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>>> Wall Street Is Using Tech Firms Like Zillow to Eat Up Starter Homes
A business that’s touted as a convenience for home sellers has created a secret pipeline for big investors to buy properties, often in communities of color.
Bloomberg
By Noah Buhayar, Patrick Clark, and Jordyn Holman
January 7, 2022
https://www.bloomberg.com/news/features/2022-01-07/buying-starter-homes-gets-harder-as-wall-street-uses-zillow-to-buy-thousands?srnd=premium
Zillow Group Inc. spent last year aggressively expanding a home-flipping operation designed to make the $2 trillion U.S. real estate market better for consumers, until a bad bet on home prices pushed the company to pull the plug.
As it shuts down the operation, Zillow’s efforts to sell off its inventory of thousands of homes has highlighted a little-noticed truth about the business, called iBuying. The tech industry’s attempts to simplify the process of selling a house depend on flipping properties to some of the biggest names in global finance.
A Bloomberg News analysis of more than 100,000 property records shows that Zillow and the two other biggest iBuyers, Opendoor Technologies Inc. and Offerpad Solutions Inc., are selling thousands of homes to landlords backed by KKR & Co., Cerberus Capital Management, Blackstone Inc., and other large institutions. In many cases, those properties are never even listed, further squeezing average buyers out of competitive housing markets.
Two out of 10 homes flipped by the iBuyers last year wound up with investors and other entities, and the rate is double that in some Sun Belt metro areas, where the companies are most active. What’s more, in some of those markets, the flips are happening at a higher rate in communities of color.
The transactions raise questions about the role the iBuyers are playing in a housing market starved of affordable properties, both for rent and purchase. A diverse range of U.S. political voices, from the Biden Administration to the conservative television host Tucker Carlson, have blamed institutional landlords for crowding out regular families. Populist angst over the role investors play in housing has also expanded from Shenzhen to Seoul and Stockholm to Berlin.
Wall Street's Hidden Source of Homes
Tech-powered home flippers called iBuyers are selling to big rental landlords
“It just doesn’t feel right,” said Mike DelPrete, a scholar-in-residence at the University of Colorado Boulder, who studies iBuyers. “These companies go around saying, ‘We’re going to help mom and pop and inject liquidity into the market.’ They don’t say, ‘We’re going to suck up houses from the ordinary market and sell them to Wall Street.’”
Tech Spin
Home flipping is an old business, and investors who buy houses cheaply and fix them up can play an important role in the market by improving outdated properties. The iBuyers brought a tech-powered spin to the idea. Instead of hunting for deeply discounted homes, they use algorithms to buy near the market price, trying to capture a small profit on a large number of transactions.
The business model has resonated with customers during the pandemic, allowing property owners to sell without hosting an open house or waiting for the buyer’s mortgage to get approved. The three largest iBuyers acquired more than 27,000 homes in the third quarter of 2021, nearly twice as many as they bought in the previous three-month period. At the end of September, the companies owned more than $10 billion worth of real estate.
Acquiring homes is only one part of the iBuyers’ business; they also need to offload what they purchase. Big landlords transact quickly and buy repeatedly, helping the tech companies save money and gain scale. They’re also flush with cash, having raised more than $30 billion to acquire and develop rental houses since the beginning of the pandemic. And they tend to focus on the same moderately priced, Sun Belt suburbs where iBuyers are most active.
As Zillow neared its Nov. 2 decision to get out of the business in the face of mounting losses, it marketed thousands of homes to institutional landlords, starting a process that has helped the company wind down the business.
Zillow spokesman Viet Shelton said that the company's remaining inventory represents a tiny fraction of U.S. homes sold annually, and that the company intends to sell houses to a variety of buyers, including families, small investors, institutional landlords and nonprofits. “Leveraging these varied sales channels is common among all iBuyer companies in the space, with the noted exception that Zillow is selling these homes as we exit iBuying, while other iBuyers will continue these sales practices in perpetuity,” he said.
A representative for Offerpad said most homes it sells are purchased by individuals, and that the geography of investor purchases reflects how property funds approach the market. “We have a diverse mix of customers that benefit from the ease and simplicity of our services,” the representative said. “Where investors choose to do business is a function of their strategy.”
Opendoor declined to comment.
While selling to property funds has clear benefits for iBuyers and their customers, it's yet another way some parts of the country are being deprived of affordably priced houses.
Investors accounted for more than 18% of all U.S. home sales in the third quarter, according to research from Redfin Corp., the highest share since at least 2000. Atlanta was one of the most popular markets, with investors buying 32% of homes sold during that period.
Bloomberg analyzed flips in census tracts where the median home value was between the 40th and 60th percentile — neighborhoods where properties should be affordable for regular families. In these parts of greater Atlanta, iBuyers were 60% more likely to flip homes to investors and other entities in predominantly non-White areas, compared with those where White people are in the majority. In metro Phoenix, where iBuyers flipped more than 4,500 homes last year, the rate was 41% higher. In greater Charlotte, the iBuyers were three times as likely to do the flips in non-White areas.
McDonough, Georgia, is a hot spot within a hot spot. Roughly 30 miles southeast of downtown Atlanta, it’s a city of about 29,000 where two-thirds of residents are Black. The population has surged over the last two decades, amid a suburban building boom. Much of the town sits in one of the ZIP codes where iBuyers are most active nationally, selling more than 100 homes last year, according to Bloomberg's analysis of the property records, which were compiled by Attom Data Solutions. About 70% of those houses went to investors, many without ever being listed.
Back in 2001, Nicole Prince was able to buy a modest, three-bedroom home there while earning $12-an-hour. She lived in the house for a few years, moved to something bigger nearby and kept it as a rental. Last year, Prince, who’s Black, decided to sell and turned to the iBuyers. Offerpad agreed to pay $191,000 — far more than she thought she’d get: “I was like, ‘What?’ You couldn’t say no.”
The sale closed in mid-September. About three weeks later, the house was scooped up by Tricon Residential, a landlord that buys and manages single-family rental homes, for $5,000 more than what Offerpad paid, according to data from Attom. It still nags her that it didn’t go to a young person or family of color — somebody that was starting out like she was two decades ago.
“I feel like I didn’t pay it forward,” she said.
Rental Shortage
While there’s growing concern about investors turning more and more homes into rentals, complaints about the rise of Wall Street landlords often skip over the complexity around the issue. For one thing, the vast majority of the country's rental houses are owned by small investors. For another, the U.S. is also facing a shortage of rental housing that has driven up prices and stressed family finances.
When a landlord buys a home from an iBuyer, they’re often adding a unit of rental housing to a market that desperately needs it, said David Howard, the executive director of the National Rental Home Council, a trade group. At the same time, the institutional players are offering homes in desirable neighborhoods to households without the cash for a downpayment, he said.
“Race and ethnicity never factor into decisions about where or when to buy or sell a home,” Howard said in an email. “The overriding motivation is having a presence in those neighborhoods and communities where the demand for quality and affordably priced rental housing is strongest.”
KKR declined to comment. A representative for FirstKey Homes, a Cerberus portfolio company, said that it's purchased just 1% of its properties through iBuyers. Kathleen McCarthy, global co-head of Blackstone Real Estate, said that “not one of our portfolio companies have purchased a single off-market home from an iBuyer.” Blackstone has a small stake in Tricon.
The confluence of iBuyers and Wall Street-backed landlords is on display in the Creekwood Station neighborhood of McDonough, where Prince sold her home to Offerpad. Aimee Turner moved to the subdivision two decades ago, when the homes were new and most residents owned their properties. These days, she said, roughly three-quarters of the houses are rentals.
“I probably couldn’t even tell you five homeowners on this street,” she said on a recent afternoon while out walking her dog.
An entity affiliated with Tricon bought the home next door to Turner in February, paying Offerpad $140,000, according to Attom data. Tricon also paid $140,000 to buy a house two streets over from Opendoor. And Zillow flipped another home in the neighborhood in July to Progress Residential, a company run by New York-based investment firm Pretium Partners.
A representative for Tricon said most of the properties the company acquires from iBuyers are listed on the open market. Kevin Baldridge, the company's chief operating officer, said in a statement that single-family rentals let families live “in neighborhoods they may not otherwise be able to afford to buy in.” The company receives “up to 10,000 leasing inquiries each week across the country for an average of just 200 to 300 available homes,” he said. Pretium declined to comment.
The increasing number of rentals in the neighborhood was a good thing for Tyrone and Sherece Sapp, who were scrambling to find a place to live with their two kids after Tyrone accepted a job transfer to Atlanta from New York.
After several other rental options didn’t pan out, Tricon accepted their application to lease the house next door to Turner’s. The $1,500-a-month rent was higher than what some smaller landlords, like Prince, were charging. But for a couple that had been living with two kids in a two-bedroom apartment in New York, the cost for a whole house didn’t seem that bad.
“In New York, sometimes that’s a basement apartment,” Sherece said.
The challenge comes when renters look to purchase a house, so that they can start building wealth.
Institutional landlords already have all kinds of advantages over average buyers, said Desiree Fields, an assistant professor of geography and global metropolitan studies at the University of California, Berkeley, who studies single-family rental companies. By giving them access to off-market listings, the iBuyers are only strengthening their hand, she said.
“It's troubling,” Fields said. “It's just going to make it that much harder for people who might otherwise be in a position to acquire a starter home.”
Methodology
Deed records were pulled on Dec. 23 from a national database of iBuyer transactions compiled by Attom Data Solutions. Bloomberg News then matched records where the seller’s name corresponded with an entity used by Offerpad, Opendoor or Zillow. Buyers whose names didn't appear to be a person or a family or living trust were categorized as an investor or other entity.
Bloomberg used location data provided by Attom to determine each home’s census tract, which was then used to pull demographic and housing characteristics of the surrounding area from the 2019 American Community Survey (five-year estimates). The rate of flips was calculated by dividing the number of sales to investors in majority White and non-White tracts by the number of single-family homes in those areas.
— With assistance by Brett Pulley, and Jeremy Cf Lin
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>>> Best REIT ETFs for Q1 2022
NURE, REM, and MORT are the best REIT ETFs for Q1 2022
Investopedia
By NATHAN REIFF
August 31, 2021
https://www.investopedia.com/articles/etfs/top-real-estate-etfs/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
Best Stock ETFs
Real estate exchange-traded funds (ETFs) hold baskets of securities in the real estate sector, providing investors with a less expensive way to invest in the industry compared to other options. These funds often focus specifically on real estate investment trusts (REITs), which are securitized portfolios of real estate properties. REITs offer investors income potential as well as the liquidity of traditional stocks. Some of the major names in the REIT space include Vornado Realty Trust (VNO) and Welltower Inc. (WELL). Investing in these and other REITs allows investors to receive dividend distributions. Though the financial returns may be lower than owning an entire building and pocketing all the rental income, there is less risk.
KEY TAKEAWAYS
REITs slightly outperformed the broader market over the past year.
The ETFs with the best one-year trailing total return are NURE, REM, and MORT.
The top holding of the first ETF is Sun Communities Inc., and the top holding of the second and third ETFs is Annaly Capital Management Inc.
The REIT ETF universe is comprised of about 33 ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). REITs, as measured by the FTSE Nareit All Equity REITs Index, have slightly outperformed the broader market with a total return of 33.5% over the past 12 months compared to the S&P 500's total return of 31.4%, as of Aug. 27, 2021.12 The best performing REIT ETF, based on performance over the past year, is the Nuveen Short-Term REIT ETF (NURE). We examine the three best REIT ETFs below. All numbers below are as of Aug. 27, 2021.3
Nuveen Short-Term REIT ETF (NURE)
Performance Over One-Year: 58.3%
Expense Ratio: 0.35%
Annual Dividend Yield: 2.25%
Three-Month Average Daily Volume: 40,418
Assets Under Management: $73.8 million
Inception Date: Dec. 19, 2016
Issuer: TIAA
NURE targets the Dow Jones U.S. Select Short-Term REIT Index. The index is comprised of U.S. exchanged-traded REITs that focus on apartment buildings, hotels, self-storage facilities, and other properties that typically have shorter lease terms compared with other sectors. Just under half of the fund's holdings are apartment REITs, followed by self-storage REITs and hotel REITs.4 The top holdings of NURE include Sun Communities Inc. (SUI), a REIT that acquires, operates, and develops manufactured home and RV communities; Mid-America Apartment Communities Inc. (MAA), an apartment REIT that owns, develops, and acquires properties in the U.S. Southeast, Midwest, and Texas; and Camden Property Trust (CPT), an apartment REIT.5
iShares Mortgage Real Estate ETF (REM)
Performance Over One-Year: 48.3%
Expense Ratio: 0.48%
Annual Dividend Yield: 6.09%
Three-Month Average Daily Volume: 563,551
Assets Under Management: $1.5 billion
Inception Date: May 1, 2007
Issuer: BlackRock Financial Management
REM is a multi-cap fund that targets the FTSE Nareit All Mortgage Capped Index. The index aims to track the performance of U.S. residential and commercial real estate mortgages. As such, REM does not focus exclusively on REITs but also includes other domestic real estate stocks and financial services names.6 REM's expense ratio is higher than those of many of its peers. The top holdings of REM include Annaly Capital Management Inc. (NLY), AGNC Investment Corp. (AGNC), and Starwood Property Trust Inc. (STWD), all of which are mortgage REITs.7
VanEck Vectors Mortgage REIT Income ETF (MORT)
Performance Over One-Year: 47.2%
Expense Ratio: 0.40%
Annual Dividend Yield: 6.91%
Three-Month Average Daily Volume: 146,815
Assets Under Management: $317.1 million
Inception Date: Aug. 16, 2011
Issuer: Van Eck Associates Corp.
MORT is a multi-cap fund targeting the MVIS US Mortgage REITs Index.8 The index aims to track the overall performance of U.S. mortgage REITs. Mortgage REITs differ from traditional REITs in that they don't own real estate, but rather generate revenue from issuing mortgages and acquiring loans or mortgage-backed securities. As such, these REITs carry the potential for both substantial returns and significant risk. Just like REM, the top holdings of MORT include Annaly Capital Management, AGNC Investment, and Starwood Property Trust.
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>>> American Tower (AMT) Closes Acquisition of CoreSite Realty
Zacks Equity Research
December 29, 2021
https://finance.yahoo.com/news/american-tower-amt-closes-acquisition-152803514.html
American Tower Corporation AMT has announced the completion of the acquisition of CoreSite Realty Corporation. This was accomplished through a merger of one of its wholly owned subsidiaries with and into CoreSite.
Initially, the transaction is expected to be modestly accretive to American Tower’s adjusted FFO per share but over time it is likely to be increasingly accretive.
Amid acceleration in 5G deployments, and wireless and wireline convergence, this transaction offers American Tower the opportunity to capitalize on CoreSite’s highly interconnected data center facilities and critical cloud on-ramps. Along with this recurring growth, the company will have the capacity to boost its current tower real estate’s value through the emerging edge compute prospects.
The closing, funded by borrowings under American Tower’s revolving credit facilities and term loans, follows the completion of its prior disclosed tender offer for all CoreSite’s outstanding shares of common stock.
According to American Tower’s November press release, AMT was slated to acquire CoreSite for $170.00 per share in cash. Including assumption and/or repayment of CoreSite’s existing debt at closing, the total consideration for the transaction amounted to roughly $10.1 billion.
As of Sep 30, 2021, CoreSite had 25 data centers, 21 cloud on-ramps and more than 32,000 interconnections in eight major U.S. markets. In the third quarter of 2021, this portfolio helped the company generate annualized revenues and adjusted EBITDA of $655 million and $343 million, respectively.
Over the past five years, CoreSite has averaged double-digit annual revenue growth, making the buyout a strategic fit for American Tower. It is also expected to significantly increase its scale.
Shares of this Zacks Rank #2 (Buy) company have appreciated 28.5% compared with its industry's 29.7% growth so far in the year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Key Picks
Some other key picks from the REIT sector include Prologis PLD, Extra Space Storage Inc. EXR and Rexford Industrial Realty REXR.
Prologis carries a Zacks Rank of 2 at present. Prologis’ 2021 FFO per share is expected to increase 8.4% year over year.
The Zacks Consensus Estimate for PLD’s 2021 FFO per share has been revised marginally upward in two months.
Extra Space Storage holds a Zacks Rank of 2 at present. 2021 FFO per share for Extra Space Storage is expected to increase 29.9% year over year.
The Zacks Consensus Estimate for EXR’s 2021 FFO per share has been revised 2.1% upward in a month.
The Zacks Consensus Estimate for Rexford Industrial’s ongoing-year FFO per share has moved 1.2% north to $1.63 over the past two months.
The Zacks Consensus Estimate for Rexford Industrial’s 2021 FFO per share suggests an increase of 23.5% year over year. Currently, REXR carries a Zacks Rank of 2.
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Crown Castle Intl - >>> 4 Dividend Stocks to Supplement Your Social Security in 2022
Income-minded investors have plenty of good options still available as we move into the new year.
Motley Fool
by James Brumley
Dec 29, 2021
https://www.fool.com/investing/2021/12/29/dividend-stocks-supplement-social-security-2022/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Crown Castle
Dividend yield: 3%
Crown Castle International (NYSE:CCI) isn't a household name. But there's a good chance you or someone in your household relies on Crown Castle's service without even knowing it.
This company owns more than 40,000 cellphone towers and around 80,000 miles worth of fiberoptic cable, leasing access to its infrastructure to more familiar outfits like AT&T and Verizon. As long as you and other consumers need to remain connected to the rest of the world, the telco industry will need a means of keeping those connections in place. This makes for very reliable recurring revenue for Crown Castle.
That reliable revenue has allowed Crown Castle to dish out a dividend in every quarter since 2014 and to raise its annual payout every year since 2018. The yield of 3% may not be thrilling, but given its relatively low risk and secure future, that's a fair payout.
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>>> Why American Tower Can Continue Its Rapid Growth
GuruFocus
by Nathan Parsh
December 27, 2021
https://finance.yahoo.com/news/why-american-tower-continue-rapid-194211064.html
Many investors own real estate investment trusts, or REITs, for their generous dividend yields. There are some REITs that offer a lower yield, and though they might not meet the objectives of an income-focused investor, this doesn't mean that low yielding REITs should be avoided. While some might have low yields due to business problems, there are others that have low yields due to faster growth and higher valuation multiples, and these can sometimes prove to be extremely profitable in the long run.
Take American Tower Corporation (NYSE:AMT), for example. This company's dividend has compounded at a rate of more than 20% since becoming a REIT. Despite this level of dividend growth, American Tower yields just 2% today as the strength in the business has caused the stock to rise more than 166% over the last five years. For context, the S&P 500 Index has returned a cumulative 111% over this period of time. Lets take a closer look into American Tower to see why I believe it will remain a high growth REIT.
Business overview and recent earnings highlights
American Tower began as a subsidiary of a radio systems company in the mid-1990s. It was spun off from its parent company in 1998 and converted to a REIT in 2012. American Tower is valued at $127 billion today and generated annual revenue of slightly more than $8 billion last year.
The REIT has an incredible size and scale as the largest independent operator of wireless telecom and broadcast towers in the world. It is also one of the largest REITs in the world regardless of type of real estate.
American Tower has approximately 43,000 towers in the U.S., giving it a leadership position in what has become an incredibly important industry over the years. This same infrastructure will be vitally important as the rollout of 5G service continues.
American Towers most recent quarter, for which it announced earnings results on Oct. 28, shows that the company continues to capitalize on tailwinds in its business. Revenue for the quarter grew almost 22% to $2.45 billion, topping Wall Street analysts estimates by $40 million. Adjusted funds from operation of $2.49 per share was a 26 cent, or 10.3%, improvement from the prior year and was 17 cents ahead of expectations.
Property revenue surged 19.2%. Organic tenant billings growth, which reflects just properties that the trust has owned since the beginning of the prior year period, was up 4.9%. International was the real driver during the quarter as organic tenant billings growth was 5.9% for the period. The best performing region was Africa, up more than 9%, but Latin American wasn't far behind at 7%.
Prospects for growth
American Tower has expanded from just a U.S.-based business into international markets. As of the end of last year, American Tower had nearly 76,000 towers in the Asia/Pacific region, 41,500 in Latin America, 20,000 in Africa and 5,330 in Europe. American Tower has just begun entry into certain markets such as Australia, Canada, France, Niger and Spain, all of which occurred within the past five years.
Outside of the U.S., most of American Tower's markets haven't completed 4G networks yet. Regardless, data consumption is surging, with some international markets seeing 100% growth year-over-year. The demand for additional towers will mean higher capital spending budgets on the part of carriers in order to improve infrastructure, putting the REIT in a sweet spot to benefit from higher global demand for its properties.
As a result, American Tower expects nearly all of its regions to see organic growth in the coming years. In total, the REIT expects organic billings growth of 4.5%. The U.S. and Canada are projected to return as much as 4%, primarily due to 5G rollout. International markets should grow at a rate of 5% to 6%. These markets are led by Africa, with expected growth of at least 8%; Latin America, which is projected to be higher by more than 7%; and Europe, up at least 5%. Asia is expected to be flat, as other companies are dominant in this region.
International regions haven't experienced as much development as its domestic market, which should provide American Tower a long runway for growth as these markets should see increased demand for wireless telecom and broadcast service going forward.
The REIT has long-term contracts with most carriers that provide automatic rent escalators. In the U.S., the typical yearly increase is close to 3% with many international markets tied to inflation, giving some visibility to future revenue totals.
American Tower hasnt been shy about acquiring additional businesses to augment its core portfolio. For example, the REIT announced on Nov. 15 that it was acquiring CoreSite, which owns 25 data centers and more than 32,000 interconnections in the U.S., for $10 billion in cash. This will grant American Tower entrance into new markets that it doesn't already touch. The transaction will add $655 million in annual revenues to American Towers business, which would have represented more than 8% of last years total.
The REIT has been very successful as adjusted funds from operation (AFFO) have a compound annual growth rate (CAGR) of 15% over the last 10 years. This growth rate would have been higher if the share count had not increased by 13% over the same time frame.
Dividend analysis
Business results have enabled American Tower to grow its dividend at a level rarely seen amongst REITs. Unlike most in the real estate sector, the trust increases its dividend almost every quarter instead of once per year. Shareholders received 20% more in dividends per share this year than they did in 2020. The trust raised its dividend 6.1% for the Jan. 14, 2022 payment date. American Tower has a nine-year dividend growth streak while the dividend has a CAGR of 22.3% since 2012.
With an annualized dividend of $5.56, American Tower has a forward dividend yield of 2%. As REITs go, this is a low dividend yield, but this tops the stocks historical average yield of 1.8%. It is also superior to the 1.25% average yield for the S&P 500 Index.
The REIT distributed $4.33 of dividends per share in 2021. Wall Street analysts expect American Tower to earn $10.25 per share in adjusted funds from operation this year, resulting in a projected payout ratio of 42%. Adjusted funds from operation are predicted to rise to $10.30 for the next fiscal year. Using the new annualized dividend, the payout ratio is 54%. American Tower has averaged a payout ratio of 44% over the past five years. Both the average and projected payout ratios are very low for a REIT, putting American Tower in a good position to continue to raise its dividend moving forward.
Valuation analysis
Shares of American Tower trade close to $279. Using analysts estimates for 2021 and 2022, the stock has a forward price-to-funds-from-operation ratio of just over 27 for both years. This is a premium to the stocks five-year average price-to-funds-from-operation ratio of 23.4.
Shares are also trading ahead of their GuruFocus Value, but not overly so.
Why American Tower Can Continue Its Rapid Growth
American Tower has a GF Value of $269.72, equating to a price-to-GF-Value ratio of 1.03. The stock is rated as fairly valued by GuruFocus.
Final thoughts
American Tower might not offer the type of yield that REIT investors are accustomed to seeing from this sector of the economy, but this isn't due to a lack of raising dividends on the company's part. The dividend has compounded at an extremely high rate since the REIT was formed. Shareholders of the REIT have benefited from incredible share price returns over the medium-term, easily outperforming the broad market.
American Tower is set to benefit from several catalysts for growth, especially 5G rollout in the U.S. and growing demand in developing markets, which should position the REIT to continue its streak of strong earnings results.. In turn, dividend growth will likely remain elevated.
The stock isn't cheap, either on a historical basis or compared to the GF Value, but quality names with excellent fundamentals and high expectations for future growth rarely are.
The long-term track record for adjusted funds from operation and dividend growth suggests that American Tower could be a solid investment for those looking for more than just yields from a REIT investment.
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Tricon Residential - >>> Here’s the best new asset class in real estate: Tricon Residential
MarketWatch
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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Digital Realty - >>> 2 High-Yield Tech Stocks to Buy in January
These income-generating companies can make long-term investors a lot richer.
Motley Fool
by Rich Duprey
Dec 30, 2021
https://www.fool.com/investing/2021/12/30/2-high-yield-tech-stocks-to-buy-in-january/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Digital Realty
Real estate investment trust (REIT) Digital Realty (NYSE:DLR) is an unusual choice for a high-yield tech stock because REITs are usually seen as financial stocks, not technology picks. However, because Digital Realty owns and operates warehouses full of servers and data centers, it neatly straddles both worlds.
Data center REITs are also becoming a rare commodity these days because of the merger and acquisition boom in the space. Assuming all the deals that have been announced are completed, Digital Realty and Equinix (NASDAQ:EQIX) will be the last two remaining REITs in the space. With market valuations of $50 billion and $75 billion, respectively, it's unlikely anyone will be acquiring them or taking them private.
Digital Realty owns 282 data centers that represent 35 million square feet of space, including 36 data centers held as investments in unconsolidated joint ventures (Equinix owns 235 data centers).
Data centers essentially serve as the backbone of the internet, providing the nerve center for everything that occurs in the cloud and online, whether it's e-commerce or Internet of Things devices accessing their network. All of that data needs a home in which to live, and data centers provide the warehousing for the servers and networking equipment in a secure environment.
However, data centers are no longer simply a bricks-and-mortar presence -- they have moved into the cloud themselves. Digital Realty's PlatformDIGITAL service is a global data center platform that meets the evolving needs of enterprise customers by allowing them to customize by the cabinet or to scale and hyperscale for very large deployments. It recently closed on a joint venture with Brookfield Infrastructure Partners (NYSE:BIP) to bring the platform to India, one of the world's biggest, most important data center markets.
Third-quarter adjusted funds from operations (AFFO), a critical profitability metric for REITs, was $1.60 per share, up from $1.47 per share a year ago, and was primarily pushed higher by the expansion of the PlatformDIGITAL service.
Digital Realty's dividend currently yields 2.7% annually, which is not especially high compared to AT&T. It is still a hefty payout for a tech stock, and one that investors should count on growing in the future.
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>>> Terreno Realty (TRNO) Acquires Redmond Property, Stock Rises
Zacks Equity Research
December 30, 2021
https://finance.yahoo.com/news/terreno-realty-trno-acquires-redmond-184706343.html
Shares of Terreno Realty Corporation TRNO have rallied more than 3% during the last two trading sessions. This industrial REIT is on a buyout spree and recently acquired an industrial property in Redmond, WA for $3.5 million. The move comes as part of its acquisition-driven growth strategy.
This latest acquisition comes after the company shelled out $33.5 million to purchase an industrial property in Woodinville, WA and expended $74.1 million net of free-rent credits to acquire an industrial property in Hialeah, FL.
The Redmond property, 100% leased to one tenant on a short-term basis, is a 0.8-acre improved land parcel at 9045 Willows Road. It is between I-405 and SR 520, representing an advantageous location and positioning it well to lure tenants. The estimated stabilized cap rate of the property is 4.9%.
Demand for industrial real estate space has been shooting up amid an e-commerce boom, with growth in industries and companies making efforts to improve supply-chain efficiencies. Terreno Realty is also banking on such opportunities. It is focused on expanding its portfolio on acquisitions. TRNO is targeting functional assets at in-fill locations, which enjoy high-population densities and are located near the high-volume distribution points.
Terreno Realty’s latest spate of acquisitions also include purchasing an industrial property in Bladensburg, MD for $11.9 million and shelling of $60.8 million to acquire an industrial property at 5150-5236 Eisenhower Avenue, inside the Capital Beltway in Alexandria, VA.
With such expansion efforts, Terreno Realty is poised to enhance its portfolio in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC — which display solid demographic trends and witness healthy demand for industrial real estate.
Apart from the fast adoption of e-commerce, industrial real estate is anticipated to benefit from an increase in inventory levels post the global health crisis, offering scope to industrial landlords, including Terreno Realty, Prologis PLD, Duke Realty DRE and Rexford Industrial Realty REXR, to enjoy a favorable market environment.
Terreno Realty currently carries a Zacks Rank #2 (Buy). In the past three months, TRNO’s shares have rallied 34.4% compared with the industry’s growth of 14.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prologis carries a Zacks Rank of 2 at present. Prologis’ 2021 FFO per share is expected to increase 8.4% year over year.
The Zacks Consensus Estimate for PLD’s 2021 FFO per share has been revised marginally upward in two months.
Duke Realty carries a Zacks Rank of 3 (Hold) at present. The long-term growth rate for Duke Realty is projected at 7.80%.
The Zacks Consensus Estimate for DRE’s 2021 FFO per share has been revised marginally upward in two months to $1.74.
The Zacks Consensus Estimate for Rexford Industrial’s ongoing-year FFO per share has moved 1.2% north to $1.63 over the past two months.
The Zacks Consensus Estimate for Rexford Industrial’s 2021 FFO per share suggests an increase of 23.5% year over year. Currently, REXR carries a Zacks Rank of 2.
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Farmland Partners - >>> This Farm REIT Just Made a Giant Change
Farmland Partners has recently been dealing with unusually complicated issues, but the REIT just completed a deal that makes the company even more complex.
Motley Fool
by Reuben Gregg Brewer
Jan 6, 2022
https://www.fool.com/investing/2022/01/06/this-farm-reit-just-made-a-giant-change/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Key Points
Farmland Partners is working through some legal issues after successfully defending itself against a short seller.
The farmland REIT just bought a new business, expanding its reach.
Farmland Partners is now even more complex, which could be good or bad, depending on how you look at investing.
Farmland is an interesting asset class that has been gaining the attention of institutional buyers. The logic is pretty simple: No new farmland is being created. In fact, farmland is often repurposed for homes and other types of real estate development.
Real estate investment trust (REIT) Farmland Partners (NYSE:FPI) is looking to take advantage of this scarcity -- only this REIT's story isn't quite so simple.
The value of a farm
Farmland Partners estimates that there's about $2.5 trillion worth of farmland in the U.S., a valuation that's on par with the rental-apartment market. Of that amount, only about 1% of farmland is owned by institutions like pension funds, versus 5% for apartments. So there's material opportunity for growth here.
There's also material appeal on a risk-adjusted basis. During the past 30 years, the standard deviation, a measure of volatility, for farmland is about 7.5%, compared to nearly 22% for the S&P 500 Index. This difference leads to a Sharpe ratio, a measure of risk-adjusted performance, of 1.2 for farmland versus 0.4 for the S&P 500 Index.
Notably, the average REIT has a Sharpe ratio of 0.4 as well, so this is really about the unique nature of farmland, not property in general. Basically, if you are looking for slow and steady growth, farmland fits the bill. And, even better, farmland returns don't correlate highly with other assets, meaning they can help with diversification.
On that basis, you'd think Farmland Partners would be a slam-dunk investment option. Unfortunately, it was hit by a short-selling scheme a few years ago that necessitated a dividend cut to ensure liquidity during a legal battle. By comparison, peer Gladstone Land has been able to continue growing and raising its dividend in the absence of legal distractions.
Farmland Partners' efforts to fight back was largely successful, getting a damaging report about the company retracted. Unfortunately, the company is still battling related shareholder-class action lawsuits, even though the short-seller claims were debunked. So this REIT is something of a turnaround play in that regard.
A big change
That said, Farmland Partners just made an acquisition that shifts the picture even more than the short-seller fiasco. In late 2021, Farmland Partners bought Murray Wise Associates. According to the news release announcing the deal, Murray Wise, the chief executive officer of Murray Wise Associates, founded Westchester Group, which is the largest institutional farmland asset manager. He started Murray Wise Associates as a spinoff of Westchester Group's brokerage, auction, and farm-management business when Westchester was acquired by the pension fund Teachers Insurance and Annuity Association in 2010.
Essentially, the goal here is for Farmland Partners to add an asset-management operation to its business. This pushes Farmland Partners beyond the typical REIT configuration, in which companies own properties and pass the income they generate from rents on to investors. Now, Farmland Partners will also help farmers buy and sell properties, create and manage institutional partnerships, and even directly manage farms on behalf of others, earning fees for the effort.
Farmland Partners is really looking to become a one-stop shop for farm investing, but that will make it a much more complicated company for investors to track and understand. If you like to keep things simple, this already complicated story just got even more complicated.
That said, for investors willing to watch their investments more closely, Farmland Partners' new business direction could be an interesting opportunity. Essentially, with one investment, you get broad exposure to farmland, including property ownership, property brokerage, and property management. That provides multiple avenues for growth in what is a large and underinvested asset class.
There's one caveat, however: The REIT is planning to focus on business growth and expects its dividend yield, now about 1.6%, to be fairly modest. So, income-focused investors probably won't like the stock.
So who should buy Farmland Partners?
At the end of the day, Farmland Partners' new business model will allow investors to access the farmland sector in a broad and diversified way. That's the good news. The bad news is that this change suggests that this already low-yielding REIT will remain that way even as it moves past its legal headwinds, limiting its appeal to growth-oriented investors and those looking for asset classes with low correlations to other investments.
If that sounds like you, then a deep dive could be appropriate. If you prefer simple investments, however, then Farmland Partners, despite operating in an interesting property niche, probably won't appeal to you.
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Gladstone Land - >>> Forget Bitcoin: I'm Buying This Under-the-Radar REIT
This real estate investment trust offers similar benefits to investing in Bitcoin, with less volatility.
Motley Fool
by Matthew DiLallo
Jan 3, 2022
https://www.fool.com/investing/2022/01/03/forget-bitcoin-im-buying-this-under-the-radar-reit/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Key Points
Investing in farmland is a better inflationary hedge because it's less volatile and generates income.
Farmland REIT Gladstone Land is a good way to invest in farmland.
Like many people, I've been thinking about buying some Bitcoin (CRYPTO:BTC). The main reason is to hedge against inflation, which has been running hot this year. However, I haven't purchased any because it's so volatile. The cryptocurrency has had several large declines from its all-time high, including more than 50% earlier this year.
Because of that, I've started looking elsewhere than cryptocurrency for an inflation hedge. While I also considered investing in gold, I've homed in on an under-the-radar real estate investment trust (REIT) that offers many of the same benefits to buying Bitcoin, plus some additional ones without the stomach-churning volatility.
That REIT is farmland-focused Gladstone Land (NASDAQ:LAND). Here's why I plan to buy it instead of Bitcoin as an inflation hedge.
Why farmland?
Before we dig into Gladstone Land, I wanted to lay out the case for farmland as an investment. Since 1991, farmland has delivered higher cumulative returns than all other major asset classes except REITs. Further, farmland has produced those higher returns with less volatility than all but two major asset classes (CDs and AAA-rated bonds). In fact, since 1991, farmland hasn't had a single down year, whereas gold, the stock market, and Bitcoin have all experienced declines of more than 50% from their highs.
Two factors drive farmland's ability to deliver attractive returns: annual cash rent and land value appreciation. Farmland generates an income yield for its investors, making it stand out from other inflationary hedges like gold and Bitcoin, which don't produce income. Meanwhile, farmland benefits from inflation because land values tend to rise by at least the inflation rate. These factors make farmland an excellent inflation hedge.
Digging into Gladstone Land
Gladstone Land currently owns 164 farms comprising about 113,000 acres across 15 states. Its farms primarily grow fresh produce, like fruits and vegetables, or permanent crops, such as berries and nuts. These types of farms tend to be better investments than those that grow commodity crops (e.g., corn, wheat, and soy) because they experience less price volatility and government dependence, as well as lower storage costs.
Gladstone primarily leases its farms to farmers under long-term triple net leases, making the tenant responsible for insurance, maintenance, and real estate taxes. These leases typically include a fixed cash payment with annual escalations, upward market adjustments, or participation features, such as a percentage of the farm's gross revenue.
Those lease terms provide Gladstone Land with a nice inflation buffer. It typically ties annual rent escalations to the inflation rate. Meanwhile, participation features provide upside to higher prices, with fresh produce historically outpacing the historical inflation rate by 1.5 times since 1980. In addition to its inflation-protected lease income, Gladstone's farms benefit from rising land values, providing another layer of inflation protection.
However, Gladstone Land is more than an inflation hedge. The farmland REIT has a long history of growing value for shareholders by expanding its farm portfolio through acquisition. For example, it bought five new farms across three states and some additional water access for $62.3 million in the third quarter. Since its initial public offering (IPO) in 2013, Gladstone has grown its farm portfolio from less than $200 million to nearly $1.4 billion today.
Combined with rising lease income, its steady diet of acquisitions has enabled Gladstone to grow its cash flow per share and dividend at attractive rates. Gladstone has increased its monthly dividend 24 times in the last 27 quarters, raising it by 50.7% overall. It aims to continue expanding that payout in the future at a rate that outpaces inflation. Overall, Gladstone Land has delivered 14.6% compound annual total returns for its shareholders since its IPO.
All the benefits of Bitcoin (and more) -- without the volatility
One of the premises of investing in Bitcoin is it can be an inflation hedge. While the cryptocurrency's returns have certainly outpaced inflation over the years, they have been extremely volatile.
That's why I've decided to forget about using Bitcoin to hedge against inflation. Instead, I plan to invest in farmland through little-known REIT Gladstone Land. It has a long history of delivering inflation-beating returns with a lot less volatility than Bitcoin, which seems likely to continue in the future.
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Public Storage, Invitation Homes - >>> 2 Unstoppable REIT Stocks To Buy in 2022
These two companies are poised for unstoppable growth in the REIT sector.
Motley Fool
by Liz Brumer-Smith
Dec 31, 2021
https://www.fool.com/investing/2021/12/31/2-unstoppable-reit-stocks-to-buy-in-2022/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Key Points
Public Storage spent $5.1 billion in 2021 alone to grow its portfolio.
Invitation Homes is seeing unparalleled demand, with rents rising 10.4% YoY.
Many of the sectors that were hit hard by initial pandemic closures last year made a huge comeback in 2021 which, in turn, gave a massive boost to the real estate industry. This helped the index for all real estate investment trusts (REITs), as tracked by the NAREIT, achieve a 38% return year to date, outpacing the S&P 500 by over 7%. But as 2021 comes to a close, Public Storage (NYSE:PSA) and Invitation Homes (NYSE:INVH) specifically appear to be teed up for another unstoppable year of growth.
Here's a closer look at these REITs today and why these REIT stocks should be on your radar to buy in 2022.
1. Public Storage
The self-storage industry has performed incredibly well, not just over the past year but over the past several decades, outperforming all other commercial real estate asset classes over the past 26 years. Public Storage is the largest operator in the industry, having 2,678 facilities under management or ownership across 39 states in the United States and interest in 247 units in Europe. Year to date, the company has seen share prices increase 64% while providing investors with an annualized return of 65%.
New demand for storage facilities as people relocate or downsize during the pandemic has helped boost Public Storage's earnings this year, with funds from operations (FFO) -- a common metric used to evaluate REITs that is similar to earnings per share (EPS) -- up 35% for the nine months ended 2021. And the company is finishing 2021 with a bang after closing on the acquisition of All Storage, which adds 56 storage facilities for a total of 7.5 million rental square feet, largely in the greater Dallas/Ft. Worth metro. This acquisition is a part of the $5.1 billion Public Storage has spent to expand its portfolio through new acquisitions and developments in 2021 alone.
Public Storage is entering 2022 in a larger position than ever before, while still having a low debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 4.0x as well as $958 million of cash and cash equivalents. Expansion of that scale will undoubtedly benefit shareholders, having direct and immediate impacts on revenues and FFOs. Given its acquisition activity and strong financial position, 2022 could be another great year for this storage giant.
2. Invitation Homes
Invitation Homes is the premier single-family rental operator, specializing in the development of build-to-rent communities and the acquisition of existing single-family rental homes across the country. Considering rental demand is growing like crazy, this means Invitation Homes is in a particularly strong position as we enter 2022.
Year to date, Invitation Homes saw share prices increase 54% . FFO has increased 15% year-over-year, and net operating income (NOI) has grown 43%. In 2021, Invitation Homes added 3,259 homes to its portfolio, while blended rent growth climbed 10.4% year over year -- and its growth opportunities aren't over yet. Rental demand, particularly for single-family homes, is expected to remain high for years to come. Invitation Homes also announced this year that it would enter into a partnership with PulteGroup to purchase 7,500 homes from the homebuilder over the next five years, providing a steady pipeline of acquisitions for the company to grow its portfolio.
These two REITs are great companies in their respective niches of real estate, backed by major long-term trends favoring growth and well-positioned portfolios.
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>>> Residential REITs ETFs to Capitalize on Rising Apartment Renters
ETF Trends
by MAX CHEN
AUGUST 4, 2021
https://www.etftrends.com/residential-reits-etfs-to-capitalize-on-rising-apartment-renters/
Due to the elevated housing prices, priced-out home buyers are reluctantly coming back to the cities and renting again, bolstering residential real estate investment trusts and sector-related exchange traded funds.
Stock prices of publicly-traded apartment companies have rallied, with the FTSE Nareit Equity Apartments index up 42% since January, as compared to the 17% gain for the S&P 500 over the same period, the Wall Street Journal reports.
Meanwhile, median rent on apartments has increased more than 10% over the past year to $1,244, or 9.4% above where rents were back in March 2020, right before Covid-19 lockdowns, according to Apartment List.
Contributing to the rise in apartment rents, demand has rebounded in response to surging home prices that forced many would-be home buyers to give up and go back to paying rent. Median existing-home sales prices were 23.4% higher as of June year-over-year to $363,300, a record high, according to the National Association of Realtors.
“It’s kind of a good time to be an urban apartment owner again,” Mark Parrell, chief executive of Equity Residential, a real-estate investment trust, told the WSJ.
Investors who want a piece of the real estate action can access the space through funds like the Vanguard Real Estate ETF (NYSEArca: VNQ). VNQ seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments. However, broad REITs sector-specific ETFs have low exposure to residential REITs, with VNQ’s underlying portfolio including a 14.0% tilt to residentials.
On the other hand, ETF investors who are interested in gaining exposure to this ongoing trend in the housing market can consider residential-heavy REIT ETFs, such as the iShares Residential Real Estate Capped ETF (NYSEArca: REZ) and NuShares Short-Term REIT ETF (BATS: NURE). NURE includes a hefty 49.7% tilt toward apartment- or rental-related REITs while REZ has a 51.0% weight in residential REITs.
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>>> Gladstone Land Acquires Additional Farmland in Florida
Acesswire
December 20, 2021
https://finance.yahoo.com/news/gladstone-land-acquires-additional-farmland-133000518.html
MCLEAN, VA / ACCESSWIRE / December 20, 2021 / Gladstone Land Corporation (NASDAQ:LAND) ("Gladstone Land") announced that it has acquired 1,204 gross acres of farmland, including 975 farmable acres, located north of Fort Myers, Florida, for approximately $7.4 million. In connection with the acquisition, Gladstone Land entered into a five-year, triple-net lease agreement with the seller and current tenant. The property is farmed primarily for sod, melons, and cattle.
"We are very pleased to add this versatile property to our portfolio," said Bill Frisbie, Executive Vice President of Gladstone Land. "Demand for farmable acreage in Florida continues to increase, and we are excited to partner with a very strong tenant who will manage the property well."
"The acquisition of this farm adds to our existing properties in the Southeast and is another good, long-term investment for us," said David Gladstone, President and CEO of Gladstone Land. "We have had a strong year in 2021 with acquisitions and look forward to another good year in 2022."
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 164 farms, comprised of approximately 113,000 acres in 15 different states and 45,000 acre-feet of banked water in California, valued at approximately $1.5 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 106 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The company has increased its common distributions 24 times over the prior 27 quarters, and the current per-share distribution on its common stock is $0.0452 per month, or $0.5424 per year. Additional information, including detailed information about each of the company's farms, can be found at www.GladstoneLand.com.
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STAG Industrial (STAG), Realty Income (O) - >>> You could be a landlord for Amazon, FedEx and Walmart with these REITs that net up to a 4.4% yield — you can even collect on a monthly basis
Money Wise
by Jing Pan
December 18, 2021
https://finance.yahoo.com/news/could-landlord-amazon-fedex-walmart-180000530.html
You could be a landlord for Amazon, FedEx and Walmart with these REITs that net up to a 4.4% yield — you can even collect on a monthly basis
Being a landlord is one of the oldest ways to earn a passive income. And these days, you don’t have to buy a house to get a piece of the action.
Check out real estate investment trusts, which are publicly traded companies that own income-producing real estate.
REITs collect rent from their properties and pass it along to shareholders in the form of dividends. That means investors don’t have to worry about screening tenants, fixing damages or chasing down late payments. Instead, they simply sit back and enjoy the dividend checks rolling in when they pick a winning REIT.
Of course, the COVID-19 pandemic did impact some commercial real estate. And not all REITs are the same. If you are a landlord for e-commerce giant Amazon, for instance, you should have no problem collecting a steady stream of rental income.
With that in mind, let’s take a look at two REITs paying oversized dividends to investors — one could be worth pouncing on with some of your extra cash.
Amazon’s landlord
The first one is STAG Industrial (STAG), a REIT that owns and operates single-tenant industrial properties throughout the U.S. Its biggest tenant is Amazon.
The company’s portfolio consists of 517 buildings totaling approximately 103 million rentable square feet across 40 states.
Note that 434 of the 517 properties are warehouses, which happen to be an essential part of e-commerce.
Moreover, a tenant survey in 2020 revealed that around 40% of the REIT’s portfolio handles e-commerce activity.
To see how solid STAG Industrial is, take a look at its dividend history.
Since the company went public in 2011, it has paid a higher dividend every single year.
While most dividend-paying companies follow a quarterly distribution schedule, STAG Industrial pays shareholders every month. The monthly dividend rate stands at 12.08 cents per share, which translates to an annual yield of 3.2%.
STAG Industrial shares are up 50% year to date. If you don’t feel comfortable picking individual stocks in this elevated market, you can always build a diversified passive income portfolio automatically just by investing your spare change.
Walmart’s landlord
When it comes to paying monthly dividends, one company stands out above all — Realty Income (O).
Realty Income has been paying uninterrupted monthly dividends since its founding in 1969. That’s 616 consecutive monthly dividends paid.
Better yet, since the company went public in 1994, it has announced 114 dividend increases.
Realty Income has a diverse portfolio of nearly 11,000 commercial properties located in all 50 states, Puerto Rico, the UK and Spain. It leases them to around 650 tenants operating across 60 industries.
This means even if one tenant or industry enters a downturn, the impact on company-level financials will likely be limited.
For instance, while Realty Income rents some properties to AMC Theaters — whose business was hurt by COVID-19 — it also has Walgreens, FedEx and Walmart as some of its top tenants. And these businesses turned out to be largely pandemic-proof.
Earlier this week, the REIT increased its monthly cash dividend to 24.65 cents per share, giving the stock an annual dividend yield of 4.4%.
To put things in perspective, the average dividend yield of S&P 500 companies is just 1.3% today.
Looking beyond REITs
Of course, stocks are volatile. And even the best REITs are not immune to the market’s ups and downs.
Diversification is key — and you don’t have to stay in the stock market to get it.
If you want to invest in something insulated from stock market swings, take a look at some lesser-known alternative assets.
Traditionally, investing in sectors like exotic vehicles or multifamily apartment buildings or even litigation finance have only been options for the ultrarich.
But with the help of new platforms, these kinds of opportunities are available to retail investors, too.
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Gladstone Land - >>> 2 Stocks That Cut You a Check Each Month
These two very successful niche operators have been handing out monthly dividends for many years running.
Motley Fool
by Eric Volkman
Dec 17, 2021
In this current era, where change often moves with lightning speed, who wants to wait three months to receive a dividend? Is it because the decades-old standard quarterly dividend is still very much the norm? Why can't it be the exception?
Well for a select group of dividend-paying companies, distributing a chunk of profits in the form of a regular monthly dividend is the norm. Let's take a closer look at two of them -- Realty Income (NYSE:O) and Gladstone Land (NASDAQ:LAND) -- and see if getting paid each month by these dividend stocks is right for you.
1. Realty Income
Realty Income, a real estate investment trust (REIT) that focuses on retail properties, is the standard-bearer for monthly dividend payers. There's a reason it has trademarked its descriptor as "The Monthly Dividend Company." It's been doling out a steadily increasing payout every turn of the calendar since its shares were listed on the New York Stock Exchange way back in 1994.
The company has thousands of sources of revenue. At the end of its most recently reported quarter, its massive portfolio comprised 7,018 properties. Nearly all of these were located in the U.S., but the company is branching out; in September, it closed its first transaction on the European continent -- a 93 million euro ($105 million) sale/leaseback deal with French supermarket operator Carrefour on seven properties in Spain.
Given this financial commitment, and the obvious enthusiasm with which the company announced it, we can expect much greater expansion in this huge new market for the REIT.
Meanwhile, Realty Income continues to grow its fundamentals at admirable rates. In the third quarter, it managed to lift its total revenue by almost 22% on a year-over-year basis. Growth in the company's adjusted funds from operations (AFFO), the most important profitability metric for REITs, soared even higher at 26%.
Nearly all of those 7,000-plus properties are home to active businesses, as Realty Income's occupancy rate is just under 99%. The company rents its spaces out on triple-net leases that have very long terms (the average is nearly nine years). This provides a very solid tenant base for the REIT and effectively locks in years of sturdy cash flow. No wonder the company is willing to share its wealth so frequently.
Realty Income's latest monthly dividend was a shade under $0.25 per share. At the latest closing share price, this yields 4.4%.
2. Gladstone Land
Elsewhere in the REIT sector, we have Gladstone Land. This company's focus is on farmland and assets related to the same, i.e., properties that are rented under triple-net leases to their tenants. Gladstone owned 160 farms covering more than 108,000 acres across 14 U.S. states as of November. All of its properties are under lease.
Are you saying you've never heard of an agricultural properties REIT? That's not surprising. There are only very few on the market and of that small group, Gladstone is far and away the largest and most significant.
Gladstone tends to favor farms that grow fresh produce and select "permanent" crops like nuts and blueberries. It believes these are more profitable and can thus produce higher rental income. These crops also tend to require lower storage expenses and are less volatile in price than commodity crops such as wheat and corn.
This focus makes for a good business strategy. Thanks to organic growth (no pun intended) and net additions to its property portfolio (33, to be exact), Gladstone posted a robust 40% year-over-year increase in revenue in its Q3 (to just under $19.6 million). AFFO saw an even higher leap, bounding 66% upwards to nearly $5.3 million.
That's entirely in character for Gladstone, which over the past few years has seen dramatic improvements in both revenue and AFFO.
All this means Gladstone has plenty in its financial tank for a dividend that gets distributed 12 times per year. The dividend has been paid without fail since the company listed on the stock market in 2013.
The payout isn't immense in either absolute terms (the latest one was less than $0.05 per share) or yield, which these days is 1.8%. However, the regularity of this reliable monthly dividend, Gladstone's strong position in its very limited niche, and its vast scope for expansion make it a compelling stock worth considering. After all, this is a huge country that still has plenty of agricultural lands available to develop.
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>>> Gladstone Land Acquires Pistachio Orchard in California
Yahoo Finance
December 6, 2021
https://finance.yahoo.com/news/gladstone-land-acquires-pistachio-orchard-133000557.html
MCLEAN, VA / ACCESSWIRE / December 6, 2021 / Gladstone Land Corporation (NASDAQ:LAND) ("Gladstone Land") announced that it has acquired 2,635 gross acres of farmland, including 1,776 planted acres of pistachios, located near Lost Hills, California, for $88.0 million. In connection with the acquisition, Gladstone Land entered into a 10-year, triple-net lease agreement with the seller.
"We are very pleased to add these mature pistachio trees to our portfolio," said Tony Marci, Managing Director of Gladstone Land. "The trees are planted in soils and a climate that are well-suited to pistachios, which is evident in the excellent yield history of the orchard."
"We value our tenants as much as the properties in our portfolio," said Bill Reiman, Executive Vice President of Gladstone Land. "We are excited to enter into a lease and begin a relationship with an excellent and established farmer in the region."
"The acquisition of this pistachio orchard adds to our existing permanent crop farmland and is another good, long-term investment for us," said David Gladstone, President and CEO of Gladstone Land. "We have had a strong year in 2021 and look forward to another good year in 2022."
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 163 farms, comprised of over 111,000 acres in 15 different states and 45,000 acre-feet of banked water in California, valued at approximately $1.5 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 106 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The company has increased its common distributions 24 times over the prior 27 quarters, and the current per-share distribution on its common stock is $0.0452 per month, or $0.5424 per year. Additional information, including detailed information about each of the company's farms, can be found at www.GladstoneLand.com.
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>>> Capital Gains Tax on Home Sales
Investopedia
By CHAD LANGAGER
November 27, 2021
https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
Reviewed by ANDY SMITH
Fact checked by KATRINA MUNICHIELLO
PART OF
Guide to Selling Your Home
TABLE OF CONTENTS
How Much Is Capital Gains Tax?
Requirements and Restrictions
When Is a Home Sale Fully Taxable?
Capital Gains Tax Example
How to Avoid Capital Gains Tax
How Real Estate Taxes Work
Taxes on Investment Property
Real Estate Taxes vs. Property Taxes
The Bottom Line
Frequently Asked Questions
Your home is likely your life's biggest and proudest purchase: all the painstaking measures you took—countless property searches, contract negotiations, inspections, and closing—to arrive at the dream of homeownership. Now, it's time to sell. What next? Did you know that your home is considered a capital asset, subject to capital gains tax? If your home has appreciated in value, you could be required to pay taxes on the profit.
However, thanks to the Taxpayer Relief Act of 1997, most homeowners are exempt.1
If you are single, you will pay no capital gains tax on the first $250,000 of profit (excess over cost basis). Married couples enjoy a $500,000 exemption. There are, however, some restrictions.1
KEY TAKEAWAYS
You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you are single and $500,000 if married filing jointly.1
This exemption is only allowable once every two years.1
You can add your cost basis and costs of any improvements you made to the home to the $250,000 if single or $500,000 if married.2
Is It True That You Can Sell Your Home And Not Pay Capital Gains Tax?
How Much Is Capital Gains Tax on Real Estate?
To be exempt, the home must be considered a primary residency based on Internal Revenue Service (IRS) rules. These rules state that you must have occupied the residence for at least two of the last five years.3
If you buy a home and a dramatic rise in value causes you to sell it a year later, you would be required to pay capital gains tax. If you've owned your home for at least two years and meet the primary residence rules, you may owe tax on the profit if it exceeds IRS thresholds. Single persons can exclude up to $250,000 of the gain, and married persons filing a joint return can exclude up to $500,000 of the gain.1
Short-term capital gains are taxed as ordinary income, with rates as high as 37% for high-income earners; long-term capital gains tax rates are 0%, 15%, 20%, or 28% with rates applied according to income and tax filing status.4
5
This rule even allows you to convert a rental property into a primary residence because the two-year residency requirement does not need to be fulfilled in consecutive years.3
How the Capital Gains Tax Works with Homes
Suppose you purchase a new condo for $300,000. You live in it for the first year, rent the home for the next three years, and when the tenants move out, you move in for another year. After five years, you sell the condo for $450,000. No capital gains tax is due because the profit ($450,000 - $300,000 = $150,000) does not exceed exclusion amount. Consider an alternative ending in which home values in your area increased exponentially.
In this scenario, you sell the condo for $600,000. Capital gains tax is due on $50,000 ($300,000 profit - $250,000 IRS exclusion). If your income falls between $40,400 and $441,450, your capital gains tax rate as a single person is 15% in 2021.5 (The income range rises slightly, between $41,675 and $459, 750, for 2022.)6 If you have capital losses elsewhere, you can offset the capital gains from the sale of the house by those losses, and up to $3,000 of those losses from other taxable income.7
2021 Long-term Capital Gains Rates
Filing Status 0% Tax Rate 15% Tax Rate 20% Tax Rate
Single < $40,400 $40,400 to 445,850 >$445,850
Married filing jointly < $80,800 $80,800 to $501,600 >$501,600
Married filing separately < $40,400 $40,400 to $250,800 >$250,800
Head of Household < $54,100 $54,100 to $473,750 >$473,750
Applicable to the Sale of a Principal Residence
2022 Long-term Capital Gains Rates
Filing Status 0% Tax Rate 15% Tax Rate 20% Tax Rate
Single < $41,675 $41,675 to $459,750 >$459,750
Married filing jointly < $83,350 $83,350 to $517,200 >$517,200
Married filing separately < $41,675 $41,675 to $258,600 >$258,600
Head of Household < $55,800 $55,800 to $488,500 >$488,500
Applicable to the Sale of a Principal Residence
Requirements and Restrictions
If you meet the eligibility requirements of the IRS, you'll be able to sell the home capital gains tax-free. However, there are exceptions to the eligibility requirements, which are outlined on the IRS website.
The main major restriction is that you can only benefit from this exemption once every two years. Therefore, if you have two homes and lived in both for at least two of the last five years, you won't be able to sell both of them tax-free.3
The Taxpayer Relief Act of 1997 significantly changed the implications of home sales in a beneficial way for homeowners. Before the act, sellers had to roll the full value of a home sale into another home within two years to avoid paying capital gains tax. This, however, is no longer the case, and the proceeds of the sale can be used in any way the seller sees fit.1
When Is a Home Sale Fully Taxable?
Not everyone can take advantage of the capital gains exclusions. Gains from a home sale are fully taxable when:3
The home is not the seller's principal residence
The property was acquired through a 1031 exchange within five years
The seller is subject to expatriate taxes
The property was not owned and used as the seller's principal residence for at least two of the last five years prior to the sale (some exceptions apply)
The seller sold another home within two years from the date of the sale and used the capital gains exclusion for that sale
Capital Gains Tax on Home Sale Example
Consider the following example. Susan and Robert, a married couple, purchased a home for $500,000 in 2015. Their neighborhood experienced tremendous growth and home values increased significantly. Seeing an opportunity to reap the rewards of this surge in home prices, they sold their home in 2020 for $1.2 million. The capital gains from the sale were $700,000.
As a married couple filing jointly, they were able to exclude $500,000 of the capital gains, leaving $200,000 subject to capital gains tax. Their combined income places them in the 20% tax bracket. Therefore, their capital gains tax was $40,000.
How to Avoid Capital Gains Tax on Home Sales
Want to lower the tax bill on the sale of your home? There are ways to reduce what you owe or avoid taxes on the sale of your property. If you own and have lived in your home for two of the last five years, you can exclude up to $250,000 ($500,000 for married people filing jointly) of the gain from taxes.
Adjustments to the cost basis can also help reduce the gain. Your cost basis can be increased by including fees and expenses associated with the purchase of the home, home improvements, and additions. The resulting increase in the cost basis thereby reduces the capital gains.
Also, capital losses from other investments can be used to offset the capital gains from the sale of your home. Large losses can even be carried forward to subsequent tax years. Let's explore other ways to reduce or avoid capital gains taxes on home sales.
Use 1031 Exchanges to Avoid Taxes
Homeowners can avoid paying taxes on the sale of their home by reinvesting the proceeds from the sale into a similar property through a 1031 exchange. This like-for-like exchange—named after the IRS code Section 1031—allows for the exchange of like property with no other consideration or like property including other considerations, such as cash. The 1031 exchange allows for the tax on the gain from the sale of a property to be deferred, rather than eliminated.8
Owners—including corporations, individuals, trust, partnerships, and LLCs—of investment and business properties can take advantage of the 1031 exchange when exchanging business or investment properties for those of like kind.8
The properties subject to the 1031 exchange must be for business or investment purposes, not for personal use. The party to the 1031 exchange must identify in writing replacement properties within 45 days from the sale and must complete the exchange for a property comparable to that in the notice within 180 days from the sale.9
Since executing a 1031 exchange can be a complex process, there are advantages to working with a reputable, full-service 1031 exchange company. Given their scale, these services generally cost less than attorneys who charge by the hour. A firm that has an established track record in working with these transactions can help you avoid costly missteps and ensure that your 1031 exchange meets the requirements of the tax code.
Convert Your Second Home into Your Primary Residence
Capital gains exclusions are attractive to many homeowners, so much so that they may try to maximize its use throughout their lifetime. Because gains on non-primary residences and rental properties do not have the same exclusions, more people have sought clever ways to reduce their capital gains tax on the sale of their properties. One way to accomplish this is to convert a second home or rental property to a primary residence.
A homeowner can make their second home as their primary residence for two years before selling and take advantage of the IRS capital gains tax exclusion. However, stipulations apply. Deductions for depreciation on gains earned prior to May 6, 1997, will not be considered in the exclusion.10
According to the Housing Assistance Tax Act of 2008, a rental property converted to a primary residence can only have the capital gains exclusion during the term in which the property was used as a principal residence.11 The capital gains are allocated to the entire period of ownership. While serving as a rental property, the allocated portion falls under nonqualifying use and is not eligible for the exclusion.10
To prevent someone from taking advantage of the 1031 exchange and capital gains exclusion, the American Jobs Creation Act of 2004 stipulates that the exclusion applies if the exchanged property had been held for at least five years after the exchange.12
How Installment Sales Lower Taxes
Realizing a large profit at the sale of an investment is the dream. However, the corresponding tax on the sale may not be. For owners of rental properties and second homes, there is a way to reduce the tax impact. To reduce taxable income, the property owner might choose an installment sale option, in which part of the gain is deferred over time. A specific payment is generated over the term specified in the contract.13
Each payment consists of principal, gain, and interest, with the principal representing the non-taxable cost basis and interest taxed as ordinary income. The fractional portion of the gain will result in a lower tax than the tax on a lump-sum return of gain. How long the property owner held the property will determine how it's taxed: long-term or short-term capital gains.
How Real Estate Taxes Work
Taxes for most purchases are assessed on the price of the item being bought. The same is true for real estate. State and local governments levy real estate or property taxes on real properties; these collected taxes help pay for public services, projects, schools, and more.
Real estate taxes are ad-valorem taxes, which are taxes assessed against the value of the home and the land it sits on. It is not assessed on the cost basis — what was paid for it. The real estate tax is calculated by multiplying the tax rate by the assessed value of the property. Tax rates vary across jurisdictions and can change, as can the assessed value of the property. However, some exemptions and deductions are available for certain situations.
How to Calculate Cost Basis of a Home
The cost basis of a home is what you paid (your cost) for it. Included is the purchase price, certain expenses associated with the home purchase, improvement costs, certain legal fees, and more.
Example: In 2010, Rachel purchased her home for $400,000. She made no improvements and incurred no losses for the ten years she lived there. In 2020, she sold her home for $550,000. Her cost basis was $400,000, and her taxable gain was $150,000. She elected to exclude the capital gains and, as a result, owed no taxes.
What Is Adjusted Home Basis?
The cost basis of a home can change. Reductions in cost basis occur when you receive a return of your cost. For example, you purchased a house for $250,000 and later experienced a loss from a fire. Your home insurer issues a payment of $100,000, reducing your cost basis to $150,000 ($250,000 original cost basis - $100,000 insurance payment).
Improvements that are necessary to maintain the home with no added value, have a useful life of less than one year, or are no longer part of your home will not increase your cost basis.14
Likewise, some events and activities can increase the cost basis. For example, you spend $15,000 to add a bathroom to your home. Your new cost basis will increase by the amount you spent to improve your home.14
Basis When Inheriting a Home
If you inherit a home, the cost basis is the fair market value (FMV) of the property when the original owner died.15 For example, say you are bequeathed a house that the original owner paid $50,000 for. The home was valued at $400,000 at the time of the original owner's death. Six months later, you sell the home for $500,000. The taxable gain is $100,000 ($500,000 sales price - $400,000 cost basis).
The fair market value is determined on the date of the death of the grantor or on the alternate valuation date if the executor files an estate tax return and elects that method.16
Reporting Home Sale Proceeds to the IRS
It is required to report the sale of a home if you received a Form 1099-S reporting the proceeds from the sale or if there is a non-excludable gain. Form 1099-S is an IRS tax form reporting the sale or exchange of real estate. This form is usually issued by the real estate agency, closing company, or mortgagee. If you meet the IRS qualifications for not paying capital gains tax on the sale, inform your real estate professional by Feb. 15 following the year of the transaction.
The IRS details what transactions are not reportable:17
If the sales price is $250,000 ($500,000 for married persons) or less and the gain is fully excludable from gross income. The homeowner must also affirm that they meet the principal residence requirement. The real estate professional must receive certification that these attestations are true.
If the transferor is a corporation, a government or government sector, or an exempt volume transferor (someone who has or will sell 25 or more reportable real estate properties to 25 or more parties)
A transaction to satisfy a collateralized loan
Non-sales, such as gifts
If the total consideration for the transaction is $600 or less, which is called a de minimus transfer
Special Considerations
What happens in the event of a divorce or for military personnel? Fortunately, there are considerations for these situations. In a divorce, the spouse granted ownership of a home can count the years the home was owned by the former spouse to qualify for the use requirement.3 Also, if the grantee has ownership in the house, the use requirement can include the time the former spouse spends living in the home until the date of sale.
Military personnel and certain government officials on official extended duty and their spouses can choose to defer the five-year requirement for up to ten years while on duty. Essentially, as long as the military member occupies the home for 2 out of 15 years, they qualify for the capital gains exclusion (up to $250,000 for single taxpayers and up to $500,000 for married taxpayers filing jointly).18
Capital Gains Taxes on Investment Property
Real estate can be categorized differently. Most commonly, it is categorized as investment or rental property or principal residences. An owner's principal residence is the real estate used as the primary location in which they live. An investment or rental property is real estate purchased or repurposed to generate income or a profit to the owner(s) or investor(s).
How the property is classified affects how it's taxed and what tax deductions, such as mortgage interest deductions, can be claimed. Under the Tax Cuts and Jobs Act of 2017, up to $750,000 of mortgage interest on a principal residence can be deducted. However, if a property is solely used as an investment property, it does not qualify for the capital gains exclusion.19
Deferrals of capital gains tax are allowed for investment properties under the 1031 exchange if the proceeds from the sale are used to purchase a like-kind investment. And capital losses incurred in the tax year can be used to offset capital gains from the sale of investment properties. So, although not afforded the capital gains exclusion, there are ways to reduce or eliminate taxes on capital gains for investment properties.
Rental Property vs. Vacation Home
Rental properties are real estate rented to others to generate income or profits. A vacation home is real estate used recreationally and not considered the principal residence. It is used for short-term stays, primarily for vacations.
Often, homeowners convert their vacation homes to rental properties when not in use by them. The income generated from the rental can cover the mortgage and other maintenance expenses. There are a few things to keep in mind, however. If the vacation home is rented out for less than 15 days, the income is not reportable. If the vacation home is used by the homeowner for less than two weeks in a year and then rented out for the remainder, it is considered an investment property.20
Homeowners can take advantage of the capital gains tax exclusion when selling their vacation home if they meet the IRS ownership and use rules.
Real Estate Taxes vs. Property Taxes
The terms real estate and property are often used interchangeably, as are real estate taxes and property taxes. However, property is actually a broad term used to describe different assets, including real estate, owned by a person; and not all property is taxed the same.
Property taxes, as it relates to real estate, are ad-valorem taxes assessed by the state and local governments where the real property is located. The real estate property tax is calculated by multiplying the property tax rate by real property's market value, which includes the value of the real property (e.g., houses, condos, and buildings) and the land it sits on.
Property taxes, as it relates to personal property, are taxes applied to movable property. Real estate, which is immovable, is not included in personal property tax. Examples of personal property include cars, watercraft, and heavy equipment. Property taxes are applied at the state or local level and may vary state-to-state.
The Bottom Line
Taxes on capital gains can be substantial. Fortunately, the Taxpayer Relief Act of 1997 provides some relief to homeowners who meet certain IRS criteria. For single tax filers, up to $250,000 of the capital gains can be excluded, and for married tax filers filing jointly, up to $500,000 of the capital gains can be excluded. For gains exceeding these thresholds, capital gains rates are applied.1
There are exceptions for certain situations, such as divorce and military deployment, and there are rules for when sales must be reported. Understanding the tax rules and staying abreast of tax changes can help you better prepare for the sale of your home.
Are Home Sales Tax-Free?
Home sales are tax-free if the condition of the sale meets certain criteria. The seller must have owned the home and used it as their principal residence for two out of the last five years (up to the date of closing). The two years must not be consecutive to qualify. The seller must not have sold a home in the last two years and claimed the capital gains tax exclusion. If the gains do not exceed the exclusion threshold ($250,000 for single people and $500,000 for married people filing jointly), the seller does not owe taxes on the sale of their house.1
How Do I Avoid Paying Taxes When I Sell My House?
There are several ways to avoid paying taxes on the sale of your house. Here are a few:
Offset your capital gains with capital losses. Capital losses from previous years can be carried forward to offset gains in future years.
Consider using the IRS primary residence exclusion. For single taxpayers, you may exclude up to $250,000 of the capital gains, and for married taxpayers filing jointly, you may exclude up to $500,000 of the capital gains (certain restrictions apply).1
Also, under a 1031 exchange, you can roll the proceeds from the sale of a rental or investment property into a like investment within 180 days.9
How Much Taxes Do I Pay When Selling My House?
How much taxes you pay is dependent on the amount of the gain from selling your house and your tax bracket. If your profits do not exceed the exclusion amount and you meet the IRS guidelines for claiming the exclusion, you owe nothing. If your profits exceed the exclusion amount and you earn between $40,400 and $441,450, you will owe a 15% tax (based on the single filing status) on the profits.5
Do I Have to Report the Sale of My Home to the IRS?
It is possible that you are not required to report the sale of your home if none of the following are true:3
You have non-excludable, taxable gain from the sale of your home (>$250,000 for single taxpayers and >$500,000 for married taxpayers filing jointly).
You were issued a 1099-S, reporting proceeds from real estate transactions.
You want to report the gain as taxable, even if all or a portion falls within the exclusionary guidelines.
ADVISOR INSIGHT
Kimerly Polak Guerrero, CFP®, RICP®
Polero ICE Advisers, New York, NY
In addition to the $250,000 (or $500,000 for a couple) exemption, you can also subtract your full cost basis in the property from the sales price. Your cost basis is calculated by starting with the price you paid for the home, and then adding purchase expenses (e.g., closing costs, title insurance, and any settlement fees).
To this figure, you can add the cost of any additions and improvements you made that had a useful life of over one year.
Finally, add your selling costs, like real estate agent commissions and attorney fees, as well as any transfer taxes you incurred.
By the time you finish totaling all these costs of buying and selling and improving the property, your capital gain on the sale will likely be much lower, enough to qualify for the exemption.
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>>> Israeli firm to sell HSBC Tower in New York for $855 million
MSN Money
By Steven Scheer
https://www.msn.com/en-us/money/companies/israeli-firm-to-sell-hsbc-tower-in-new-york-for-24855-million/ar-AARugTF?ocid=uxbndlbing
JERUSALEM (Reuters) - Israel's Property and Building Corp said on Sunday it agreed to sell the HSBC Tower building in midtown Manhattan for $855 million to New York-based real estate firm Innovo Property Group, recording a net loss of $45 million.
The Israeli company, which is 63% owned by Discount Investment Corp, said it had also sold property in Israel for 390 million shekels ($123 million).
Doron Cohen, chief executive of both Property and Building and Discount, said management was focusing on income-producing properties in Israel and that the amount it was receiving from both transactions would allow it to advance this policy.
"We are continuing the policy and examining the possibility of realising additional properties in the United States and in Israel," Cohen said, noting the sale of the HSBC building came despite "gloomy" predictions over U.S. commercial real estate market.
He cited Tivoli Village, an upscale apartment complex in Las Vegas that opened this year, which may be put up for sale as part of the company's efforts to boost liquidity and reduce debt.
Along with conglomerate Koor Industries, Property and Building, bought the 30-storey, 80,000 square metre HSBC Tower in 2009 for $353 million. In 2011, Property acquired Koor's stake in the tower which has an occupancy of 99%, it said. HSBC had bought the building in the 1990s.
Property and Building said the value of the HSBC Tower in its books was $864 million as of Sept. 30. After costs, it said it would record a net loss of $45 million from the sale.
Completion of the sale is expected by April 1, 2022 subject to Innovo's right to advance the date while also receiving options to postpone the completion twice for 30 days each.
Property said after the sale it will have a net cash flow of $343 million.
Its shares were 0.7% lower in afternoon trading in Tel Aviv.
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>>> Gladstone Land Acquires Farmland in Oregon
Yahoo Finance
November 29, 2021
https://finance.yahoo.com/news/gladstone-land-acquires-farmland-oregon-133000467.html
MCLEAN, VA / ACCESSWIRE / November 29, 2021 / Gladstone Land Corporation (NASDAQ:LAND) ("Gladstone Land") announced that it has acquired 165 gross acres of farmland located near Milton-Freewater, Oregon, for approximately $2.4 million. In connection with the acquisition, Gladstone Land entered into a 10-year, triple-net lease agreement with an existing tenant who is a leader in the wine industry.
"We are excited to make another acquisition in Oregon," said Tony Marci, Managing Director for Gladstone Land. "Our tenant will plant a vineyard on this land, which is located within the Walla Walla Valley AVA. The property is in a beautiful setting on land overlooking the Walla Walla Valley."
"This land, with established water rights, will be a great addition to our portfolio," said David Gladstone, President and CEO of Gladstone Land. "We are pleased to expand the relationship with our tenant and help them to continue providing premium wines to their customers."
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 162 farms, comprised of approximately 109,000 acres in 15 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 105 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The company has increased its common distributions 24 times over the prior 27 quarters, and the current per-share distribution on its common stock is $0.0452 per month, or $0.5424 per year. Additional information, including detailed information about each of the company's farms, can be found at www.GladstoneLand.com.
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>>> Gladstone Land Corporation Exceeds $75 Million Raised for Series C Preferred Stock Offering
Yahoo Finance
November 18, 2021
https://finance.yahoo.com/news/gladstone-land-corporation-exceeds-75-210500039.html
MCLEAN, VA / ACCESSWIRE / November 18, 2021 / Gladstone Land Corporation (Nasdaq:LAND) (the "Company") today announced that it has sold over $75,000,000 in its continuous registered public offering of $500,000,000 of its 6.00% Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") since filing a prospectus supplement on April 3, 2020. The Company's first sale of Series C Preferred Stock occurred on April 8, 2020.
"We launched our Series C Preferred Stock offering in 2020 very soon after closing on $150 million in sales in our Series B Preferred Stock offering. Despite launching near the start of the COVID-19 pandemic, we were very pleased with the pace of sales of our Series C Preferred Stock throughout 2020. Moreover, after hiring our own wholesaling team within Gladstone Securities, our affiliated broker dealer, we have been thrilled with the acceleration of our Series C Preferred Stock sales throughout 2021. We hope to continue increasing our monthly sales in 2022 and beyond, as we have a total offering size of $500 million and a large target market of available farmland in the United States. Since launching the Series B Preferred Stock offering in May of 2018, we've used the Series B and Series C proceeds to grow our farmland portfolio from 79 farms with approximately 65,000 acres worth about $550 million in mid-2018 to 160 farms with over 108,000 acres worth approximately $1.4 billion. Having access to the independent broker dealer and RIA markets has been important to augment our other sources of capital so that we have been able to grow significantly," said David Gladstone, President of Gladstone Land.
The Company expects that the offering of its Series C Preferred Stock will terminate on the date that is the earlier of either June 1, 2025 (unless earlier terminated or extended by the Company's Board of Directors) or the date on which all 20,000,000 shares offered in the Series C Preferred Stock offering are sold (the "Termination Date"). The Company intends to use the net proceeds from the Series C Preferred Stock offering to purchase more farmland and for other general corporate purposes. There is currently no public market for shares of Series C Preferred Stock. The Company intends to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year of the Termination Date, however, there can be no assurance that a listing will be achieved in such timeframe, or at all.
Gladstone Securities, LLC, a FINRA-member broker-dealer, is acting as dealer manager on this offering.
Investors are advised to carefully consider the investment objectives, risks, charges and expenses of the Company before investing. The prospectus supplement dated April 3, 2020 and the accompanying prospectus dated April 1, 2020, which have been filed with the SEC, contain this and other information about the Company and the Series C Preferred Stock offering and should be read carefully by prospective investors before investing.
The Series C Preferred Stock offering is being conducted as a public offering under the Company's effective shelf registration statement filed on Form S-3 with the U.S. Securities and Exchange Commission (the "SEC") (File No. 333-236943). The Company has filed a registration statement (including a prospectus) and a prospectus supplement with the SEC for the Series C Preferred Stock offering. Before you invest, you should read the prospectus in that registration statement, the prospectus supplement and other documents that the Company has filed with the SEC for more complete information about the Company and the Series C Preferred Stock offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Gladstone Securities, the Company's dealer manager for the Series C Preferred Stock offering, will arrange to send you the prospectus and prospectus supplement if you request it by calling toll-free at (833) 849-5993 or email info@gladstonesecurities.com.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About Gladstone Land Corporation:
Founded in 1997, Gladstone Land is a publicly traded real estate investment trust that owns farmland and farm-related properties located in major agricultural markets across the U.S. and leases its properties to unrelated third-party farmers. The Company reports the fair value of its farms on a quarterly basis. The Company currently owns 160 farms, comprised of over 108,000 acres in 14 different states, valued at approximately $1.4 billion. The 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, figs, olives, pistachios, and other orchards, as well as groves of blueberries 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. The Company pays monthly distributions to its stockholders and has paid 105 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The current per-share distribution on its common stock is $0.0452 per month, or $0.5424 per year. Additional information, including detailed information about each of the Company's farms, can be found at www.GladstoneFarms.com.
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>>> American Tower (AMT) Announces Deal to Buy CoreSite for $10.1B
Zacks Equity Research
November 16, 2021
https://finance.yahoo.com/news/american-tower-amt-announces-deal-135801583.html
American Tower Corporation AMT has entered into a definitive agreement to acquire CoreSite Realty Corporation COR for roughly $10.1 billion. The combined company will cater to the growing need for convergence between mobile network providers, cloud service providers, and other digital platforms amid accelerating global 5G deployments.
The data center management company, CoreSite, consists of 25 data centers, 21 cloud on-ramps and more than 32,000 interconnections in eight major U.S. markets. As of Sep 30, 2021, CoreSite generated annualized revenues and adjusted EBITDA of $655 million and $343 million, respectively. Hence, the property buyout is likely to increase American Tower’s scale.
Moreover, with the addition of CoreSite’s data and cloud management capabilities to its mobile edge compute business American Tower will be able to offer a huge variety of 5G and cloud solutions.
Per management, “We expect the combination of our leading global distributed real estate portfolio and CoreSite’s high quality, interconnection-focused data center business to help position American Tower to lead in the 5G world.”
The transaction, expected to close by the end of this year, will likely be accretive to American Tower’s adjusted funds from operations (AFFO) per share and be increasingly accretive over time.
This marks American Tower’s second acquisition deal this year. Previously, AMT agreed to acquire Telxius Towers for $9.4 billion in cash in January. In June, it closed the first tranche of this previously announced acquisition, which comprised roughly 20,000 communications sites in Germany and Spain.
Shares of this Zacks Rank #3 (Hold) company have appreciated 5.9% compared with its industry's 10.9% growth, in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, tenant concentration is very high for American Tower. In fact, of its top three customers, Verizon VZ and AT&T T accounted for majority of the company’s total revenues.
Hence, loss of either Verizon or AT&T, consolidation among them, or reduction in network spending will significantly hamper American Tower’s top line.
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>>> Gladstone Land Corporation (LAND) Q3 2021 Earnings Call Transcript
LAND earnings call for the period ending September 30, 2021.
Motley Fool
Gladstone Land Corporation (NASDAQ:LAND)
Q3 2021 Earnings Call
Nov 10, 2021, 8:30 a.m. ET
https://www.fool.com/earnings/call-transcripts/2021/11/10/gladstone-land-corporation-land-q3-2021-earnings-c/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Greetings, and welcome to Gladstone Land Third Quarter Earnings Call. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions].
I would now like to turn the conference over to your host, David Gladstone, Chief Executive Officer and President. Thank you. You may begin.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Well, thank you for that nice introduction. This is David Gladstone, and welcome to the quarterly conference call for Gladstone Land. And again, thank you all for calling in today. We appreciate you take time out of your day to listen to our presentation. We're first going to start with Erich. Erich Hellmold is in the office today for Michael LiCalsi. Erich is our Deputy General Counsel, and he is also the -- one of the big guns in administration side of our business and that's the administrator for all the Gladstone funds. Erich, why don't you start?
Erich Hellmold -- Deputy General Counsel
Thanks, David, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based upon our current plans, which we believe to be reasonable.
Many factors may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all risk factors in our Forms 10-K and other documents we file with the SEC. Those can be found on our website, www.gladstoneland.com, specifically the Investor's page or on the SEC's website at www.sec.gov. We undertake no obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
Today we will discuss FFO, which is Funds From Operations. FFO is a non-GAAP accounting term defined as net income excluding the gains or losses from the sale of real estate and any impairment losses from property, plus depreciation and amortization of real estate assets. We will also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and adjusted FFO which further adjusts core FFO for certain non-cash items, such as converting GAAP rents to normalized cash rents. We believe these are better indications of our operating results and allow better comparability of our period-over-period performance.
Please take the opportunity to visit our website, www.gladstoneland.com, and sign up for our email notification service, so you can stay up to date on the Company. You can also find us on Facebook, keyword-The Gladstone Companies, and we have our own Twitter handle @GladstoneComps.
Today's call is an overview of our results, so we ask you to review our press release and Form 10-Q, both issued yesterday for more detailed information. Again, those can be found on the Investors page of our website.
Now, I'll turn the presentation back to David Gladstone.
David J. Gladstone -- Chairman, Chief Executive Officer and President
All right. Thank you, Erich. I always start with a brief recap of the current farmland holdings. We currently own about 108,000 acres on 160 farms and about 45,000 acre-feet of banked water. All those together total about $1.4 billion in assets that we own. Our farms are located in 14 different states, and more importantly in 28 different growing regions, and our farms continue to be 100% occupied and are leased to 82 different tenant farmers, all of whom are unrelated to us. And the tenants on these farms are growing over 60 different types of crops.
Given the number of different growing regions, tenants, types of crops, our farms -- on our farms, we think this is sufficient diversification to provide for safety and security of the cash flows coming from the rents. And we believe this diversification helps protect the dividends that we're paying to our preferred as well as our common shareholders. There are no guarantees in this world, anything can happen in this life. But right now, we're feeling pretty good about getting the money in from rents and paying it out as dividends.
We had another strong quarter from the acquisition standpoint and we continued to see a decent number of buying opportunities come our way. And in the fourth quarter, we've gotten off to a nice start. We still have a few farms that we're working on to close before the end of the year. Hopefully, we'll get them all done. It has been kind of a slow year in terms of the pandemic has kept people out of the office and that always slows things down.
We continue to be able to renew all the expiring leases without incurring any downtime on any of our farms and notable increase in these renewals reflects the positive trends in all the rental rates that we're currently seeing in many regions.
Overall operations on our farms remained strong and demand for products that are grown in most of our farms remains relatively strong. And these are products like berries and vegetables and nuts. And as anybody who goes to the grocery store these days, tell you, there are many of these types of food that continue to increase in price and that's good for our farmers and good for us long-term.
During the third quarter, the team acquired five farms, 5,000 acre-feet of banked water for total price of about $62 million. In addition, right after the quarter-end, we acquired two more farms, approximately 2,000 more acre-feet of banked water or total about $46 million. So we have new investments of about $108,000 -- $108 million from last time.
Overall, initial net cash yield to us on these are about 5.5%. In addition, all the leases on these farms contain certain provisions such as participation rents or annual escalations that should push that figure higher as we go forward in the future. As a reminder, this banked water is water that we own, but is stored in a local water district. We can use the water that's in these districts on the farmland located in Kern County that sub-basin where the water is, where we have several farms and we can sell it to a third-party, or we can use it on our farms.
Our plan is to hold the water to keep as a safeguard for our own assets in the region. Currently, we are not using any of it. We're using the water that we have from the wells that we have on the farms in the past. They say they have not used any of it, they kept buying a little bit. So when it came time to sell, they wanted to sell us the same insurance for water that we have in these wells. All of our farms currently have enough water, but we like the security of having extra water.
On the leasing front, since the beginning of the third quarter, we executed ten lease renewals on properties located in California, Colorado, Florida and Michigan.
Overall, these lease renewals are expected to result in an increase in annual net operating income of about $227,000 or about 8% over the prior leases that we had. Looking ahead, we only have three leases scheduled to expire in the next six months that make up less than 2% of our total annualized lease revenue. We are in discussion with the existing tenants on these farms, as well as some potential new tenants and we aren't expecting any downturn -- downtime on these farms.
Overall, we continue to expect the new leases on these farms to be relatively flat from where they are today. There are few other items I'd like to touch on before we move on. The first one is going -- the ongoing drought in the West, despite some recent record-breaking rainfall parts of California. Certainly in Oregon and Washington, they've gotten a good amount of water down on the farms, but they also have gotten many feet of snow in the mountains, and when that snow melts, it feeds all the farms in the valley. However, all our properties continued to be in a position where there is currently ample water to complete both the current crop and next year's crop. Where we have farms located in water districts, those districts have stored water or other supplemental sources that cover our farms for the short-term.
Almost all of the farms out West have well sites and most of them rely on groundwater as their main source of the irrigation. For these properties, we are seeing a typical seasonal dropping of the water table levels, and we haven't had any, of course, that have gone dry. And all of our farms currently have pumping capacity to cover their crop needs.
One thing you should know is that wet and dry weather cycles are the norm out West. Those of you here in the Midwest or in the South, this is something that you would know how to handle most likely, but it's very difficult in the West, especially California. Throughout any long-term investment, we know that we're going to have both drought periods and wet periods. So when we underwrite a potential investment out West, we look for properties with multiple sources of water, we build in drought scenarios in our projections, and we also take into account potential government regulations because sometimes they just come in and say we'd like you to pump 25% less water out of the ground. We've done that and we've done a good job keeping the government happy with our water.
We continue to expect a strong year in terms of participation rents. I think this will be the largest year we've ever had. You know, we recorded about $2.4 million in participation rents each of the past two years and we are expecting a sizable increase in that amount for 2021. No guarantees, but that's what we're projecting right now. And this is mainly due to having several more farms with participation rents this year. We recorded about $1.8 million of participation rents so far through the third quarter. People have begun to pay and give us good projection, so we're bringing in that money now.
Regarding the progress on our ESG policy, we continue to work on developing a formal policy related to disclosures that we continue to think are relevant and we will continue to update you on this as we get closer to finalizing these policies. One of our problems on ESG is just finding someone who can identify and say we've done it correctly. There is a lot of fighting on Europe over what constitutes some of the ESG policies.
Finally, I want to again briefly mention that Gladstone Acquisition, it's our SPAC that recently filed and reiterate the relationship to Gladstone Land. It has a little over $100 million in cash in it now. And as mentioned in previous calls, we sometimes come across farm owners who don't want to sell just their land, they want to sell both their farmland and their operations as a package deal.
As you know, a REIT like Gladstone Land is limited in the ability to own operating companies because operating income is generally not permitted in a Real Estate Investment Trust. So Gladstone Acquisition was created to potentially take advantage of such opportunities. We're looking at a couple now, we've not signed anything, and so, there has been no press releases on it, but stay tuned, you'll hear what we do there.
I'm going to stop at this point on operations. I'll turn it over to our Chief Financial Officer, Lewis Parrish, to talk to you more about the numbers that he published last night.
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
Thank you, Dave, and good morning, everyone.
I'll begin with our balance sheet. During the third quarter our total assets increased by about $60 million, due to new acquisitions which were financed with a mix of debt and equity proceeds. During the quarter, we secured about $31 million of new long-term borrowings at a weighted average rate of 2.75%, which is fixed for the next ten years.
On the equity side, since the beginning of the third quarter, we've raised about $86 million of net proceeds through sales of our common stock under the ATM Program, representing a net cost of capital of 2.35% with our recently increased dividend. And over the same time period, we've also raised about $22 million of net proceeds from sales of the Series C Preferred Stock.
Moving on to our operating results, first, I'll note that for the third quarter we had net income of about $1.5 million and a net loss to common shareholders of $1.6 million or $0.052 per common share. On a quarter-over-quarter basis, adjusted FFO for the third quarter was approximately $5.3 million compared to $3.7 million in the second quarter, an increase of about 41%. AFFO per share was $0.166 in the third quarter versus $0.126 in the second quarter, an increase of 32%. Dividends declared per share were about $0.135 in each quarter. The primary driver behind the increase in AFFO was additional participation rent recorded. This was partially offset by incentive fee earned by advisor during the current quarter.
During the third quarter, we recorded about $1.8 million of participation rents versus only $19,000 in the previous quarter. Fixed base cash rents increased by about $1 million or 6% on a quarter-over-quarter basis, primarily driven by additional revenue earned from recent acquisitions.
On the expense side, excluding reimbursable expenses and certain non-recurring or non-cash expenses, our core operating expenses increased by about $1.1 million, which is driven by higher related party fees. The quarter-over-quarter increase in related party fees is reflective of a higher rate used to determine the base management fee rate, which became effective from July 1 and includes an incentive fee of $945,000 earned by our advisor during the current quarter versus none earned in the prior quarter.
Removing related party fees, our core operating expenses decreased by about $250,000. This decrease was primarily driven by lower property operating expenses, which was largely due to less water costs incurred in one of our properties in Colorado and reduced annual filing fees as well as a decrease in our general and administrative expenses due to the additional costs incurred in the prior quarter related to our annual shareholders meeting.
Regarding the additional water costs in Colorado, the impact on the current quarter's numbers was about $260,000 or $0.01 per share, down from about $350,000 in the prior quarter. We currently anticipate incurring an additional $100,000 to $150,000 during the fourth quarter for these water costs, but we do not currently anticipate continuing to incur these costs beyond 2021.
Moving on to net asset value, we had 37 farms revalued during the quarter, all via third-party appraisals except for three farms that we revalued internally. Overall, these farms increased in value by about $2 million over their previous valuations from a year ago. So as of September 30, our portfolio was valued at just over $1.3 billion all of which was supported by third-party appraisals or the actual purchase prices.
And based on these updated valuations and including the fair value of our debt and all preferred stock, our net asset value per common share at September 30 was $13.80, which is up by $0.64 from last quarter.
Turning to our capital makeup and overall liquidity, from a leverage standpoint and with respect to our borrowings, our loan-to-value ratio on our total farmland holdings on a fair value basis and net of cash was about 44% at September 30. Over 99% of our borrowings are currently at fixed rates, and on a weighted average basis, these rates are fixed at 3.35% for another six years out. So we believe we are currently well protected on the debt side against any future interest rate volatility. In addition, the weighted average maturity of these borrowings is about ten years out.
Regarding upcoming debt maturities, we have about $43 million coming due over the next 12 months. However, about $27 million of that represents maturities of eight loans coming due. The eight properties collateralizing these loans have increased in value by a total of $14 million since their respective acquisitions. So we do not foresee any problems refinancing any of these loans if and when we choose to do so.
So removing these maturities, we only have about $16 million of amortizing principal payments coming due over the next 12 months, or about 2% of our total debt outstanding. From a liquidity standpoint, including availability on our lines of credit and other undrawn notes, we currently have over $125 million of dry powder, in addition to over $100 million of unpledged properties. We have ample availability under our two largest borrowing facilities and we continue to be in discussions with these and other lenders for new borrowings and credit facilities. But overall, credit continues to be readily available to us from multiple vendors and at very favorable terms.
Finally, I will touch on our common distributions. We recently raised our common dividend again to $0.0452 per share per month. Over the past 27 quarters, we've raised our dividend -- our common dividend 24 times resulting in an overall increase of 50.7% in our monthly common distributions over this time. Since 2013, we've paid 105 consecutive monthly dividends to common shareholders totaling $5.39 per share in total distributions. Paying dividends to our shareholders is paramount to our business plan and our goal is to continue to increase the dividend at regular intervals.
When considering the relative stability and security of the underlying assets and the related cash flows, we believe the stock continues to offer a compelling investment alternative especially in light of today's inflationary concerns.
And with that, I'll turn the program back over to David.
David J. Gladstone -- Chairman, Chief Executive Officer and President
All right. Thank you, Lewis. That's a nice report and Erich gave us a nice introduction. So we're gliding along here. Acquisition activity remains good for us. We continue to see buying opportunities, we continue to make offers, we sign up people and get them into a position that we can go forward and close -- little bit slow in the marketplace out there simply because people are still reacting to the COVID-19.
Just a few final points before -- that I'd like to make before we move too far on. We believe that investing in farmland, growing crops that contribute to healthy lifestyle such as fruits and vegetables and nuts is following the trend that we're seeing in the marketplace today. Currently, about 85% of our total crop revenues come from farms growing the types of food that you'd find in either the produce section or the nut section of your local grocery store.
So if you want to see what we grow, just go to the grocery store and you will see it. We consider these foods to be among the healthiest type foods, and we continue to see a growing trend toward organic among these food groups. About 40% of our fresh produce acreage is either organic or transitioning to become organic and about 15% of the permanent crop acreage falls into this organic category.
We believe the organic sector would continue to be strong -- as very strong growth area. And in addition, more than 95% of the crops that are grown on our farmland is classified as being non-GMO.
Another major reason our business strategy is to focus on farmland growing fresh produce is due to the effect of inflation on the particular segment. According to the Bureau of Labor -- the Bureau of Labor, the overall annual food CPI generally keeps pace with inflation. This is why so many financial advisors tell their clients to invest in farmland because it acts as the hedge against inflation. However, over the 40-plus years, the fresh fruit and vegetable segment of the food category has outpaced total food CPI by a multiple of 1.5 times. And this is a large reason why we like being in this segment as well.
And while prices of commodity grain crops such as corn and wheat are typically more volatile and susceptible to global supply and demand, fresh produce is mostly insulated from global volatility mainly because the crops are generally consumed locally and within a short time after harvest. You've got about 14 days to get a strawberry off the vine and into somebody's mouth before it goes bad.
I'm telling you this because we are often confused with owning farms where farmers grow corn, soy, wheat and we have mostly stayed clear of these crops because we have to compete, they have to compete with other countries like Brazil, Argentina, the Ukraine, where cost of production, even after shipping cost, is very low. And those farmers can undercut the prices of grain farmers in the US. This year, grain prices have been much higher in the United States. But one reason and that's because Brazil and Argentina are in a very difficult drought situation. Farms in these countries, largely depend on rain for water.
So overall demand for prime farmland growing berries and vegetables remains stable to strong in almost all of the areas where our farms are located, particularly along the West Coast, including most of California, Oregon and Washington. And not to forget East Coast especially Florida and some of the other states on the East Coast, everything is going along at a good pace. And overall, farmland continues to perform well compared to other assets. There is an association called NCREIF and it has a farmland index and is currently made up of about $13.2 billion worth of agricultural properties including all of ours and that's averaged return of about 12.3% over the last 20 years compared to 11% for the overall REIT index and lower for the S&P index.
And during those 20 years, the Farmland Index has not had a single negative year yield, whereas the REIT Index and the S&P Index have had four negative years over that same period. Farmland has generally provided investors with a safe haven during turbulent times and in financial marketplaces as both land prices and food prices, especially for fresh produce have continued to rise steadily.
So just in closing, please remember that purchasing stock in this Company is a long-term investment in farmland. I think, an investment in our stock really has two parts. It's similar to gold in the sense that it's a hard asset, farmland or dirt, and it's the good farmland that can grow food. It has an intrinsic value because there's a limited amount of good farmland and it's being used up by urban development especially in California and Florida, where we have many farms.
Second, I'd like to compare gold and other alternative assets because it's better than those because it's an active investment with cash flows to investors. And we believe that's better than a bond fund because we keep increasing the dividend. We expect inflation, particularly in the food sector to increase and increase to values that pump up the value of underlying farmland to increase as a result. And we expect this especially be true of fresh produce food sector, the trends are more people in the US are eating healthy foods continuing to grow such products for distribution through.
And Gladstone Land would not be anything without the good people we have operating and managing it. Buying and leasing farmland is a complex business. So if you like, what we're doing, please buy some stock and keep eating fresh fruits and vegetables and nuts.
Now we will stop and have some questions from those who follow us. Operator, would you please come on and tell these people how they can ask us some questions?
Questions and Answers:
Operator
Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions]. Our first question comes from Rob Stevenson with Janney. Please proceed.
Robert Stevenson -- Janney Montgomery Scott LLC -- Analyst
Good morning. David, where is pricing for farmland today versus a couple of years ago pre-pandemic? When you look at similar properties, are we up 5%, 10% flattish? How do you sort of characterize it across your various sort of property types and markets?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Yeah. If you're looking at the Midwest, which is most often the one that's published, it's gone up pretty substantially this year simply because people are making money. They're also buying lots of tractors and those kind of equipment. In the areas that we're in, there has been sort of a steady increase over the last ten years and certainly over the last three or four years as people have realized that there is other things, other than corn and wheat that are growing. And I would say, there has been a good 15% increase over the last three years.
Robert Stevenson -- Janney Montgomery Scott LLC -- Analyst
Okay. And then given how hot the housing market is, have you guys thought about selling some of your land to homebuilders in some markets where it's bumping up against the farms?
David J. Gladstone -- Chairman, Chief Executive Officer and President
We have a few farms that are inside of the areas like, in California, you can't just sell your land to a developer and the developer goes off and builds where he wants to on it. In California, you need to get the local city -- you have to be inside the city districts. So if you're in Watsonville, you need to be inside of the town limits for Watsonville, and then the local government officials can make that decision.
If you're outside of that, you have to put it on the ballot for voting. And if you've ever seen a ballot for California, they are about four-feet long. There are really a lot of things on those ballots. And one of those would be I want to take that lot that's right next to the -- right next to this one or that one and build houses on it. And they always get shot down. Californians are not interested in building more houses. And so, you have California pushing now to take neighborhoods and tear down the houses and build apartment buildings or condos, something in order to increase the net amount of land that's being used for that.
And it's really rough in California. They're probably 15% under house built or places to live and they just can't seem to get out of their own way in terms of regulations. And I know a lot of farms will be there. We have one right inside of Watsonville. It's a small, mostly blueberries, no mostly strawberries in that. And I think some day someone will show up and want to buy that. But that's not going to be a big hit, it's going to be a nice hit. But they haven't shown up yet. And one reason is quite frankly the strawberry fields are in an area that is not the best part of town. So as a result, they have a lot of old houses around it and they haven't done much changes. And unlike a lot of cities in California, there's not a lot of people moving to Watsonville. So as a result, we haven't had the pressures that you'd have if we were next to Los Angeles or San Francisco or even some of the other large cities.
So I would say, one day someone will show up in one of our big farm, which is -- it's probably 500 acres, and it's right next to the ocean. And somebody is going to be able to get that through and build on it because it's an hour and 20 minutes to LAX, and that's going to be a big one. We paid about $25,000 in total for everything on that farm. It's probably worth $80,000 an acre today. And if you could zone it, it would be worth $1.5 million an acre if you could put townhouses on it.
So, yes, someday all you lucky people after I'm gone are going to enjoy the benefits of us selling some of these farms. Right now, we're not interested in selling anything. What we want to do is build an incredible Company with lots of farms and try to catch up with some of the other big farmers in the United States.
As you well know, there is a man that is in the -- really not in the business anymore, but he is buying up a lot of land around the country. He has got about 230,000 acres and he is the largest farmer and we need to catch him. It's going to be a while because there is issues in tax-free dollars to buy farms. But I think we are in good shape, Rob, and I think we're just going to continue doing the same thing every day for the next ten years until we get a really big farming operation going.
Robert Stevenson -- Janney Montgomery Scott LLC -- Analyst
Okay. And then last one from me. The acquisition vehicle, I mean, are the opportunities which you're looking at there going to be too big for taxable REIT subsidiary? Is that the reason why you're going that route rather than just putting any of the operations into a taxable REIT subsidiary for the time being?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Yeah. They are too big and they would overshadow everything. And as you know, if we bust that regulation, we are out of the REIT business for five years. So I don't want to break it in. So that's why we're there and we keep getting these opportunities showing up and saying we'd like to sell the whole thing, and we say, well, hang on, as soon as we get public, we will be able to distribute some of the $100 million that we have in that SPAC, and also give you some publicly traded stock. We are working on some now. We've got some in here. And when is our acquisition call? Did we have a date? Anybody know?
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
We don't yet.
David J. Gladstone -- Chairman, Chief Executive Officer and President
We don't have a date yet. Okay. I know he's filing next week. Is it...?
Erich Hellmold -- Deputy General Counsel
Isn't it filed?
David J. Gladstone -- Chairman, Chief Executive Officer and President
No.
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
It hasn't been.
David J. Gladstone -- Chairman, Chief Executive Officer and President
It's the case, so it will happen soon. You'll get a copy of it obviously, Rob, and maybe by then, we'll have something little more firmed up. I don't think it's going to be a problem finding things to buy. We've seen a lot of those. And what we want to do is buy several relatively large ones and start out as a diversified group rather than one that just does one thing and then continue to buy smaller farms and operations and have a good operating team. We don't have an operating team now. We'd have to tap one of our tenants to do some of that. But I don't -- I don't know how all of that's going to work out until we buy the first couple of farms.
Robert Stevenson -- Janney Montgomery Scott LLC -- Analyst
Okay. Thanks, David. Guys, I appreciate it.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Okay. Next question?
Operator
Our next question comes from Eddie Reilly with EF Hutton. Please proceed.
Eddie Reilly -- EF Hutton -- Analyst
Hey guys, congrats on a strong quarter. It's like this is the second quarter on a row where our lease renewals will contribute over 10% in growth in net operating income. Is this more indicative of the individual farms whose leases were renewed? Or is this indicative of the general environment we're in, in terms of inflation you think?
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
We think it's a little bit of both. I mean, obviously there are certain pockets in the country where if we were renewing leases in those regions, it might be a more muted increase or maybe even flat. But with a couple of the farms that we've negotiated, where those negotiations have taken place, in Northern California, Michigan, parts of -- some parts of Florida, Midwest and that's where we're seeing rents in those particular areas are increasing slightly, particularly in the Midwest as David mentioned, with the commodity prices this year. But Florida has been a pretty strong market consistently, Central and Northern California has -- Southern California cap rates have compressed a little bit there, but none of our lease renewals have been in that area lately. So it's a little bit of both.
Eddie Reilly -- EF Hutton -- Analyst
Got you, got you. And where are most of the lease renewals say in upcoming year taking place?
David J. Gladstone -- Chairman, Chief Executive Officer and President
In the rest of 2021, it's just one farm. We have three leases in '21 that are expiring over the next -- well I guess, actually over the next six months, three leases, but two of them are tenant termination options that are exercisable within the next five days. We do not believe the tenants want to exercise the option on either one of those. So it's really just one renewal that we're working on. And it's on a farm in Colorado that we're close to finalizing negotiations with a tenant. The gross rent is likely to remain flat. But we are expecting a significant decrease in the amount of operating expenses we will be on the hook for. So we would expect hopefully an increase in NOI for us there.
Eddie Reilly -- EF Hutton -- Analyst
Got it, got it. Turning to the financing, it seems like you guys have a pretty healthy loan-to-value ratio right now. Can you just talk a little bit about your plan of action for funding new deals going forward?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Well, we have three ways of generating funds for that. One, of course, we've touched on and that's the borrowing. There are lots of lenders in the agricultural space. In the US, we have -- I think, there's five federal large banks that do lending and we've used them pretty much every time. We also have a couple of large institutions. Rabobank is the largest in the world in terms of agricultural lending. We've done a little bit with them, but not a lot. And in addition to that, we've got -- MetLife is the largest lender in the United States and we've done deals with them.
So there is plenty of leverage, and it doesn't seem to be impacted by banks that might have problems. So we're in good shape there. We also sell some preferred stock. We've got a number of those outstanding and we participate by selling non-traded preferred. That's more expensive. It's about 6%, but we use it when we need a little extra leverage. So it's that kind of situation.
And quite frankly, the ATM Program has been very strong. What have you got from that?
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
We've got about $86 million over the past four months or so.
David J. Gladstone -- Chairman, Chief Executive Officer and President
So we've been selling stock through that ATM Program and using it to buy farms that are generating 5%, 6%. And so after leverage, we've got a good ratio. And the nice thing about leverage is that it doesn't go up until the end of it, and we've got long-term mortgages on these things. So as a result, the spread is sort of locked in for years and years and years. And so for us, the next movement for us is going to be to raise money in some other way. And I don't have any other way right now. But all of those that I mentioned are just wonderful places to get leverage now. That's going to change over time and that will reduce how much we can pay for a farm. And all of these farmers know that. So we've had good transaction with them. And as you probably know, we do from time to time have people that will take UPREIT shares that is -- and that's a non-taxable transaction whereby we give them shares of our stock and they give us their farm and it's quite nice for them and for us, because that's another way of raising equity. So we are in good shape on the financial side. We don't see any problems unless something blows up and I don't see that happening in the economy right now.
Eddie Reilly -- EF Hutton -- Analyst
Got you. Thank you.
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
And I will add regarding the use of some of the sources that David mentioned, in the past where we would almost always get a loan simultaneously with the acquisition, with all the equity proceeds that we've been able to bring in. What we've been doing and what we probably will continue to do is buy these farms with equity proceeds and then close on a loan, but not draw it until later. We want to close on it now because interest rates are very attractive. As we said earlier, we got 2.75% fixed debt for next ten years this quarter, but we want to lock in these rates, but not drawn them yet until late down the road when we actually need the additional proceeds.
Eddie Reilly -- EF Hutton -- Analyst
Okay, great. That makes sense. Thank you, guys.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Other questions?
Operator
Our next question comes from Eric Borden with Berenberg Capital. Please proceed.
Eric Borden -- Berenberg Capital -- Analyst
Hey, guys, good morning.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Good morning.
Eric Borden -- Berenberg Capital -- Analyst
Kind of -- can you talk about the volumes in the quarter? What was the mix in terms of deal size there? And then kind of maybe going forward given your favorable cost of capital, what's the appetite to target larger deals or maybe portfolios out there in terms of farmland?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Yeah, there are not that many that come up with big farms, other than the fact that the farms continue to go up in price in some areas. So I think we'd love to get some big farms, 5,000 acres would be great. We can find acreage here and there and everywhere. We also want diversification. So getting one huge farm like we have in Southern California. There are not that many people that can lease it. We've leased it to one of the largest strawberry operators in the country. And they are strong, big and lots of cash flow. So we like that.
But to get to these much larger farms, there aren't that many farmers that can take down that much. So we have to be very careful not to get in a vine whereby we have a large farm, we don't have a tenant. So we like the onesie, twosies. There not a lot of players there. And that's our forte as being able to negotiate those and offer the seller a good price for the farm, but also tax-free if they want to do the right transaction. So we'll keep doing what we're doing and the diversification is really important for me. I don't want to get into a situation where we've got a couple of big farms that are going to hurt us.
Eric Borden -- Berenberg Capital -- Analyst
No, I appreciate that. And then maybe on the acquisition front, kind of historically Q4 seems to be the key time to acquire farms, but given constraints as it relates to COVID, do you think you'll see more farmers come to market in Q1 or will there be some rollover there into the New Year?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Probably, I would guess. We never know if they're going to be able to close on time. We had one situation in which after the review of everything, we found that we were about a half a acre or maybe it was more on somebody else's farm that we were -- that the farmer was farming, and we had to get that undone before we close. And of course that's got to go through the government in California. So that's always a pain. Not that they're bad people, it's just that COVID has messed up their scheduling. And so as a result, we get -- we don't get really quick response on that. So you sit for a while waiting for it to close.
I think the bottom line, Eric, is that we are known in the marketplace now. We were not known five years ago very much. And so now everybody knows who we are, that's going to sell our farm, and so they show up on our doorstep. And we are just sitting there working with them, trying to get them to move to a point where we can get the deal done.
And unfortunately a lot of these farms are tied up in history that is it's been in the family for five, six generations. And there is a lot of emotional in the sale of that. It just is one of those things that it's been in our family for six generations or three generations, whatever it is and they don't want to let it go for what it's really worth to somebody who's farming it. And while we can always agree to look at somebody doing -- some third-party doing the review, it doesn't mean you're going to get the farm just because you got the review at the [Technical Issues] there is a lot of things bundled up into that.
There is a lot of farms out there in California. It's massive in terms of the areas that we like which is berries and most of the nut trees are out there. Certainly, almonds and pistachios, and we've picked up a lot of pistachio farms because there weren't a lot of people buying those, and it's a wonderful product. So, I don't know, acquisitions are going to go at the pace that people want us -- want to go. And I know, I talked to a guy ten years ago, trying to buy his farm, and unfortunately for him, he died and we bought it from his sister, who inherited that and she didn't have the same emotional impact and that went back to 1938, where they sold off the oil and gas underneath the farm. And so it was a little bit different transaction.
I just think there is the time when people decide to sell. The pandemic pushed some people along. Others once you talk to them and say, look you're 65 years old, do you have a plan for your farm? And they don't usually. So we show them how they can do it. We talk with some of the people that advise farmers on what to do and they see the non-taxable way of going, and here's the difference between that program that we have, is that farms that might be 200 or 300 acres are broken into maybe six or eight different tax districts. And so as a result, each one of those taxable pieces is considered a farm by the IRS, and so they can sell us three or four of those and take cash, and sell the other two or three in the form of cash, non-cash and be a shareholder.
We've had a number of those, where they want to take some cash out. And this is one of the only places that I know that works like that because if you're buying a warehouse some place, it's one unit. And so you've got to be very careful how you do that, because I think there is only a 10% amount that you can pay in cash, if the other part of it is in non-taxable.
The pressure that's been put on the marketplace by the reduction in 1031's value, because the government has changed the way that works, has been good for us. And I think we'll see more of that as time goes on. Anyway, if you talk to some of these advisors, farmland is where you want to be, but having a whole lot of money tied up in one farm is not where you want to be, as there's little -- only a few things you can do with it.
The other question?
Eric Borden -- Berenberg Capital -- Analyst
Yeah. Last one for me and then -- kind of relates to potential development opportunities. I know in the past you kind of talked about potential deforestation around the farmlands, certain farms, and I was just curious, is that potential -- does that arable land give you an opportunity to increase the acreage per farm or is that really not how I should be thinking about it?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Probably not the way to think about it, only because the deforestation is up in the mountains and we don't grow anything in the mountains. So we're not part of that whole problem. And it's really sad people have burned down houses and a lot of trees have been lost that were up in the mountains. But at the end of the day, problem for us is we just need good flat farmland and that's what we're looking forward.
So I think from our standpoint, you shouldn't look at it that way, you should consider it, gee, they've got some farmland, the farmer is going to sell it. If you sometimes have taken a small plane from Watsonville down to Oxnard, the two small airports you can go through, and as you fly over that part of the world, it's just everything is in farmland that isn't in houses. And so over time, there is no doubt in my mind that over time those places will go away.
There used to be -- in Watsonville, there was a company that you probably know, it's that sparkling apple juice, and a lot of non-alcoholic drinkers drink that in place of champagne. And they've been around forever and a day, and all of that farmland that we farm there in Watsonville plus thousands of other acres used to be, filled with apple trees. And those all got chopped down and put into berries and some of the other ground crops because it was much more profitable. And they now get a lot of their apples from up in the mountains of Washington and maybe some of the other apple tree makers. And so it's just a changing thing that goes on almost every day out there. And we are seeing more and more people needing place to live. And so it's going to continue with pressure on all of those places.
So, I don't know, Eric, we just are following huge transition in land from agricultural to places to live. It won't happen in my lifetime completely, but I'd say 50 years, a lot of that will be gone, and it will be cashed in by us and other people who own farms. So, hang in there.
Eric Borden -- Berenberg Capital -- Analyst
Sounds good. Thank you, guys. Appreciate it.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Okay. We have any more questions?
Operator
Our next question comes from James Villard with Ladenburg Thalmann. Please proceed.
James Villard -- Ladenburg Thalmann -- Analyst
Good morning, guys.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Good morning.
James Villard -- Ladenburg Thalmann -- Analyst
Just one quick one. How do you think inflation expectations were impacting your acquisition volume?
David J. Gladstone -- Chairman, Chief Executive Officer and President
Yeah, maybe some there. Obviously, inflation in berries and other ground crops are pretty steep right now. And so the farmer is making good money and he wants more money than he wanted before. So, yes, it's following through. The difference is that a lot of the leases that we have in place now go up in price when inflation goes up. So, it helps us. We have stopping points as we call it, where in three years or five years, we assess the marketplace, and to the extent that the marketplace has gone up, we are able to push up the price of our rents. We also have, as we've mentioned many times now, the ownership in some of the crop. And as the crop prices go up, we benefit as well on that.
So it's kind of sheltered ourselves from inflation. We're not in the crops that people rent by the year. For example, a lot of the corn crops are rented on an annual basis, and they, of course, have a chance to jack up the rent every year. We've tried to stay away from that and just put some bumps in there for us, and all of others have some kind of way of the price going up and it's worked very well.
I think there is always a tension between what you want to do on something like that, and because if the prices of the crop go down, our rent doesn't go down. So we only have a chance to move rents up rather than any other method. And like many other REITs, we have built into our leases 2% increases every year, 3% increases every year, and that pretty much takes care of the way inflation is going.
However, at the rate of the last six months, that would be stripped away pretty quick. So inflation could hurt us, unlikely at some point in time, we will regain our strength back because the lease will come due and that's when we push up the price. I think the acquisition side -- inflation on the acquisition side is taken care of by the fact that people want to sell, they want to sell for no taxes or they want to sell and lease it back with some kind of inflation protection for us and for them that they know what they're going to have to pay over the next five to ten years, in the sense that they have a base rent and an inflated piece of the rent.
I don't know, there is not many ways to protect yourself. We go through that with our other REIT which is in the business of buying warehouses and office buildings that are leased to tenants. And those are all long-term leases with bumps every year. That seems to be OK, but I think you're right, there is some herd [Phonetic] against us being able to buy some properties, we looked at a farm in Oxnard, not too long ago that was growing some very inflated types of crops. And so as a result, they wanted more money for it and they also were in an area -- if you're in Oxnard, you're within striking distance of LA. And I think all of that land will be sold over time.
I remember going over from LA some years ago and I arrived in the afternoon and the twinkling lights were very few ten years ago. Today you come over that hill that's just before you get to Oxnard, and there are a lot of lights, so they're building houses there, they're building this, that and the other. And so it's going to -- it's going to grow, it's just too close to LA not to grow. So we're going to see that pressure on those properties as well.
Anything else I can answer for you?
James Villard -- Ladenburg Thalmann -- Analyst
Yeah. I guess just kind of following up on that, are you seeing any -- I guess, in the negotiations you're having on new potential leases, are you seeing more push back on your ability to get percentage rent agreements?
David J. Gladstone -- Chairman, Chief Executive Officer and President
No, I don't think so. I think we always -- there is a dance that goes on between buyers and sellers, and we are no different from anybody else. They're pushing whatever they think they can get, and which they should do. But I think the negotiations go pretty straightforward. Most people have already heard about us, they've already read about us, they are probably some shareholders that come with their land. But having negotiations go pretty straightforward, and some sellers as I mentioned in another part of the presentation have an emotional attachment to their land. And they just don't want to sell it at the average price that's going on.
They have their whole history. I know when we bought a farm in Oxnard, it had an old fashioned house on it. We ended up tearing down the house. And after we tore it down, I realized that one of the families there, all of their children who were in their 60s now had grown up in that house, and I regretted it from that standpoint, but we had to get rid of it because we were afraid they were going to come in and tell us, it's one of those protected areas that we couldn't tear down the house. It was a beautiful old farm house, but it didn't fit in the farm. They had been lived in for years and years and years. So it was not in good shape.
Anyway, I think there is a lot of people in the California areas that I went -- recently there was a family with 24 members in the family that had come over about 100 years ago. And each of those 24 people have the right to stop any sale. I had 23 of them lined up -- I'm sorry, 22 of them lined up, but they were two hold-outs and we couldn't get them to agree. So it's still sitting out there, I guess, it's ready for somebody else to take over at some point in time and sell it off. But it will get sold. There is just nobody there that wants to do it. Besides it's in -- it's growing garlic and how many people can grow garlic. Any other question?
James Villard -- Ladenburg Thalmann -- Analyst
I mean, I guess just following up on that, I mean, is there -- have you seen a change -- I'm guessing, where I'm getting at it, is there a change in what's versus pre -- I guess pre-inflation scare looking back to a year?
David J. Gladstone -- Chairman, Chief Executive Officer and President
No, we haven't seen anybody say, gee, it's worth more this year because of inflation. I mean, I'm sure somebody argues that. We don't spend a lot of time on it. We usually have an appraisal. We need to keep the -- within the confines of the appraisal because that's what we borrow against this, whatever the appraiser says, the banks will usually give us 60% of that in terms of a long-term mortgage. So we don't have a lot of room to go outside of that appraised relationship, but we're in every time we do a deal.
So, yeah, they know what we can -- and we tell them, here's what we can pay. And they either keep coming back and negotiating or they stop and go away. And at this -- as we call it the smaller end of the spectrum, there just aren't that many people out there bidding against us. I'm sure we'll see somebody come and do the same thing we're doing at some point in time. So far, no one is there. And as you probably know, we have a huge team of people in both Florida -- not a huge team in Florida, but a huge team in California, just everywhere there, everybody knows us.
James Villard -- Ladenburg Thalmann -- Analyst
Yeah, thank you for the color. Great answer.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Okay, thank you. Any other questions?
Operator
There are no further questions in queue at this time. I would like to turn the call back over to Mr. Gladstone for closing comments.
David J. Gladstone -- Chairman, Chief Executive Officer and President
Well, thank you all for asking questions. Hope you come with a lot of questions next time. It's always great just to chat about things that are on your mind. And we'll see you next quarter. That's the end of this call.
Operator
[Operator Closing Remarks].
Duration: 59 minutes
Call participants:
David J. Gladstone -- Chairman, Chief Executive Officer and President
Erich Hellmold -- Deputy General Counsel
Lewis Parrish -- Chief Financial Officer and Assistant Treasurer
Robert Stevenson -- Janney Montgomery Scott LLC -- Analyst
Eddie Reilly -- EF Hutton -- Analyst
Eric Borden -- Berenberg Capital -- Analyst
James Villard -- Ladenburg Thalmann -- Analyst
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>>> World's largest 3D-printed neighborhood to break ground in Texas
November 4, 2021
by Oscar Holland
CNN
https://edition.cnn.com/style/article/icon-3d-printed-homes-austin
Anew property development in Austin, Texas, is set to become the world's largest community of 3D-printed homes.
Scheduled to break ground next year, the project will feature 100 single-story houses "printed" on-site using advanced robotic construction and a concrete-based building material.
Digital renderings of the neighborhood, unveiled last week, show rows of properties with their roofs covered in solar cells. The homes will each take approximately a week to build, according to firms behind the development.
The project is a collaboration between homebuilding company Lennar and ICON, a Texas-based construction firm specializing in 3D-printed structures. The houses have been co-designed by the Danish architecture practice Bjarke Ingels Group.
Although ICON would not disclose the cost of the project, the company said its technology is significantly faster and cheaper than conventional construction methods -- partly because it requires less manual labor. The building process will involve five of the firm's 46-foot-wide robotic "Vulcan" printers, which pipe out a concrete mix called Lavacrete according to a pre-programmed home design.
The firms behind the project said houses can be significantly cheaper and quicker to produce using 3D printing.
The firm said it can produce homes up to 3,000 square feet in size, and has previously printed the walls of a house measuring 400 to 500 square feet in just 24 hours (spread over the course of "several days"). Roofs, windows, doors and finishes will be added afterward by Lennar.
In a press release, ICON's co-founder and CEO Jason Ballard described the Austin neighborhood as a "watershed moment in the history of community-scale development."
"Construction-scale 3D printing not only delivers higher-quality homes faster and more affordably, but fleets of printers can change the way that entire communities are built for the better," he is quoted as saying. "The United States faces a deficit of approximately 5 million new homes, so there is a profound need to swiftly increase supply without compromising quality, beauty, or sustainability and that is exactly the strength of our technology."
In a statement, Martin Voelkle, partner at Bjarke Ingels Group, described the 3D-printed buildings -- and their photovoltaic roofs -- as "significant steps towards reducing waste in the construction process, as well as towards making our homes more resilient, sustainable and energy self-sufficient."
Advocates of 3D-printed construction believe it can greatly reduce labor costs and construction time. Research has also suggested that the method can slash waste and carbon dioxide emissions. The ability of 3D printers to construct buildings without formwork (the concrete molds that cement is typically poured into) can significantly reduce overall use of the material, which is responsible for about 8% of global CO2 emissions annually.
A recent study in Singapore, for instance, found that constructing a bathroom unit using 3D printing produced almost 86% less carbon dioxide than conventional construction methods -- and was over 25% cheaper. Critics have meanwhile pointed out that 3D concrete printing still relies on a non-renewable material, and that structures' safety and stability are not specifically addressed by existing building codes.
Is this 3D-printed home made of clay the future of housing?
'Not science fiction'
While the newly announced Austin project is ICON's largest to date, the firm has been using 3D printing to build social, or subsidized, housing in Mexico and Texas since 2018. The company also recently revealed that it is working with NASA to make building materials from moon dust, with a view to constructing a lunar base.
Earlier this year, ICON unveiled plans for a separate four-home development in East Austin. In 2019, the company also announced that it is building a community of 50 homes for low-income families in Tabasco, Mexico.
ICON has yet to unveil prices for the homes in its new Austin development. Earlier this year, the first printed home to hit the market in the US -- a one-story, 1,400-square-foot space in Riverhead, New York -- was listed for $299,000. Another 3D printing firm, Palari Group, recently unveiled plans to build 15 3D-printed properties near Palm Springs, California, with prices for three-bedroom homes starting at $595,000.
Speaking to CNN in 2019, Ballard said that his company's technology could "deliver a much higher-quality product to the housing market at a speed and price" that is "typically not available" for low-income families. His firm believes its technology can also be used to combat homelessness and may be deployed during disaster relief.
"3D printing is not science fiction," Ballard said at the time. "We have crossed that threshold from science fiction into reality. In the future, our bet is that this will be humanity's best hope for a housing solution that matches our highest values and ideals."
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>>> Zillow Seeks to Sell 7,000 Homes for $2.8 Billion After Flipping Halt
Bloomberg
by Patrick Clark, Sridhar Natarajan and Heather Perlberg
November 1, 2021
https://finance.yahoo.com/news/zillow-seeks-sell-7-000-184559654.html
(Bloomberg) -- Zillow Group Inc. is looking to sell about 7,000 homes as it seeks to recover from a fumble in its high-tech home-flipping business.
The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Zillow will likely sell the properties to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private.
A representative for Zillow didn’t immediately comment.
The move to offload homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid. The company typically offers smaller numbers of homes to single-family landlords, but the current sales effort is much larger than normal.
If successful, the sale would make a dramatic dent in Zillow’s inventory. The company acquired roughly 8,000 homes in the third quarter, according to an estimate by real estate tech strategist Mike DelPrete.
Zillow shares dropped 8.6% to $96.61 on Monday. The stock had slipped 22% this year through Friday after nearly tripling in 2020. The company is scheduled to report earnings on Tuesday.
Read more: Zillow’s Zeal to Outbid for Homes Backfires in Flipping Fumble
Zillow recently said it would stop making new offers in its home-flipping operation for the remainder of the year, though it continues to close on properties that were already under contract. The decision came after the company tweaked the algorithms that power the business to make higher offers, leaving it with a bevy of winning bids just as home-price appreciation cooled off a bit.
An analysis of 650 homes owned by Zillow showed that two-thirds were priced for less than the company bought them for, according to an Oct. 31 note from KeyBanc Capital Markets.
“I think they leaned into home-price appreciation at exactly the wrong moment,” said Ed Yruma, an analyst at KeyBanc.
Zillow put a record number of homes on the market in September, listing properties at the lowest markups since November 2018, according to research from YipitData. It also cut prices on nearly half of its U.S. listings in the third quarter, according to Yipit, signaling that its inventory was commanding prices lower than it expected.
Read more: Cerberus Leads Wall Street Landlords Finding Hidden Homes to Buy
Led by Chief Executive Officer Rich Barton, 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 property is worth. The popularity of the company’s apps and websites fuels profits in Zillow’s online marketing business.
But more recently it has been buying and selling thousands of U.S. homes, practicing a new spin on home-flipping called iBuying that seeks to offer sellers a better way of selling a home.
Zillow invites owners 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.
The company bought more than 3,800 houses in the second quarter, making progress toward its stated goal of acquiring 5,000 homes a month by 2024. The increase in purchases left the company struggling to find workers to renovate the properties.
Read more: Wall Street’s Favorite Suburban Housing Bet Is Getting Crowded
Zillow and its chief iBuying competitors, Opendoor Technologies Inc. and Offerpad Solutions Inc., often sell homes to single-family landlords in the normal course of business. Investors bought roughly 9% of all homes Zillow sold in the first quarter of 2021, Bloomberg previously reported.
Investors have been buying single-family rental homes during the pandemic, chasing the inventory-starved housing market for properties they can buy and rent. That should help Zillow find buyers, said Rick Palacios, director of research at John Burns Real Estate Consulting.
“I bet Zillow can sell to single-family landlords at a profit given how hungry those groups are for inventory,” he said.
<<<
Fundrise - >>> 3 Ways to Earn Big Returns Without the Shaky Stock Market
Don't limit yourself to the stock market. These alternatives can trounce the S&P 500.
MoneyWise
by Rona RichardsonBy Rona Richardson
Oct. 28, 2021
https://moneywise.com/investing/investing-basics/3-ways-to-invest-outside-of-the-stock-market?utm_source=syn_oath_mon&utm_medium=B&utm_campaign=19414&utm_content=oath_mon_19414_new+investing+platform
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Final Thoughts
You don’t need to limit yourself to the stock market in order to invest successfully.
These three investment ideas aren’t typical, but nonetheless real. Maybe reading about these alternatives will inspire you to think outside of the box when looking for interesting places to invest your own money.
Always remember to consult with a financial advisor to discuss the merits of your ideas and associated risks.
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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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