a steady stream of revenue regardless of economic conditions. And because those customers tend to be deep-pocketed telecommunications providers, the risk of default is very low. Indeed, you'd never know there was a recession this year to look at American Tower's 20% dividend hike and 10% revenue growth in the first half of 2020.
With the ongoing 5G rollout increasing demand for tower space, American Tower -- even at its current high share price -- seems like a better bet than oil to outperform over the long term.
https://www.fool.com/investing/2020/09/19/with-oil-crashing-again-these-3-stocks-are-buys/
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>>> T-Mobile and American Tower Sign New Milestone Multiyear Agreement
Business Wire
September 15, 2020
https://finance.yahoo.com/news/t-mobile-american-tower-sign-123000871.html
T-Mobile and American Tower Sign New Milestone Multiyear Agreement
T-Mobile (NASDAQ: TMUS) and American Tower Corporation (NYSE: AMT) announced today that the companies have signed a new long-term agreement designed to drive significant value for both parties over its nearly 15-year term. The new agreement enhances T-Mobile’s access to American Tower’s U.S. sites while locking in synergies and facilitating T-Mobile’s continued rapid, efficient deployment of broad and deep nationwide 5G. The agreement also provides long-term revenue growth visibility to American Tower.
"Wireless mobility has never been more critical for consumers and businesses alike, and as technology continues to advance into 5G and beyond, that will only increase," said Neville Ray, President of Technology at T-Mobile. "Through our multiyear agreement with American Tower, we’ve secured T-Mobile’s ability not only to accelerate our aggressive 5G build, but also to continue to deliver connectivity for our customers well into the future."
The new agreement ensures T-Mobile can serve Americans’ wireless needs for years to come and allows T-Mobile to increase momentum on its rapid 5G deployment, adding coverage and enhancing speed in thousands of cities and towns across the country.
"We look forward to strengthening our valued partnership with T-Mobile through this mutually beneficial, long-term agreement," said Tom Bartlett, CEO, American Tower Corporation. "We’re excited to help T-Mobile deploy next-generation 5G service across the country quickly and efficiently by utilizing our extensive nationwide portfolio of communications sites."
About T-Mobile US, Inc.
T-Mobile U.S. Inc. (NASDAQ: TMUS) is America’s supercharged Un-carrier, delivering an advanced 4G LTE and transformative nationwide 5G network that will offer reliable connectivity for all. T-Mobile’s customers benefit from its unmatched combination of value and quality, unwavering obsession with offering them the best possible service experience and undisputable drive for disruption that creates competition and innovation in wireless and beyond. Based in Bellevue, Wash., T-Mobile provides services through its subsidiaries and operates its flagship brands, T-Mobile, Metro by T-Mobile and Sprint. For more information please visit: http://www.t-mobile.com.
About American Tower
American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 181,000 communications sites. For more information about American Tower, please visit www.americantower.com.
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Digital Realty - >>> Interxion Acquires Land in Madrid for Future Expansion
Business Wire
September 9, 2020
https://finance.yahoo.com/news/interxion-acquires-land-madrid-future-110000438.html
Interxion, a Digital Realty (NYSE:DLR) company and a leading European provider of carrier- and cloud-neutral colocation data centre services, has acquired a 3.6-acre land parcel in a strategic expansion of its Madrid campus, Spain’s most highly interconnected data centre campus. The parcel is less than one kilometre from Interxion’s existing data centres and can support a facility with up to 34 megawatts of critical IT capacity encompassing more than 35,000 square metres.
Interxion’s Madrid facilities have become the primary hub for content exchange on the Iberian Peninsula – and in southern Europe more broadly. Customers who deploy their critical infrastructure with Interxion in Madrid gain direct access to leading global cloud providers on campus as well as access to communities of connectivity providers, platforms and enterprises on six continents through PlatformDIGITAL™, Digital Realty’s global data centre platform.
Interxion purchased the 14,550-square metre plot to build its fourth data centre in Madrid’s technology zone known as Silicon Alley Madrid, a part of the San Blas-Canillejas district. Construction of a 34-megawatt data centre would be expected to generate more than 500 jobs and drive significant economic impact, boosting GDP between €9 and €12 for every euro invested. The strategic expansion project underscores Interxion’s confidence in the region’s future as southern Europe’s digital hub and its commitment to the development of the digital economy in Spain.
"The recent restrictions on people’s movements have shined a new light on the role of data centres and the digital economy," said Robert Assink, Managing Director of Interxion Spain. "There is now heightened awareness of the importance of connectivity and access to the applications that enable us to work, study, consume content and shop from anywhere. Without data centres, it would not be possible to connect users and businesses."
Interxion has been operating in Madrid for two decades, driving technological development in the region and managing more than half of Spain’s internet traffic.
About Interxion: A Digital Realty Company
Interxion: A Digital Realty Company, is a leading provider of carrier- and cloud-neutral data centre services across EMEA. With more than 700 connectivity providers in over 100 data centres across 11 European countries, Interxion provides communities of connectivity, cloud and content hubs. As part of Digital Realty, customers now have access to 47 metros across six continents. For more information, please visit www.interxion.com.
About Digital Realty
Digital Realty (NYSE:DLR) supports the data centre, colocation, and interconnection strategies of customers across the Americas, EMEA and APAC, ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare and consumer products. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter.
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>>> Innovative Industrial Properties Acquires Michigan Property and Expands Real Estate Partnership with Holistic Industries
Business Wire
September 1, 2020
https://finance.yahoo.com/news/innovative-industrial-properties-acquires-michigan-214000505.html
IIP Expands Property Portfolio to 62 Properties in 16 States Comprising Over 4.7 Million Square Feet
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property located at 29600 Stephenson Highway in Madison Heights, Michigan.
The purchase price for the property was $6.2 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Holistic Industries Inc. ("Holistic"), which intends to operate the property as a regulated cannabis cultivation, processing and dispensing facility, upon completion of development of an approximately 63,000 square foot industrial building. In connection with the development of the property, IIP has agreed to provide reimbursement of up to $18.8 million. Assuming full reimbursement for the development of the property, IIP’s total investment in the property will be $25.0 million.
In addition to the Michigan property, IIP owns and leases to Holistic three other properties in Maryland, Massachusetts and Pennsylvania.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
"We have had the privilege of being Holistic’s long-term real estate partner since 2017, and supporting them in their expansion over the years with key growth capital along the way," said Paul Smithers, President and Chief Executive Officer of IIP. "Josh and his team of dedicated professionals have set a standard for product quality, patient care and customer experience that we are proud to support, and we are thrilled for the success that they have achieved."
Holistic is one of the largest private, vertically-integrated multi-state operators in the cannabis industry, with operations in California, Maryland, Massachusetts, Michigan, Pennsylvania and Washington D.C. Founded by Chief Executive Officer Josh Genderson in 2011, Holistic’s success is driven by its unique and scalable approach and mission to be the best place to work, shop and invest in the cannabis industry. Holistic is dedicated to delivering exceptional cannabis products to patients and customers in an environment of highly focused customer service and individualized patient care.
"IIP has been an excellent real estate partner, and we appreciate their unwaivering support in facilitating our expansion over the past three-plus years," said Josh Genderson, Chief Executive Officer of Holistic. "We look forward to working closely with IIP in the development of this property and the vision we have for the community, creating a state-of-the-art facility that produces the high quality, consistent product, with a compassionate, customer-focused experience for our patients and customers, and an operation that provides great jobs and opportunities for career advancement for local residents."
According to a Michigan Marijuana Regulatory Agency report, July 2020 total sales for medical-use and adult-use cannabis were approximately $109.6 million, equating to approximately $1.3 billion in sales on an annualized basis and representing a continued strong, month-to-month growth. Michigan began regulated adult-use cannabis sales in December of last year. As of today, IIP’s total investment, including committed funding for future tenant improvements, for the properties IIP owns in Michigan is approximately $155.8 million.
As of September 1, 2020, IIP owned 62 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.7 million rentable square feet (including approximately 1.7 million rentable square feet under development/redevelopment), which were 99.3% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.0 years. As of September 1, 2020, IIP had invested approximately $844.8 million in the aggregate (excluding transaction costs) and had committed an additional approximately $245.9 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $14.5 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenant at that property may not elect to have IIP disburse those funds to the tenant and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
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>>> Prologis Releases Updated "Future Flow of Goods" Economic Impact Report
PR Newswire
August 13, 2020
https://finance.yahoo.com/news/prologis-releases-updated-future-flow-130000739.html
In-depth analysis examines how the company's business operations contribute directly to the global economy
SAN FRANCISCO, Aug. 13, 2020 /PRNewswire/ -- Prologis, Inc. (NYSE: PLD), the global leader in logistics real estate, today released a new report that summarizes the economic impact of its worldwide operations.
Prologis commissioned independent advisory firm Oxford Economics to update the company's "Future Flow of Goods" study, first conducted in 2017. The revised report reveals Prologis' growth amidst changes in the logistics real estate landscape.
"This study shows just how critical logistics real estate is to the vitality of the global economy," said Prologis chairman and CEO Hamid R. Moghadam. "Every day, Prologis sees many of the goods that make modern life possible flow through our distribution centers, which in turn underscores the interconnected nature of global trade."
Key insights from the new study include the following:
The current economic value of goods flowing through Prologis facilities worldwide is $2.2 trillion, a 69% increase over 2017.1 This figure underscores the diversity of the Prologis customer base and the scale and value of the company's global real estate portfolio.
This $2.2 trillion in throughput represents 3.5% of the gross domestic product (GDP) of the 19 countries in which Prologis operates. In 2017, the company's portfolio spanned 684 million square feet, and throughput represented 2.4% of the GDP of those same 19 countries.2 The increase speaks to Prologis' growth strategy and the scale of its platform, which comprises nearly 1 billion square feet today.
The flow of goods through Prologis buildings represents 2.5% of global GDP—4.4% of global household consumption.2 In 2017, the flow of goods was 1.7% of global GDP.
Prologis is a powerful supporter of jobs in its communities; each day, approximately 850,000 people go to work under Prologis roofs, a 57.4% increase over 2017.3
Visit https://www.prologis.com/about/economic-impact-report to view and download the full report.
1 Based on 2019 data per Oxford Economics report
2 Per Oxford Economics, it is important to note that GDP represents the total value of all final goods and services production. Some warehouses may be used to store intermediate goods (i.e. components used in the production of final goods), and of course services do not need to be stored, and a single good will often be stored in multiple warehouses on its way to final consumers.
3 Based on estimates available in 2017, Oxford Economics assumed that direct employment at Prologis warehouses would be one worker for every 743 square feet (69 square meters) of warehouse space globally. Subsequent research by Prologis has refined this estimate and resulted in the country-specific estimates of 1,000-1,900 square feet per direct employee. Based on the original assumption, we estimated total direct employment of 816,200 workers in Prologis warehouses in July 2017. Updating the previous assumption, however, Oxford Economics would estimate total employment in Prologis warehouses in 2017 of 539,900.
ABOUT PROLOGIS
Prologis, Inc. is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of June 30, 2020, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 963 million square feet (89 million square meters) in 19 countries. Prologis leases modern logistics facilities to a diverse base of approximately 5,500 customers principally across two major categories: business-to-business and retail/online fulfillment.
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Equinix - >>> Why the Coronavirus Has Helped Equinix's Results
Remote working increases the demand for data.
Motley Fool
Brent Nyitray, CFA
Aug 12, 2020
https://www.fool.com/investing/2020/08/12/why-the-coronavirus-has-helped-equinixs-results/
One of the biggest revelations out of the coronavirus crisis has been how easily many white-collar businesses have been able to adapt to remote working. Just about every company that has reported second-quarter earnings has remarked that the transition to mass remote-working has gone well. Tech leaders like Google and Facebook have permitted employees to work remotely for the next year if they prefer.
Remote working vastly increases the demand for data, cloud storage and access, as well as bandwidth. That's why it's a good time to consider Equinix (NASDAQ:EQIX). Equinix is a real estate investment trust that dominates the data center space, and it's one of the few REITs that can satisfy both growth and income investors.
A record quarter for the Americas
Equinix put in another solid quarter recently and announced record bookings for the Americas. On the second-quarter earnings conference call, CEO Charles Myers said that the company had its third highest bookings for the Americas and signed on 4,200 new deals with 3,000 new customers. Equinix's customers are giants like Verizon and Oracle. Internet exchange traffic was up 44% year over year, driven by COVID-related videoconferencing as well as gaming. While COVID has inhibited decision-making at some customers (the company pegged the revenue effect to be up to $50 million), the increases in traffic and bookings demonstrate how remote working is driving demand for data and cloud storage.
Steady growth and guidance
During the quarter, Equinix reported a 2% sequential increase in revenue to $1.47 billion and an 11% increase in operating income to $282 million. Adjusted funds from operations (AFFO) increased 2% sequentially to $6.35 per share. AFFO is a better way to look at a REIT's cash flow than net income. REITs with a lot of real estate generally have a lot of depreciation, which is a non-cash expense. AFFO takes that into account.
The company also gave full-year guidance for $5.9 billion to $6 billion in revenue, which is a 6% to 8% increase from 2019. Full-year AFFO guidance is $23.87 to $24.67 per share, an increase of 5% to 8% from last year.
Continuing to invest in the business
During the quarter, Equinix continued to make investments, buying 25 data centers from Bell Canada (including 600 customers) for $750 million. This helps Equinix develop a truly national platform in Canada. Overall, Equinix completed 4,200 deals with 3,000 customers. And it opened its 5G and Edge Proof of Concept Center (POCC), which provides a testing environment for mobile network operators (MNOs), cloud platforms, technology vendors, and enterprises.
An opportunistic refinancing
Equinix was upgraded by Moody's from Ba1 to Baa3 during the quarter, and the company took advantage of that to refinance some existing high-yield debt at an average rate of 2.07%. In addition, the company issued $1.7 billion of common stock to fund further growth. It turns out that the interest savings from the refinancing covered the dilution from the equity raise. This leaves Equinix with about $5 billion of cash and about $12 billion in mortgage debt and senior notes. Last year, Equinix had about $3.6 billion in maturing obligations this year, but should be able to refinance these at lower interest rates. The $5 billion in cash alone can handle it.
Sometimes investors have to pay up for a leader
For a REIT, Equinix pays a somewhat miserly dividend of only 1.4%. For investors used to retail or mortgage REITs, this is quite small. The company also trades at a pricey 32 times guided AFFO per share as of Wednesday morning. That said, Equinix dominates its space unlike any other REIT. Its interconnection growth outstrips the next 10 competitors combined. The stock has been a stellar performer, rising 32% year to date. Sometimes investors have to pay up for industry leaders, and Equinix certainly fits that bill.
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>>> Equinix Eyes Expansion in India With GPX India Acquisition
Zacks
August 12, 2020
https://finance.yahoo.com/news/equinix-eyes-expansion-india-gpx-125112637.html
Equinix, Inc. EQIX extended Platform Equinix to India, with the $161-million acquisition of GPX Global Systems, Inc.’s Indian operations — GPX India — consisting of two highly-interconnected data centers.
The transaction value indicates a multiple of nearly 15X the estimated EBITDA at full utilization. Moreover, this all-cash deal is anticipated to close in first-quarter 2021, subject to customary closing norms, including regulatory approval.
Through the acquisition, Equinix will add a fiber-connected campus, consisting of two data centers located in Mumbai. The campus has more than 1,350 cabinets, with a provision to add another 500 cabinets at full build-out. At full built, the campus will add more than 90,000 square feet of colocation space to Platform Equinix.
Moreover, the strategic location of the data centers in Mumbai will likely enable the company to enjoy robust demand and leasing activity. This is because the city is a domain for important IT infrastructure of numerous global companies and has international connectivity serviced by subsea cables at close landing sites.
Per management, core digital sectors in India like IT and digital communication services are estimated to double in size by 2025 and will account for $355-$435 billion to GDP. Hence, given this massive proliferation of digitization in the country, the buyout is a strategic fit.
It will provide a platform for Equinix’s existing network, content, cloud and enterprise customers that are looking to expand in the dynamic market. The expansion will aid local companies to advance digital transformations by deploying their infrastructures, applications and services closer to the edge on the back of Equinix’s global-interconnected platform of more than 210 International Business Exchange data centers.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 38.2% as against the real estate market’s decline of 11.1%.
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>>> Digital Realty Adds Renewable Energy, Expands Colocation Capacity in Dallas Portfolio
PR Newswire
August 24, 2020
https://finance.yahoo.com/news/digital-realty-adds-renewable-energy-103000186.html
Phoenix Solar Project Builds on Track Record for Sustainability, and Supports Customer Expansion on PlatformDIGITAL™ in Key U.S. Metro
SAN FRANCISCO, Aug. 24, 2020 /PRNewswire/ -- Digital Realty (NYSE: DLR), a leading global provider of carrier- and cloud-neutral data center, colocation and interconnection solutions, announced today it is expanding its renewable energy capacity in Texas with a new long-term power purchase agreement to source solar power for the company's Dallas-area data center portfolio from Pattern Energy's 82.5 MWac Phoenix Solar Project located in Fannin County, Texas. The company also announced that 2323 Bryan Street, a major regional connectivity hub in downtown Dallas, is being upgraded to meet the area's growing networking needs with additional colocation capacity.
Digital Realty contracted 78% of the project's total capacity, approximately 65 MWac, with the remainder held by Pattern Energy Group LP, the project developer and owner. With the addition of this solar project, Digital Realty's entire Greater Dallas portfolio will be powered by 70% renewable energy once the Phoenix Solar project reaches commercial operation by mid-2021. This agreement marks the latest milestone in Digital Realty's continued focus on reducing its carbon footprint, in line with the Science Based Targets Initiative.
"This is our third major renewable energy transaction in Texas since 2016," said Digital Realty Senior Director of Sustainability Aaron Binkley. "We are pleased to be able to expand access to renewable energy for our customers while making additional progress towards our Science Based Target Initiative carbon emissions reduction commitment. The Phoenix Solar Project supplies renewable energy at scale in proximity to our Dallas data centers, expanding on our ongoing efforts to enhance local sustainable business practices across our global portfolio."
Phoenix Solar expands Digital Realty's use of renewables by approximately 160,000 megawatt-hours per year. This announcement builds on the significant wind energy project the company announced in April of this year, which added a total of 262,800 megawatt-hours of new clean energy to the regional electric grid. In total, these projects are expected to generate enough electricity to meet the needs of 50,000 homes each year.
Digital Realty is expanding its use of renewable energy in Texas in lockstep with its investment in new capacity in the region. With its rich technology landscape, rapidly growing job market and reputation as the energy capital of the U.S., Texas has emerged as an epicenter for business activity and technology growth. To meet the region's expanding network demands, Digital Realty is adding colocation capacity at its 2323 Bryan Street facility.
With more than 75 carriers in the Digital Dallas ecosystem, the new downtown colocation capacity provides an ideal location for customers to deploy Network Hub solutions on PlatformDIGITAL™, with availability to expand global cloud and connectivity options via Metro Connect, Service Exchange and dedicated cloud connections such as IBM Direct Link.
"Technology providers are increasingly attracted to the Dallas area's business-friendly environment and strong tech talent pool, which is fueled by leading research institutions in the region," said Tony Bishop, Digital Realty Senior Vice President, Platform, Growth & Marketing. "As a result, the gravitational pull of the Dallas market is encouraging more enterprises to locate their infrastructure and applications in close proximity to our highly-connected centers of data exchange. We're excited to be adding new, sustainable energy solutions for our customers in the region alongside today's significant milestone of expanding our colocation options and service offerings on PlatformDIGITAL at the very heart of our Dallas portfolio."
In addition to its use of renewable energy, Digital Realty continues to advance its water stewardship and energy efficiency initiatives, including a recent partnership with Nalco Water to optimize data center water use. This effort was recently recognized as a Top Project of the Year by the Environment + Energy Leader Awards. At its 1100 Space Park Drive, SJC10 facility in Santa Clara, Digital Realty is conserving water in partnership with the South Bay Water Recycling Program, investing in infrastructure that will supply an estimated 10 million gallons of non-potable, reclaimed water annually to reduce the impact on the Silicon Valley watershed.
Learn more about Digital Realty's work with Citi and EDF to supply clean energy to its Dallas, Texas data centers in recent announcements
Discover new connectivity options for customers in the Digital Dallas campus with Windstream Wholesale
For more information on Pattern Energy's solar project, please visit: phoenixsolartexas.com
More information on Digital Realty's work with Nalco Water is available here.
About Digital Realty
Digital Realty supports the data center, colocation and interconnection strategies of customers across the Americas, EMEA and APAC, ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare and consumer products. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter.
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Prologis - >>> Logistical Cashflows for Income & Growth
InvestorPlace
by Neil George
August 14, 2020
https://finance.yahoo.com/news/logistical-cashflows-income-growth-151318505.html
Retail stores are closing on a daily basis as online retail rapidly becomes the way to shop.
Pure online retail sales have climbed 103.3% in the trailing five years alone, using US Census data. Add in traditional retail moving online, and overall online sales will move higher at an increasing pace.
This means all of the industries and companies behind the scenes of this commerce are on a long-term roll.
Warehouses and logistics are the backbone beyond the websites, cloud services and data centers. After all, somebody has to store, process and deliver that mountain of goods. Here’s a way to cash in now, with plenty of income and growth to follow.
A Pro at Problem-Solutions
Prologis (NYSE:PLD) is one of the largest warehousing and logistics support companies in the US and around the major economies of the globe. It has 4,655 buildings amounting to 963 million square feet (MSF) of warehouse and related facilities.
Its occupancy is currently running at 95.7%, and it’s expanding its capacities with eager tenants. It added new facilities in the second quarter and expanded and locked-in tenants at others. Its commenced new construction on additional facilities that are 100% pre-leased and committed with more in the works.
Like other real estate investment trusts (REITs), it has some stressed tenants, but that only amounts to 0.5% of its overall rents. And rent collection continues to rebound strongly, hitting 98%.
The company calculates that $2.2 trillion worth of goods flow through its facilities on an annual basis. And in the countries where it operates, the goods and services running through amount to 3.5% of those nations’ gross domestic products (GDPs). That equates to 2.5% of the globe’s overall economy.
Its top customers leasing properties are a “who’s who” in logistics and commerce. They include Amazon (NASDAQ:AMZN), DHL Worldwide Express, FedEx (NYSE:FDX), UPS (NYSE:UPS) and XPO Logistics (NYSE:XPO).
Home Depot (NYSE:HD) wouldn’t have its depot without Prologis. And it even has some data centers for its customers Amazon, Microsoft (NASDAQ:MSFT) and others.
A Pro at Income & Growth
Revenue at Prologis is up over the trailing year by 18.8%. And that includes the highly challenging first and second quarters of this year, complete with remote work, stay at home and all of the lockdowns and cross-border limits.
But that isn’t just a one-off good year. Revenues continue to climb by an average of 17.8% on a compound annual growth rate (CAGR) basis for the past five years.
The company runs a profitable ship with low general and administrative expenses. And that in turn has driven a return on funds from operations (FFO) of 11%.
Prologis continues to expand its assets with eager and confirmed pending tenants. This means that the intrinsic (book) value of the company, currently sitting at $46.66 per share, should continue to increase. Over the past five years alone, the intrinsic value of the company has continued to climb at a 10% CAGR.
PLD has returned 192.2% over the past five years, which is way above the S&P 500’s return of 79.7% and the S&P Real Estate Index’s return of 36%.
But the stock is still a value. It’s only valued at 2.3 times its intrinsic (book) value. This is far cheaper than the average S&P Real Estate Index member, which is running at 3.3 times book.
A Pro at Paying Out
Prologis continues to pay a reasonable dividend distribution that currently yields 2.3%. That’s on the lower side, but it has been on the rise over the past five years by 10% annually.
Its retention of cash is fueling its expansion, which in turn is resulting in that continued rise in underlying intrinsic value.
The stock market continues to acknowledge the company’s rising value and rising revenue with its outperformance relative to the sector and the general market. This all makes it a proven growth company with sturdy distributions for income investors.
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>>> Why Innovative Industrial Properties Is the Best REIT Pot Stock
A favorite REIT/pot stock in 2019 is working wonders in 2020.
Motley Fool
by Sushree Mohanty
Jun 24, 2020
https://www.fool.com/investing/2020/06/24/why-innovative-industrial-properties-is-the-best-r.aspx
If you find it risky to invest directly in marijuana stocks, this real estate investment trust (REIT) might interest you. Innovative Industrial Properties (NYSE:IIPR) is an unconventional marijuana stock -- it's a REIT that provides real estate solutions to medical cannabis companies in the U.S.
Exceptional revenue growth through acquisitions
While most cannabis companies took a hard hit in 2019, Innovative Industrial Properties saw its stock rise by about 65% . The popularity of medical cannabis businesses in the U.S. is driving this revenue growth.
Acquisitions were the main contributor to revenue growth. As of May 6, the company is the proud owner of 55 properties with about 4.1 million rentable square feet in various U.S. states. In 2020 alone, Innovative Industrial Properties has acquired nine properties that total about 1.1 million rentable square feet. The locations include Colorado, Florida, Illinois, Massachusetts, Michigan, Ohio, and Virginia. Innovative acquires these properties, then leases them out to mostly medical cannabis companies (which can have trouble getting funding to purchase them on their own), thereby earning a chunk of rental revenue.
Its recent fiscal 2020 first quarter showed a drastic 210% increase in revenue to $21.1 million from the year-ago quarter.
Added benefits: A dividend stock
Besides offering unconventional access to the marijuana sector, this company pays dividends -- an added benefit to investors.
REIT stocks are well-known for being shareholder-friendly, paying 90% of their net profits as dividends. Innovative has an attractive forward dividend yield of 4.3%. That said, a high yield isn't everything -- consistency in dividend payments determines how stable the companies' financials are. Innovative has been consistently paying dividends since 2017 amid the market's ups and downs.
It hiked its quarterly dividend by 122% year-over-year in the first quarter, to $1 per share. Management noted the rise in rental revenue, net income, and adjusted funds from operations (AFFO) as the drivers behind the dividend increase.
Usually, with a REIT, we look at funds from operations (FFO) and AFFO, which paint a picture of its operating performance and give us an idea of how much cash is available to be paid out as dividends. Innovative saw a 236% increase in AFFO, to $17.8 million, and a 249% increase in net income to $11.5 million in the first quarter.
The company's commitment to providing value to shareholders is evident from its dividend hikes. In the second quarter, management raised the dividend by 6% from Q1, to $1.06 -- which is also an increase of 77% from the year-ago period. This marks the seventh increase since the company went public in December 2016.
Medical cannabis has tremendous potential
What makes me support Innovative is its potential to grow through investments in the medical cannabis business. Compared with the recreational front, medical marijuana is a more stable and growing source of income. The medical segment held 71% of total worldwide legal cannabis revenue share in 2019 -- and if estimates by Grand View Research prove right, the global legal marijuana market could be worth $73.6 billion by 2027.
The market for medical cannabis is also vast in the U.S., where 33 states and the District of Columbia have legalized it -- whereas recreational cannabis is legal only in 11 states and D.C. Many more states are gearing up to make cannabis legal this year, opening doors of opportunity for this REIT. Innovative's shares are up 26% so far in 2020, while the SPDR S&P 500 ETF has lost 4.1%.
Innovative also ended the quarter with $108.3 million in cash and cash equivalents. Discussing the first-quarter results and COVID-19 crisis, management noted in a press release that "one of the pillars of our business strategy has consistently been a conservative, flexible balance sheet, and we believe we are exceptionally well-positioned to not only weather this unprecedented health crisis and economic disruption but to continue to make real estate investments on a long-term basis with best-in-class tenant operators."
It is a well-known fact that dividend payers can be the best stocks to own during an economic storm -- like the one we are facing right now because of the COVID-19 pandemic. This REIT/pot stock allows you to be a part of the evolving marijuana sector and also offers stability and potential for long-term growth. That said, if you are interested in waiting and enjoying the full potential of the evolving cannabis industry, then I believe Cronos Group (NASDAQ:CRON) and Aphria (NASDAQ:APHA) are better positioned for 2020. They have strong balance sheets, innovative cannabis derivative products, and wise strategies for the future.
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>>> Tech-Exposed Real Estate Is Pulling Away From Other Properties
Bloomberg
Jennifer Bissell-Linsk
June 25, 2020
https://finance.yahoo.com/news/tech-exposed-real-estate-pulling-154740149.html
(Bloomberg) -- The same trends behind soaring stock prices for Amazon.com Inc. and Zoom Video Communications Inc. are benefiting shares in the companies associated with their real estate.
Communication towers and data center stocks -- sometimes referred to as “where the internet lives” -- have seen some of the biggest gains in the S&P 500 so far this year as stay-in-place measures to combat the coronavirus have accelerated the demand for digital services and connectivity.
Whereas the pandemic has severely hit many commercial property owners, shares in real estate investment trusts related to technology are outperforming. The combined market value gained by just five of those stocks is almost the same as the amount lost by 30 REITs specializing in malls and shopping centers, according to data compiled by Bloomberg News.
“If you’re a real estate investor and your mandate is to own real estate, you’re obviously not doing very well owning offices or owning retail,” Cowen analyst Colby Synesael said in a phone interview.
With more people at home, the demands on technology and its infrastructure have been tremendous, whether it’s allowing for online shopping, mobile streaming or working remotely. As a result, certain REITs have emerged as defensive plays for investors, Synesael said.
American Tower Corp., Digital Reality Trust Inc., Equinix Inc., Crown Castle International Inc. and SBA Communications Corp. have added roughly $50 billion in total market capitalization this year, and valuations for towers and data centers have never been higher.
Data centers, for instance, are trading at a roughly 15% premium to the overall REIT average on a price to estimated adjusted funds from operations basis, according to Berenberg analyst Nate Crossett. Historically they’ve traded at a 7% discount.
As a global data center company, Equinix has boasted of its work building out coverage and scale for clients that have gone on to become household names in the work-from-home era including Zoom and Cisco Systems Inc.’s Webex.
“Two significant customers of ours is Zoom and Webex -- both of whom obviously saw exceptional increases in their demand as work from home took off,” Chief Executive Officer Charles Meyers said in an interview. “We played a very key role in helping them ramp up their capacity to meet that demand. That was true also in networking cloud providers.”
Meyers said it’s difficult to anticipate how much more revenue the company could see over time. In terms of demand, he pointed to recent overall online traffic trends, which surged 25% to 30% over a 30- to 45-day period-- growth that normally would take nine months to a year to achieve.
Digital Realty Chief Financial Officer Andy Power said in an interview that the company had seen a pickup in data center demand from clients filling near-term gaps but that longer-term, he was “pleasantly surprised” at how larger enterprises were also taking this moment to plan for the future.
“We’re seeing the criticality of our infrastructure playing out front and center while many of our other asset classes [in real estate] are seeing sloping rent,” he said. Even for clients in struggling industries such as travel, the company has seen increased deployments. “Our services are fundamentally mission critical for their businesses. You cannot book an airline ticket or any hotel reservation without the infrastructure we’re essentially providing.”
Bloomberg Intelligence analyst Lindsay Dutch said the need for increased connectivity during the pandemic has demonstrated the importance of digital infrastructure, which is a long-term driver for the stocks.
“If you think of everyone on their computers, trying to connect to their workplace and do all these Zoom calls and stream Netflix -- that creates more traffic and the need for power,” she said.
Before the virus, shares in tech-related REITs had already been rising, catching the attention of investors, Cowen’s Synesael said.
For communication towers, he noted a sea change in 2018 when Vanguard Group began adding towers to its investment portfolio, prompting more investors to do the same ahead of the U.S. rollout of 5G spectrum.
Unlike data centers, tower stocks aren’t seeing a fundamental change in earnings from the pandemic, Synesael said. However, they are still benefiting from trends Covid-19 has accelerated like mobile data use, which Synesael expects to continue.
Despite their relative premium, Berenberg’s Crossett said that on an absolute basis “there’s still plenty of room to run” for data center stocks.
“To the extent that there’s a pullback, I would be adding to these names,” he said.
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>>> Equinix Unveils New Data Center in Dallas Infomart Campus
Zacks
June 25, 2020
https://finance.yahoo.com/news/equinix-unveils-data-center-dallas-130701060.html
Equinix, Inc. EQIX added a new International Business Exchange (“IBX”) data center in the Dallas Infomart Data Center campus.
The $142-million data center is the 9th one for the company in the Dallas metro area and the 2nd building on the growing Dallas Infomart campus. Moreover, with this new data center addition, it expanded the footprint in the Americas — operating more than 90 IBX data centers across Brazil, Canada, Colombia, Mexico and the United States.
The initial phase of DA11 offers a capacity of 1,975 cabinets and a colocation space of around 72,000 square feet. Upon the completion of the future phases, the facility is anticipated to provide a capacity of more than 3,850 cabinets and colocation space, exceeding 144,000 square feet.
The company also launched its 5G and Edge Proof of Concept Center (POCC) at the state-of-the-art data center. Notably, Dallas serves as a core communications market for the Southern United States, with a concentration of telecommunications companies, many of which are part of Equinix’s dense and diverse ecosystem of carriers, clouds, and enterprises. Hence, launching POCC and 5G at the new data center is a strategic fit, since companies are on the lookout to test new 5G and edge innovations.
In fact, Equinix 5G and Edge POCC will accelerate 5G strategies of companies by offering a 5G and edge "sandbox" scenario. This will facilitate mobile network operators, technology vendors, cloud platforms and enterprises to directly connect with Platform Equinix to demonstrate complex 5G and edge deployment structures.
Being an important multi-tenant data center market in the United States, management expects Dallas to continue witnessing significant demand. Hence, with the opening of DA11, the company is positioned to leverage on the demand for connectivity and interconnection to its rich ecosystem of carriers, network and cloud providers.
Further, the new data center will help companies to accelerate their transformation from traditional to digital businesses by speedily scaling infrastructures, easily adopting hybrid multicloud architectures and interconnecting with potential business partners from the global ecosystem provided by Platform Equinix.
Although the expansion of the data-center portfolio is a strategic fit, it requires huge capital outlays and given the company’s significant debt obligations, these capital-intensive activities are concerning.
Moreover, shares of this Zacks Rank #3 (Hold) company have jumped 40.6% over the past year against the real estate market’s decline of 10.8%.
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Innovative Industrial Properties - >>> 3 Recession-Proof Stocks to Buy Now
These companies will likely prosper in almost any economic environment.
Motley Fool
Will Healy
Jun 7, 2020
https://www.fool.com/investing/2020/06/07/3-recession-proof-stocks-to-buy-now.aspx
The COVID-19 pandemic stoked deep fears about how the economy would cope with the shutdowns required to get the disease under control. Consequently, stocks sold off in February and March as job losses and closures escalated.
However, investors often forget that some companies can prosper, even in harsh conditions, and may actually perform better when a recession occurs.
For those who don't forget, the recent crisis may a reason to reassess their stock portfolio and add some companies that can generate positive returns regardless of the state of the broader economy. Companies like Dollar Tree (NASDAQ:DLTR), Innovative Industrial Properties (NYSE:IIPR), and Verizon (NYSE:VZ) appear to match that description.
1. Dollar Tree
The Dollar Tree empire is made up of two extreme discounters. The company originally established the Dollar Tree line of stores, which sells most of its items at the $1 price point and the rest under $1. It later acquired Family Dollar. While Family Dollar stores also sells $1 and under items, they don't operate under the price limit of its sister brand.
Dollar Tree stock took a hit when it acquired Family Dollar in 2015. A failure to integrate the new brand into the broader company led to stock volatility, forced Family Dollar conversions to Dollar Tree stores, and occasional outright closures. This placed its most direct competitor, Dollar General (NYSE:DG), in a more favorable light as an alternative investment.
But with the COVID-19 crisis and the recessionary indicators that came with it Family Dollar stores ended up getting a performance boost. Many of the millions of newly unemployed were looking for ways to save money in trying times and were drawn to stores like Family Dollar. Dollar Tree stores also partially benefited, but supply chain issues with China, as well as a lack of Easter holiday sales due to the coronavirus outbreak, created lower sales overall.
Still, with supply chains realigning and millions still unemployed, shoppers will likely continue to frequent both stores.
Dollar Tree stock declined in February along with the broader market. But surging revenue from Family Dollar (which, along with Dollar Tree, were deemed essential businesses and remained open) has helped the company's stock recover its value and it is trading up for 2020. Dollar Tree stock trades at about 20 times forward earnings, which suggests the stock is trading at a premium. But analysts expect average annual profit increases of approximately 7% per year over the next five years.
Dollar Tree may continue to face challenges with Chinese suppliers and integrating Family Dollar into the fold. But with recessionary unemployment rates likely to persist for the foreseeable future, the company's brands should continue to be popular with consumers and with investors.
2. Innovative Industrial Properties
Innovative Industrial Properties allows investors in the marijuana industry to benefit in two ways. First, marijuana companies are a trending investment sector at the moment and are considered one of the few recession-proof sectors of the market. Second, while marijuana growers are still considered risky investments, a real estate investment trust (REIT) which rents property to cannabis growers has some insulation from the risks inherent in the industry. Being a REIT also somewhat shields the company from the excessive regulations associated with marijuana growers and allows Innovative Industrial to earn a profit and pay a dividend while many grower stocks are losing money and not rewarding shareholders.
Over the last year, Innovative Industrial has benefited from two key trends. One trend involves small start-ups selling their production properties to generate ready cash flow needed to operate and then leasing the property back immediately from the company they sold it to (in this case, Innovative Industries). The second trend is a change in legislation. Where previous laws limited the Innovative Industries' reach to states that had legalized medical or recreational cannabis, now federal hemp production legalization means the company can operate properties in all 50 states.
Because the potential is still not being realized for this industry, this stock trades at a forward P/E of 23.4, meaning it seels at a premium. But this appears reasonable considering that analysts predict earnings increases of 78.8% this year and 37.2% in fiscal 2021.
As a REIT, Innovative Industrial Properties must pay out at least 90% of net income to its shareholders. The company has not disappointed in that regard and its $4 per-share dividend payout yields about 4.6%. This dividend has also increased every year since Innovative Industrial paid its first dividend in 2017.
Grandview Research forecasts a compound annual growth rate for the global cannabis industry of 18.1% through 2027. This should ensure that the company will continue to attract tenants.
As hemp grows more popular and as more jurisdictions loosen restrictions on marijuana use, demand for properties like the type owned by Innovative Industrial should continue to surge.
3. Verizon
Verizon has struggled somewhat recently as declining margins in its wireless business and massive investments in 5G infrastructure weighed on the company. Last year alone, Verizon spent $17.9 billion on capital expenditures. This has contributed to the company's $106.56 billion long-term debt load. It also represents a significant burden for a company worth $61.65 billion after subtracting liabilities from assets.
Still, it does not have the much higher debt load and side business distractions of archrival AT&T (NYSE:T). Moreover, consumers need communication and internet connectivity in good times and bad. Even if the economy continues to struggle, the march to 5G will probably continue and the need for smartphones and internet connectivity will be there.
And Verizon has an investing advantage over its other big rival, T-Mobile (NASDAQ:TMUS), as Verizon's shareholders receive a dividend. Verizon paid out $2.46 per share last year and its payout yields about 4.3%. This payout has risen every year for more than a decade. The dividend claims about 51.7% of company profits, leaving plenty of free cash flow left over for infrastructure spending, debt paydown, dividend increases, and other investments.
This has left Verizon the growth-and-income play of the wireless industry. Verizon has risen by about 121% over the last 10 years. While that does not beat T-Mobile, it comes out well ahead of AT&T, which (with its dividend yield of about 6.6%) is primarily an income play.
In addition to a generous payout, the company sells for just 11.9 times forward earnings. Admittedly, some may sour on Verizon as analysts see profit growth averaging 1.9% per year over the next five years. Still, with 5G adoption expected to grow for years to come, Verizon should keep producing growth and income regardless of the broader economy's performance.
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American Tower - >>> 3 Stocks to Hold for the Next 20 Years
Investors need to look for companies with a track record of stability and resilience as key attributes.
Motley Fool
Royston Yang
May 21, 2020
Ideally, as an investor you should consider holding stocks over years, even decades. The magic of compounding will provide you with a substantial nest egg to enjoy your golden years, while a growing income stream from dividends provides a hedge against inflation. However, it's important not to buy and own the wrong companies. Doing so will result in poor or even negative returns and may destroy your capital over time.
So, what attributes do great companies have? They should have a strong competitive advantage, market share, and a high level of resilience. These attributes will allow them to weather crises over the years and yet emerge unscathed or even stronger. Companies with such attributes are usually large, with a long track record of growth and stellar financial performance. Size confers an advantage as it allows them to dominate the industry they are in and continue to lead the pack.
Here are three examples of stocks that you can hold for the next two decades.
Mastercard
Mastercard (NYSE:MA) is a market leader in the financial services and payments industry. The company acts as an intermediary between banks and end customers by providing a secure platform for transaction and payments processing. For the first quarter of the fiscal year 2020, the company processed a gross dollar volume of $1.56 trillion worth of transactions, up 8% year over year. The number of cards in circulation grew 5% year over year to 2.6 billion.
Mastercard is a market leader in cashless transactions. With more countries modernizing and shifting to paperless transactions, the future looks bright for the company despite the short-term effect of the COVID-19 pandemic. Because of the pandemic, the company has temporarily suspended its share repurchase program. Dividend per share has been maintained at $0.40 per quarter as the business continued to generate strong operating cash flow of $1.9 billion. With strong tailwinds for its business and a robust balance sheet, Mastercard is a company you can own for the long term without losing sleep.
Nike
Nike (NYSE:NKE) is a market leader in the design and manufacture of sports footwear and apparel. The company has retail stores located around the globe and reported growth in revenue and net income of 7% and 10% respectively for the first nine months of the fiscal year 2020.
Though Nike has had to temporarily close stores in China, North America, and other parts of the world due to COVID-19-related lockdowns, the company has managed to tap on its digital sales platform to sell its products. Digital sales were up 36% year over year during the quarter , and CEO John Donahoe has reiterated the company's commitment to invest in the Nike Direct online platform and the Nike app. Digital is the company's fastest-growing channel, and owned and partnered digital sales represent more than 20% of overall revenues.
Nike is also famous for its innovation in running shoes. A few months ago, the new Nike ZoomX Vaporfly NEXT% was touted as one of the best running shoes ever made, with people going so far as to claim it gives athletes an unfair mechanical advantage. The company has just devised a new self-lacing shoe called HyperAdapt 1.0 that electronically adjusts to the contours of your foot and offers style in addition to comfort.
Investors can rest assured that the company's innovative culture and loyal fan base make the company an attractive one to own for the long term.
American Tower
American Tower (NYSE:AMT) is an owner and operator of a portfolio of roughly 180,000 communication sites that are leased to wireless service providers and communication companies. The company is incorporated as a real estate investment trust and is mandated to pay out 90% of its annual taxable income as dividends.
Over the years, American Tower's dividend has grown impressively by around 22.8% per annum over the last seven years, from $0.90 per share in 2012 to $3.78 in 2019. The company has achieved this through acquisitions of cell towers in emerging markets and by increasing the number of tenants using the same tower (thereby improving the return on investment for each tower).
With the expected investment by telecommunication companies in the development of 5G network technology, American Tower can expect an extended period of solid growth. This catalyst can allow the company to grow for many more years, and investors can look forward to continually growing dividends.
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>>> 3 'Must-Know' Dangers Of REITs
Seeking Alpha
May 19, 2020
by Jussi Askola
https://seekingalpha.com/article/4347678-3-must-know-dangers-of-reits
REITs are very opportunistic right now, but risks also are on the rise.
Conflicts of interest, over-leverage and shaky fundamentals are the leading reasons for poor investment results.
We discuss how to identify red flags to avoid stepping on landmines.
Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Get started today »
After the recent market collapse, the REIT sector has become very opportunistic. Many companies are now priced at similar valuations as in 2008-2009 and offer generational buying opportunities for investors who know what they are doing.
REITs that commonly trade at 3%-4% dividend yields now pay 8%-12% and offer 100-200% upside in a future recovery.
With that said, risks also are on the rise and you need to be more selective than ever before. There exist ~200 REITs but only ~50 of them are worth buying, and just half of that, has passed our due diligence at High Yield Landlord:
Before you buy shares of a REIT, you should know all the dangers that could derail your investment. Investors commonly think of REITs as a homogeneous market with great similarities from one name to another. In reality, this is a stock picker's market with enormous disparities in market performance between even the closest peers. Consider the following example:
Plymouth (PLYM) and Prologis (PLD) are both industrial REITs. If you had invested in PLD, you would have earned a nice return over the past years. However, if you had picked PLYM instead, you would have earned nothing and be down quite significantly.
There are some real landmines out there and the REIT market can be very punishing to investors who do not perform good due diligence on the risk factors. Below we discuss three "must-know" dangers of REITs. Avoid those and you will save yourself a lot of headaches in the future.
Danger #1: External Management Agreement
The first thing that we analyze is the management team. We always ask ourselves:
How shareholder-friendly are they?
What are their motivations?
Do they have a competitive advantage?
If you cannot trust the management, then the rest of the story is meaningless. You don’t need to waste your time analyzing the portfolio, balance sheet and valuation if the management is conflicted.
Even when the shares appear to be dirt cheap, you should just stay away. A conflicted management always will find a way to steal from shareholders and underperform sooner or later.
How do you recognize a poorly managed REIT?
The easiest way to identify conflicts is to look at the management structure. Most importantly, REITs can be managed internally or externally:
The internal management structure is the favored option. In this case, the management team is hired as employees of the REIT and they receive a salary that's tied to some key performance metrics. If they don’t perform, they can be easily fired by the board of directors.
The external management structure is a source of much greater issues. In this case, the management is outsourced to an external company that receives fees for its services. The fee structure here creates conflicts because the managers will often be compensated for maximizing the size of the company and not for optimizing its performance. Moreover, the management agreement has a multi-year term which makes it very difficult to fire the manager in case of trouble.
Conflict of interest - NGO Financial Risk Management: Balancing ...
The manager then becomes more protective about its fees than anything else. As an example, Global Net Lease (GNL), an externally-managed REIT, recently adopted a poison pill to discourage a hostile takeover of the company. They claim that it's for the best interest of shareholders, when in reality, it's more in the interest of the manager who does not want to lose its fee income. Just take a look at its performance since the IPO. I'm not so sure that this management is in the shareholder’s best interest:
Other examples of externally managed REITs with significant conflicts of interest include: Office Properties Income (OPI), Service Properties Trust (SVC), Industrial Logistics Properties, and other RMR-managed entities (RMR). We would stay away from this type of REITs at all cost.
But exceptions exist. The management structure is a good first sign of potential conflicts, but it should not be a deal-breaker on its own.
As an example, NexPoint Residential (NXRT) is externally managed, and yet, it has a strong track record of shareholder-friendly management. The difference here is that the insider ownership is very high at 20% and the managers keep buying more shares on the open market. We are actually very bullish on this externally-managed REIT:
In conclusion, we would avoid 95% of externally-managed REITs. Most of them are poorly managed, and even despite trading at a deep discount to other REITs, they tend to underperform in the long run. Don’t let their high yield fool you. Most of them are not great opportunities.
Danger #2: Overleverage In Times Of Crisis
If there's anything to be learned from the 2008-2009 crisis, it's that a poorly-timed equity issuance can have disastrous long-term effects on the performance of a REIT.
Back then, many REITs were forced to issue equity at fire-sale prices because refinancing became impossible in the mid of the crisis. It was very dilutive and shareholders paid the price. You want to avoid this type of situation at all cost.
Today, the banking system is in much better shape and REIT balance sheets are stronger than ever before. However, there still exist some over-leveraged companies that are very close to violating debt covenants in this environment. Good examples today include the lower quality mall REITs: Washington Prime Group (WPG) and CBL & Associates Properties (CBL):
Both are priced for high risk of bankruptcy or a dilutive equity infusion in the near future. Malls were hit particularly hard by the recent crisis and the lower-quality properties will take longer to recover. Combine that with high leverage and you have a perfect mix for disaster.
Even if a REIT is very cheap, it does not mean that it will ever recover to former levels if it's forced to issue a ton of equity, diluting shareholders in the process. If you are going to invest in this type of overleveraged company, skip the common shares and go up the capital ladder.
As an example, Bluerock Residential Growth REIT (BRG) is an over-leveraged apartment REIT. The common shares are very risky and may suffer from the issuance of dilutive equity. However, its preferred shares (BRG.PD), are higher on the capital stack, offer good margin of safety, and yet, they trade at an 8.5% dividend yield and offer 20% upside to par. The risk to reward is stronger, in our opinion.
Danger #3: Deteriorating Long-Term Prospects
What's unique about this crisis is that people are forced to stay at home and avoid social contact. As a result, they are learning to work from home, shop online, and entertain themselves in new ways.
Retail, hospitality, and office property sectors are the most affected by this crisis and you need to be especially selective when investing in these REITs.
In the long run, we believe that the office sector is set to lose the most. Employers are noticing that they could save money on their office rent and that some employees may be even more productive at home.
With that said, not all office properties are created equal. As an example, a Class A skyscraper in the middle of Manhattan is probably better positioned than a class B low rise office building in a more rural area.
Companies lease space in urban skyscrapers not because they have to, but because it's valuable to their image when they bring clients to a prestigious property. Law, consulting, and investment firms won’t suddenly leave these properties. The demand is high and the supply is very restricted due to the location. Therefore, a company like SL Green (SLG) that specializes in trophy office properties is likely to do fairly well in the long run.
On the other hand, a lower-quality office REIT like City Office (CIO) is likely to suffer much more from decreasing demand and oversupply. The properties do not have the same location and prestige advantage to protect them. In fact, CIO already slashed its dividend by 36% and the impact of oversupply could be felt for many years to come.
Bottom Line
Most REITs are very cheap today, but not all of them are worth buying. You need to become very selective in this market to sort out of the worthwhile from the wobbly.
Most importantly, you should learn to identify REITs with (1) conflicted management teams, (2) over-leveraged balance sheets and (3) struggling assets. These are the three "must-know" dangers of REIT investing in 2020.
In every crisis, there are losers and winners. Astute investors made fortunes in 2008-2009 as REITs nearly tripled in the recovery:
Today is no different. We are again hit by serious crisis and opportunities are abundant. We believe that those investors who play their cards right are set for exceptional returns in the coming years.
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Prologis - >>> Opinion: Three dividend stocks of cash-flow-rich companies poised to thrive during this economic crisis
MarketWatch
By Philip van Doorn
5-9-20
https://www.marketwatch.com/story/three-dividend-stocks-of-cash-flow-rich-companies-poised-to-thrive-during-this-economic-crisis-2020-05-07?siteid=bigcharts&dist=bigcharts
Prologis PLD, -0.95% is a real-estate investment trust that develops, operates and leases warehouses and distribution centers, while also providing logistics services. Its top customer, with 17 million square feet of leased space (5.8% of “net effective rent”) at the end of 2019 was Amazon.com AMZN, +0.87%. Other large customers include Home Depot HD, +2.06%, FedEx FDX, -1.45%, United Parcel Service UPS, -0.72% and Walmart WMT, +2.04%.
The stock is down 1% this year and has a dividend yield of 2.64%. The company was included in this “early” list of S&P 500 companies that increased their quarterly sales the most from a year earlier, as most companies reported sales declines.
The continued transition to online retail has been a boon to Prologis, with the shares returning 160% over the past five years, compared with a 52% return for the S&P 500. Koontz believes “inventory building” will now be the “biggest driver” for Prologis over the long term, in light of all the shortages experienced in the U.S. since the coronavirus shutdown began in March.
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