Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

The Vanguard REIT Index ETF (NYSEARCA:VNQ) was trading as low as $19.95 in March 2009. The index is currently trading at $70.18, or 251.8% above the low made in March 2009.

(click to enlarge)

In this article I will feature two REITs that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.

1. Northern Property Real Estate Investment Trust (OTC:NPRUF) operates as an unincorporated open-ended real estate investment trust in Canada.

Insider buying by insider (last 30 days)

  • Kevin Grayston purchased 1,500 shares between May 15 - June 13 and currently holds 3,000 shares or less than 0.1% of the company. Kevin Grayston serves as a director of the company.

  • Christine McGinley purchased 875 shares between June 5-6 and currently holds 875 shares or less than 0.1% of the company. Christine McGinley serves as a director of the company.

  • Bo Rasmussen purchased 1,515 shares on June 7 and currently holds 6,664 shares or less than 0.1% of the company. Bo Rasmussen is a senior officer of the company.

  • Clifford Wilson purchased 1,500 shares between May 29 - June 7 and currently holds 1,500 shares or less than 0.1% of the company. Clifford Wilson serves as a director of the company.

Insider buying by calendar month

Here is a table of Northern Property Real Estate Investment Trust's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
June 20133,8900
May 20131,5000
April 201300
March 20132,3380
February 20136420
January 20134320

The month of June has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on May 8 with the following highlights:

Revenue$41.9 million
Net income$17.3 million
Funds from operations [FFO]$15.9 million
Net debt$560.7 million

Risks

All real property investments are subject to elements of risk. Such investments are affected by general economic conditions, local real estate markets, supply and demand for leased premises, competition from other available premises and various other factors.

My analysis

There have been four different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has insider ownership of 14%. The stock is trading at a P/E ratio of 10.69 and the stock has a dividend yield of 5.6%. The company has a book value of $25.17 per share. I believe the stock could be a good pick at the book value.

2. Retrocom REIT (OTC:RTRCF) operates as an open-ended real estate investment trust company in Canada.

Insider buying by insider (last 30 days)

  • Mauro Pambianchi purchased 13,900 shares on May 27 and currently holds 90,000 shares or 0.1% of the company. Mauro Pambianchi serves as a director of the company.

  • Edward Dato purchased 10,000 shares on May 27 pursuant to a public offering. Edward Dato currently holds 81,000 shares or 0.1% of the company. Edward Dato serves as a director of the company.

  • Patrick Lavelle purchased 15,000 shares between May 23-27 and currently holds 73,270 shares or 0.1% of the company. Patrick Lavelle is Independent Chairman of the Board of the Trustee.

  • Hani Zayadi purchased 27,000 shares on May 27 and currently holds 57,000 shares or less than 0.1% of the company. Hani Zayadi serves as a director of the company.

Insider buying by calendar month

Here is a table of Retrocom REIT's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
May 201365,9000
April 201300
March 201300
February 201300
January 201300

The month of May has seen all of the insider buying this year.

Financials

The company reported the first-quarter financial results on May 9 with the following highlights:

Revenue$21.9 million
Net income$8.2 million
Funds from operations [FFO]$7.2 million
Cash$34.7 million
Debt$429.7 million

On May 27, the company closed a $86 million financing.

Competition

The real estate business is competitive. Numerous other developers, managers and owners of retail properties compete with Retrocom in seeking tenants. Some of the properties located in the same markets as Retrocom's properties are newer, better located, less levered or have stronger anchor tenants than Retrocom's properties. Some property owners with properties located in the same markets as Retrocom's properties are better capitalized and stronger financially and hence better able to withstand an economic downturn. The existence of developers, managers and owners in such markets and competition for Retrocom's tenants could have an adverse effect on Retrocom's ability to lease space in its properties in such markets and on the rents charged or concessions granted, and could adversely affect Retrocom's revenues and its ability to meet its debt obligations.

My analysis

There have been four different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The stock is trading at a P/E ratio of 3.82 and the stock has a dividend yield of 8.8%. The company has a book value of $5.61 per share. I believe the stock could be a good pick below the book value.

Source: 2 REITs With Recent Intensive Insider Buying