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Brad Thomas

 
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  • Silly Rabbit, Externally-Managed REIT Tricks Are For Kids
    Editors' Pick • Wed, Jun. 18 SNH 33 Comments

    Summary

    • I have often argued that the externally-managed REIT model is inherently misaligned resulting from various conflicts of interests.
    • If Ventas doesn’t acquire HCT, the miserable investor will look foolish when he finds out he lost the buyer of his Ford pickup truck.
    • Although SNH has a disadvantage in terms of its exposure with one self-dealing tenant, the company does enjoy a competitive advantage in its balance sheet execution.
    • I just can’t come to grips with investing my hard-earned capital into an externally-advised REIT.
  • These REITs Should Weather The Storm
    Tue, Jun. 17 DLR, ELS, ESS 35 Comments

    Summary

    • It's much easier to predict the future value of a REIT due to the contractual make-up of the revenue streams.
    • Most high-income investments provide only income with little or no capital appreciation, but equity REITs produce both.
    • The companies that survive will be the fittest and most durable operators that have proven to be the most consistent over time.
  • A Net Lease REIT Differentiated By Discipline
    Editors' Pick • Mon, Jun. 16 NNN 26 Comments

    Summary

    • Somewhere National Retail Properties seems to get lost in the shuffle.
    • Unlike several of the larger net lease REITs, NNN focuses exclusively on "small-box retail" and the company maintains a consistent strategy of owning relatively smaller transactions.
    • Part of NNN's differentiated net lease approach is the higher cap rates that the company generates.
    • The most recent bit of good news for NNN has been the announcement by Susser to merge with Energy Transfer Partners.
  • I Found A Nice Margin Of Safety In Omega Healthcare Investors
    Editors' Pick • Wed, Jun. 11 OHI 64 Comments

    Summary

    • Following the principles of value investing, I look for stocks that are cheap, as I know that's the most reliable way to grow my nest egg.
    • My research and instinctive greed told me that there was added security in knowing that Omega had attractive long-term characteristics.
    • The dependability of the dividend is the primary reason that I own this stock, and I'm satisfied the shares will appreciate and provide me with a long-term winner.
  • Is Monmouth Ready To Run?
    Tue, Jun. 10 MNR 81 Comments

    Summary

    • The purpose for this more recent update on Monmouth is to determine whether or not this REIT could be a candidate in my investment stable.
    • So Monmouth has plenty of spark but is this horse ready to run?
    • As acquisition velocity continues, Monmouth’s recurring income (or AFFO) should provide more clarity as to whether a dividend increase is coming.
  • Healthcare Trust Of America's Selective Acquisition Strategy Pays Dividends
    Mon, Jun. 9 HTA 14 Comments

    Summary

    • It’s clear that without leveraging the portfolio HTA has not been in a position to raise its dividend; however, by adding more high-quality revenue, I suspect that HTA will soon.
    • HTA’s latest acquisition validates my thesis and I’m satisfied that the focused health care REIT will continue to seek high-quality MOB assets that will provide meaningful earnings power.
    • HTA shares should hit $13.00 soon (and keep climbing).
  • Ventas Is A Sleep Well At Night REIT That Lays Golden Eggs
    Editors' Pick • Mon, Jun. 9 VTR 74 Comments

    Summary

    • The man was never satisfied with his daily profit so he decided to foolishly slaughter the hen in hopes that there would be a treasury inside the hen.
    • By aggregating retail investors in the non-traded REIT space, Nicholas Schorsh has built an incredible machine that incubates REITs until they are ready to go public.
    • Dividends represent the “golden eggs” whereby investors can look for valuable clues that provide insight into future performance.
    • Given the company’s low cost of capital, any new investment (by Ventas) with a cash yield of 5.5% or higher should be accretive.
  • A Brand New Mortgage REIT That May Deliver Something Special
    Editors' Pick • Fri, Jun. 6 UDF 97 Comments

    Summary

    • UDF is a mortgage REIT with a differentiated model that provides debt and equity capital solutions to leading developers and home-builders.
    • UDF provides an investment alternative to regional banks and home-builders for investors to participate in the continuing U.S. housing recovery.
    • UDF raised around $615 million utilizing the RCS Capital (Nick Schorsch platform) model and during that time the company was able to aggregate loans that averaged around 13%.
    • I intend to monitor the shares to establish an entry price at around $19.00.
  • What's The Magic That Moves ARCP?
    Editors' Pick • Wed, Jun. 4 ARCP 268 Comments

    Summary

    • Given the extraordinary pace in which ARCP has announced these transactions, it clear that the market is confused.
    • Most investors don’t see the value in Cole Capital and it seems that is one of the reasons that the market is placing a lower value on ARCP shares.
    • No smoke and mirrors, just plain old dividend magic.
  • Is CyrusOne A Serious One For My REIT Portfolio?
    Tue, Jun. 3 CONE 10 Comments

    Summary

    • In terms of ownership, data centers are particularly unique in that they are one of the few sectors within real estate that really have a diverse investor base.
    • Admittedly, my skill set is real estate, and as much as I've tried to educate myself on the ever-expanding cloud-based platform, the business model is highly complicated and seems to make me drowsy.
    • So, as the title suggests, is CyrusOne a "serious one" for my REIT portfolio?
  • Gramercy Property Trust Leaves Them All In The Dust
    Editors' Pick • Mon, Jun. 2 GPT 35 Comments

    Summary

    • In September 2013 I decided it was time to “put some skin in the game” and I purchased shares at $4.19.
    • Gramercy is not only my best REIT pick but my best stock, period.
    • After a hiatus of more than five years, GPT announced (in March 2014) that the company was resuming its dividend payment to common stockholders.
    • Gordon Dugan and his team are hitting all cylinders and with a gas tank full of capital, I expect to see continued success.
  • Is American Realty Capital Properties' 8% Dividend Yield Built To Last?
    Editors' Pick • Fri, May. 30 ARCP 261 Comments

    Summary

    • Red Lobster once enjoyed a powerful competitive advantage in the restaurant space, it seems that the brand has significantly eroded and appears to be less sustainable over time.
    • When it comes to investing, those emotional less-than-rational decisions are marketing gold. It’s those that let companies charge a premium for their products, and investors that rake in the profits.
    • I consider the latest sell-off to be a selective buying opportunity. ARCP shares closed at $12.34 with a dividend yield of 8.10%.
    • I consider the latest sell-off to be a selective buying opportunity. ARCP shares closed at $12.34 with a dividend yield of 8.10%.
  • You Can't Trump This REIT
    Editors' Pick • Tue, May. 27 FRT 65 Comments

    Summary

    • A successful brand must be unique, and it must offer a differentiated product or service to be great.
    • It’s quite clear that the way that a REIT produces powerful sources of repeatable income is in the form of dividends.
    • Durability implies that a company can take a financial punch and come back swinging. In order to do that a company must enjoy a predictable earnings stream.
    • It’s important for me to own REITs just like Trump would own towers.
  • Where's The Dividend Growth For UMH Properties?
    Editors' Pick • Mon, May. 26 UMH 25 Comments

    Summary

    • I wasn’t looking for a tortoise as I was betting that UMH would perform more like a rabbit. What could I be missing?
    • UMH management makes a strong case that there is intrinsic value in the investments that are being made and that over the long-term the value of the company could provide investors with substantial appreciation.
    • A dividend cut would be costly and I need to make sure that I don’t fall victim to the temptation of chasing a high-paying REIT that offers modest growth.
    • It’s clear that UMH is not in a position to raise its dividend and that’s one of the primary reasons that the stock has underperformed the peer group.
  • Taubman Is A Time Tested REIT Brand
    Editors' Pick • Mon, May. 26 TCO 8 Comments

    Summary

    • It’s the durability component that makes a REIT brand truly attractive and what makes the underlying value increase substantially.
    • Buying a “blue chip” on sale can be awfully rewarding and I wish I was able to scoop up a number of gems late last year.
    • Taubman is an icon of operational excellence as the mall REIT has successfully orchestrated a showcase of prudent financial management.
    • Taubman would be a complimentary addition to my portfolio; however, I need to shy away from the instant gratification game and wait on a more attractive entry point.
  • An Inside Look At The 'Smoking Hot' Retail Opportunity Investments Corporation
    Thu, May. 22 ROIC 11 Comments

    Summary

    • Check out this video interview with Stuart Tanz, CEO of Retail Opportunity Investments Corporation.
    • This REIT is as hot as a firecracker and given the CEO’s (Stuart Tanz) drive for success, I suspect ROIC will top $20 by year-end.
    • ROIC is a solid REIT that trades at sound value (P/FFO of 18.1x).
  • Tanger Is A Highly Predictable Dividend Machine
    Thu, May. 22 SKT 8 Comments

    Summary

    • As the retail industry has evolved, Tanger was the first to grasp the retail distribution channel in which goods could enjoy a longer life cycle than the traditional clearance concept.
    • Earlier this week, I caught up with Tanger's CEO, Steve Tanger, to discuss his company's first-quarter earnings and its enviable brand of dividend repeatability.
    • Ben Graham has trained me to spot a bargain and although Tanger has a bargain-based model of repeatability, the shares don't indicate there's a sale today.
  • HTA Delivers On Its Dedicated Management Model
    Mon, May. 19 HTA 30 Comments

    Summary

    • As a result of the increased asset management and leasing platform, HTA is doing a majority of leasing and negotiations directly with tenants, reducing the overall cost paid to third-parties.
    • While visiting with members of the company’s executive management team I was able to meet with Amanda Houghton, Executive VP of Asset Management.
    • As further evidence of HTA’s improving circle of competence S&P recently upgraded HTA’s investment grade credit rating to BBB, with a stable outlook.
  • Schorsch Hooks A Big Lobster
    Fri, May. 16 ARCP 332 Comments

    Summary

    • Darden has a lot of real estate on the balance sheet - around 63% of assets - and that seems to be a significant element for the fortress-like brand.
    • The only REIT that could possibly take down Red Lobster's real estate (by itself) is American Realty Capital Properties.
    • Today ARCP announced that it had entered into an approximate $1.5 billion sale-leaseback transaction for over 500 Red Lobster restaurant properties.
  • This REIT 'Had Me At Hello'
    Mon, May. 12 ROIC 33 Comments

    Summary

    • It's rare that I give a rookie REIT the thumbs up on the first date; however, as Jerry Maguire said, "you had me at hello".
    • What impressed me most about ROIC is that the company started as a “blank check” Initial Public Offering, meaning that the REIT commenced with no assets and lots of cash.
    • ROIC’s FFO on a per-share basis also increased, notwithstanding a sizable increase in the shares outstanding due to over 21 million warrants being exercised since the beginning of 2013.
    • Although not a polished jewel then, my impulse told me that ROIC was going to be a big time contender.
  • Why Does Mr. Market Fear American Realty Capital Properties?
    Editors' Pick • Fri, May. 9 ARCP 236 Comments

    Summary

    • This is no fairy tale, especially when we are dealing with real money. This is not monopoly and I have a lot riding on ARCP.
    • ARCP’s latest quarter was significant based upon the fact that the New York-based REIT has demonstrated its synergistic complexities becoming simpler.
    • Since there is no operational risk associated with single-tenant investing, much of the net lease business is more about math than science.
    • Mr. Market does not comprehend the potential for ARCP and it clearly underestimates the rewards for growth.
  • Solid Quarter For This Life Science REIT
    Thu, May. 8 BMR 24 Comments

    Summary

    • Capital raising was spectacular in the first quarter with more than $23 billion of biotech financing and partnering transactions, again ahead of what was a very strong 2013 level.
    • Since going public almost ten years ago (August 4, 2004), BioMed has been able to carve out a growing niche and now the company has evolved into a highly innovative landlord.
    • I moved out of all of my shares in Medical Properties Trust due to under performance and increased competition in the hospital sector.
  • WPT Industrial Is A High-Paying Canadian REIT That Pays Monthly
       • Wed, May. 7 WPTIF 19 Comments

    Summary

    • One of the reasons that WPT listed on the Canadian exchange was the fact that the company could achieve more "shelf space" in Canada than in the US.
    • Based on US standards, WPT is a highly leveraged REIT.
    • WPT is trading at cheap valuation of 9.8x Price-to-Funds from Operations (P/FFO).
  • Why Should You Maintain A Balanced Diet Of REITs?
    Tue, May. 6 ARCP 40 Comments

    Summary

    • Great salsa is all about diversification. Only by adding diverse ingredients together can we achieve the desired outcome.
    • REITs have been around long enough (5 decades) and generated solid enough returns that I don't view REITs as an alternative class.
    • Since the emergence of the modern REIT structure, dividends have been a large factor in the outperformance of REITs relative to the broad equity market.
  • Healthcare Trust Of America Is As Pure As The Driven Snow
    Editors' Pick • Mon, May. 5 HTA 25 Comments

    Summary

    • As a "pure play" REIT, HTA is a dedicated owner of medical office buildings, with a portfolio of 114 buildings (and over 14.1 million square feet) in the 27 states.
    • HTA ended the quarter with excellent credit metrics, with debt-to-enterprise value of 31%, one of the lowest in our peer group, and debt-to-proforma EBITDA of 5.3 times.
    • This is a "pure play" bet that's paying off, and I believe the price could hit $13.00 – especially "when there's a dividend increase.".
  • What Is Your Risk Tolerance With American Realty Capital Properties?
    Thu, May. 1 ARCP 132 Comments

    Summary

    • If you're unwilling to take the chance that an investment that might drop in price, you have little or no risk tolerance.
    • Risk tolerance simply describes whether you invest in real estate, stocks, the quarter slot machine, high stakes blackjack, or stay at home with a piggy bank – or maybe a.
    • I believe that the market has demonstrated that ARCP has a high degree of risk and as we saw this week, a simple acquisition rumor caused shares to slide.
  • Why It's Important To Own Predictable REIT Stocks
    Editors' Pick • Tue, Apr. 29 AL, HCP, O 82 Comments

    Summary

    • The dividends that REIT investors receive out of earnings haven't been reduced by taxes at the corporate level, making REITs tax-efficient conduits for real estate income.
    • Over the past 20-plus years, listed equity REITs have provided 30% more dividend income than small-cap value stocks in the Russell 2000V, with 43% less variability.
    • Many REITs are now increasing dividend payouts, and that’s the best possible evidence that the security is safe and management has an alignment of interests.
  • The Smallest Health Care REIT That Pays The Highest Dividend
    Mon, Apr. 28 DOC 34 Comments

    Summary

    • When it comes to health care investing, DOC is a like a “kid in a candy shop.”.
    • DOC targets unleveraged investment returns between 7% and 10% and the company has in excess of $300 million of investment properties under review.
    • DOC's current dividend yield is 6.72% - the highest yield in the Health Care sector.
    • DOC’s IPO and secondary offering (in December) were oversubscribed by a significant amount and over 60% of the company’s shareholders are Institutional Investors.
  • Ventas Posts Another Solid Quarter And Enters The United Kingdom
    Mon, Apr. 28 VTR 21 Comments

    Summary

    • After the broad REIT sell-off last May, it seems that Mr. Market has finally begun to recognize Ventas for its "blue chip" credentials.
    • In the latest quarter, Ventas increased its cash flow by over 23% (since last year).
    • I would recommend buying Ventas shares on market weakness (under $60).
    • For an investor looking for "big 3" health care REIT exposure today, I believe that HCP represents the best opportunity.
  • Don't Follow The Herd, Consider STAG Instead
    Editors' Pick • Mon, Apr. 28 STAG 48 Comments

    Summary

    • In the world of investing there is a natural tendency to "follow the herd" and become fixated on the irrational exuberance of the market.
    • Given STAG's strong growth prospects and having switched to a monthly distribution, it seems likely that the company’s dividend expansion will grow in frequency.
    • By following the herd, some market timers may look at the one-time slide last week as weakness.
    • I believe STAG represents a strong buying opportunity and I'm moving my TARGET price to $25.00.
  • Ramco-Gershenson Is A REIT That Could Bounce Or Be Bought
    Editors' Pick • Thu, Apr. 24 RPT 10 Comments

    Summary

    • Ramco-Gershenson is trading at $16.16 a share with a Price to Funds from Operations (P/FFO) multiple of 13x. That’s around 15% below the peer average of 15.5x.
    • What’s even more interesting to me is the fact that Ramco-Gershenson is what I call a “tweener.”.
    • In REIT-dom the shopping center sector is getting crowded.
    • This REIT is “ripe” for a “combination” and the shares are somewhat attractive.
  • The REIT Way To Invest In A Wide Moat Of Dividend Repeatability
    Editors' Pick • Wed, Apr. 23 ESS, FRT, HCP 59 Comments

    Summary

    • The larger moats could enhance the defensive strategies and allow the royal families to remain competitive in battle.
    • Warren Buffett has used the term "wide moat" at least 20 times since 1986 to describe his investment process in annual letters to Berkshire Hathaway shareholders.
    • Companies with wide economic moats have a better chance of long-term survival, and they also help to protect revenue streams, profitability, and market share.
    • Much like the evolution of fortresses, REITs have also evolved (over 5 decades) into an asset class with wider economic moats that enjoy a better chance of long-term survival.