Seeking Alpha

Brad Thomas

 
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  • I'm Glad I Have This West Coast Gem In My REIT Portfolio
    Editors' Pick • Aug. 20, 2014 ROIC 25 Comments

    Summary

    • I remember building a shopping center in a rural market around twenty years ago and I had steel in the air before signing the first lease.
    • So now you have it, I’m extraordinarily critical when it comes to Shopping Center REITs.
    • One of my biggest lessons as a real estate developer was to only invest in high-quality markets; that’s where property fundamentals are the strongest.
    • With an expanded institutional base, ROIC shares are becoming harder to pick up “on the cheap” and the high-quality asset mix is highly correlated to the current valuation premium.
  • Should An Intelligent Investor Buy This Cyber-Focused Office REIT?
       • Aug. 19, 2014 OFC 10 Comments

    Summary

    • COPT does not focus on leasing to tenants engaged in weapon system production.
    • COPT has a strategic tenant niche that provides real estate solutions serving a specialized cyber-based platform.
    • The dividend cut in 2012 was substantial, and since that time, the company has generated reduced earnings (FFO per share).
    • I can't justify an investment in this REIT without adequate protection of principal.
  • Sleep Well At Night With These 5 REIT CEOs Behind The Wheel
    Aug. 19, 2014 FRT, NNN, O 32 Comments

    Summary

    • It’s important to think like an owner, not an investor.
    • “It must never be forgotten, that a stockholder is an owner of the business and an employer of its officers.” Ben Graham.
    • “What separates the winners from the losers is how a person reacts to each new twist of fate.” Donald Trump.
    • When a company has a consistent record of paying and increasing its dividend, it prompts me to believe that the management team is committed to investors.
  • A Few REIT Lessons Targeted For Millennial Investors
    Aug. 18, 2014 HTA, O, DLR 47 Comments

    Summary

    • The common denominator for all millennials is that they have all been exposed to the most catastrophic financial event of the century – The Great Recession.
    • It was not only the millennials who were touched by the Great Recession, it was just about everyone.
    • I was not born as a value investor but after experiencing significant losses stemmed by the Great Recession, I have reincarnated as more risk-averse investor seeking one investment objective.
    • It became increasingly clear to me that I could build back my investment portfolio but I first had to tap into my God-gifted intellectual property.
  • Could New York REIT Be A Takeover Target?
    Aug. 15, 2014 NYRT 41 Comments

    Summary

    • According to sources, NYRT is paying an estimated 4.75% cap for the Twitter building and that will basically max out the credit facility.
    • Why wouldn't Empire State Trust acquire NYRT?
    • NYRT’s mastermind, Nicholas Schorsch, has shown a propensity to sell so that he can publicize a "win" and sell more non-traded shares - where his bread is really buttered.
  • I'm Staying On The Gramercy Property Trust Train
    Editors' Pick • Aug. 14, 2014 GPT 10 Comments

    Summary

    • Since my initial investment my total return in Gramercy is over 55% (since September 3, 2013).
    • In order for Gramercy to “move the needle” it must continue to feed the engine with accretive high-quality net lease investments.
    • So unlike the majority of Gramercy’s peer group, the majority of total return for this security is derived from capital appreciation.
    • It’s clear that Gramercy has had a nice run but based upon the trends unfolding I see more potential.
  • A Few Net Lease REITs To Avoid
    Editors' Pick • Aug. 13, 2014 GPT, SIR, OLP 48 Comments

    Summary

    • It’s important however that investors shouldn’t paint all Net Lease REITs by the same brush, that is, be careful not to purchase a Net Lease REIT without ample due diligence.
    • While I consider the O, NNN, and WPC to be high-quality REITs worthy for most any investor portfolio, the best time to purchase these stocks is when on sale.
    • Most other investors are preoccupied with how much money they can make and not at all with how much they may lose.
  • Here's A Cool Way To Soak Up The Dividends With This Net Lease REIT
    Editors' Pick • Aug. 12, 2014 EPR 36 Comments

    Summary

    • Unlike Windstream who has proposed to convert to a REIT by entering into long-term telephone line leases, EPR Properties has a uniquely-positioned business model that requires knowledge.
    • EPR does not contend directly with most Triple Net REITs and as a result, the company has been able to source new investments with less competition.
    • The 6.29% dividend yield represents an extremely attractive opportunity for yield-hungry investors in today's low interest rate environment.
    • I like EPR’s uniquely-positioned net lease platform and it’s clear that the management team has done an outstanding job recovering from the dividend cut a few years ago.
  • Nobody Does It Better Than Kimco, I Feel Sad For The Rest
    Editors' Pick • Aug. 11, 2014 KIM 21 Comments

    Summary

    • Beyond the desire to have vetted and trusted management working for me, I’m also interested to own a security that assures uniquely-positioned value.
    • In an internet/e-commerce world, I also strongly believe the neighborhood shopping centers will continue to perform well because they are all about essential goods and services.
    • All of the cylinders are clicking for Kimco – leasing spreads up 9.7%, small shop occupancy up 200 bps, and steady acquisitions and pruning.
  • iREIT TV: Avoid the 3 Ts; Nothing But Net-Lease
    Aug. 11, 2014 ARCP, CSG, NLY 10 Comments

    Summary

    • Scroll down to watch this YouTube video featuring veteran Net Lease REIT CEO, Chris Volk.
    • Superior risk-adjusted returns drove investors to well-tenanted net lease assets during the Great Recession.
    • The Triple Net REIT sector is exploding as evidenced by the number of non-listed and publicly-listed entrants including American Realty Capital Properties, Chambers Street Group, and even Annaly Capital.
  • REIT Conversions Offer Valuable Clues As To The Strength Of This Bedrock Asset Class
    Aug. 7, 2014 ARCP, OUT, CORR 26 Comments

    Summary

    • From its beginning, the REIT approach to real estate investment established by Congress contemplated land and the improvements on it.
    • Everything that we’ve been seeing over the last 50+ years, including a fiber-optic cable network, fits in the definition that Congress laid out in 1960.
    • What has changed is that investors who thought REITs were sleepy have realized that they’ve provided stronger returns than other investments for a long, long time.
    • There are more than 200 publicly traded REITs, and the majority of them have come from IPOs of companies that were privately held.
  • IREIT TV: An Exclusive Interview With ARCP's David Kay
    Aug. 6, 2014 ARCP 31 Comments

    Summary

    • Scroll down to watch this 10 minute video with David Kay, President (and CEO-elect) of ARCP.
    • I’ll be brutally honest; it took guts for me to buy shares in ARCP after an onslaught of significant transactions that began to spook Mr. Market.
    • So, the decision I made on June 13th to buy ARCP was a good wager.
    • I bought in at $11.95 and the dividend yield was almost 8.4%.
  • iREIT TV: Exclusive Interview With CEO Of Healthcare Trust Of America
    Aug. 5, 2014 HTA 6 Comments

    Summary

    • Check out this exclusive iREIT TV interview with the CEO of Healthcare Trust of America's CEO, Scott Peters.
    • Since HTA only owns medical office buildings, the investment proposition offers defensive attributes including a growing physician healthcare provider group seeking to locate at or near hospital systems.
    • I was hoping for more than a 1% increase, but at least the dividend is headed in the right direction.
  • Show Me The Money: The Perils Of REIT ETF Investing
    Aug. 4, 2014 ARCP, DLR, O 77 Comments

    Summary

    • An unstated, though fundamental, element to purchasing many of the widely held equity index ETFs: Buying the good, the mediocre and the bad equities.
    • Peter Lynch, one of the greatest investors of all time, calls this "di-worse-ification.".
    • The investment relationship with ETFs is complicated. Investors shouldn’t get lulled into accepting consistent, slight underperformance, because of a desire to avoid large deviations from index returns.
    • I can’t provide you with specific details because I owe my dedicated subscribers the content; however, I can tell you that my tactically-weighted portfolio has returned over 21% year-to-date.
  • Pebblebrook Hotel Trust - A Luxury Brand To Consider
    Editors' Pick • Aug. 4, 2014 PEB 19 Comments

    Summary

    • In other words, the word luxury is synonymous with the Trump brand and if I did not know any better, I would have thought that Donald Trump created it.
    • When it comes to luxury-based products, loyal patrons will buy beyond traditional purchases, almost immune to price – kind of the complete opposite of a value investor, eh?
    • Although the P/FFO multiple denotes opulence, the durable growth prospects and strong balance sheet provide comfort with the contemplated entry price.
    • There are just a handful of REITs that I would consider buying with P/FFO multiples above 18x and Pebblebrook is one of them.
  • Digital Realty Has A Powerful Moat Of Dividend Repeatability
    Editors' Pick • Jul. 31, 2014 DLR 55 Comments

    Summary

    • Although Mr. Market oftentimes ignores the true long-term profits that are the basis for a wide moat, he eventually becomes more rational in nature and provides a more accurate representation.
    • A wide moat business, purchased at the right price, is the ultimate “sleep well at night” investment, and I recognized that opportunity in December 2013.
    • "This mutual attraction and our interconnected global portfolio essentially act as a wide moat that is extremely difficult for competitors to replicate." - Bill Stein of Digital Realty.
  • I'm Happy To See This Healthcare REIT Spreading The Love
    Jul. 30, 2014 HTA 24 Comments

    Summary

    • Today, HTA’s board of directors sent me an early Valentine’s Day gift by declaring a cash dividend for the third quarter of $0.145 per share.
    • Although I was hoping to see a more substantial boost, the recent dividend news gives me a better feeling that management at HTA is committed to shareholders.
    • My latest purchase was on December 3, 2014 and my total return is up 24%.
  • Will The Lobster Deal Be A Tipping Point For This Net Lease REIT?
    Jul. 30, 2014 ARCP 39 Comments

    Summary

    • "In the end, Tipping Points are a reaffirmation of the potential for change and the power of intelligent action. - Malcolm Gladwell, The Tipping Point.
    • "The name given to that one dramatic moment in an epidemic when everything can change all at once is the Tipping Point." - Gladwell, The Tipping Point.
    • I believe the Red Lobster deal is a "tipping point" for ARCP and with over $2 trillion of opportunities in the highly fragmented Net Lease sector.
  • The Day I Was Surrounded By Market Timers
    Jul. 29, 2014 HCP, O, OHI 50 Comments

    Summary

    • As soon as the first stock chart went on the screen I knew that I was not in Kansas anymore.
    • To put it bluntly, I was witnessing a form of gambling in which there was no valuation analysis whatsoever – just plain and simple speculation.
    • Many ordinary investors all too often act on inflection sentiments when they buy and sell stocks, always looking for instant gratification.
  • Be Prepared For Mid-Year REIT Results, Part 3
    Jul. 28, 2014 DOC, GPT, HCT 11 Comments

    Summary

    • I currently own 19 REIT securities and in this third edition, I will provide the final forecast that includes 5 of the REITs that I own.
    • Maybe Gramercy (GPT) won’t be Babe Ruth (714 HR’s) in 2014 but I’ll settle for Sammy Sosa (609 HR’s).
    • It takes only a few large losses to decimate overall investment performance, even if many other investments prove successful.
  • Can Red Lobster Claw Back Its Once Loyal Customers?
    Editors' Pick • Jul. 28, 2014 ARCP 101 Comments

    Summary

    • Over the century brands have become less about trust and more about certainty, instead becoming advertising catchphrases designed to appeal to customers.
    • People often seek out the closest Starbucks location in a cult-like ritual where the brands trademark is only recognizable by a text-less logo of the mythological Norse Queen.
    • It’s clear that there are lessons learned from the Starbucks transformation and hopefully Golden Gate and Red Lobster can learn from the coffee king.
    • Red Lobster has an uphill battle and the key to predicting the success of the fading brand is to claw back loyal customers.
  • Finding A Margin Of Safety In Realty Income
    Editors' Pick • Jul. 28, 2014 O 63 Comments

    Summary

    • I was not a buyer when shares were trading at over $55.00 a share in May (2013) and I waited on the right pitch to get in the game.
    • Every investor has his or her own risk tolerance level and that simply means that it comes down to how much you can afford to lose.
    • Unfortunately I cannot help you swing the bat, only you can do that.
  • Be Prepared For Mid-Year REIT Results, Part 2
    Jul. 25, 2014 ARCP, CSG, EXR 27 Comments

    Summary

    • Earnings results aren't meant to deceive investors, but it's up to the prospective investor to bifurcate the wheat from the chaff.
    • Once you have a sense of a company's financial health, it's time to check out the earnings call transcript.
    • As an investor in any public company, you are actually paying a fraction of the CEO's salary.
  • Be Prepared For Mid-Year REIT Results
    Jul. 23, 2014 ARCP, DLR, HTA 39 Comments

    Summary

    • As elegant as a headline is that boasts “ABC Company Beats Guidance”, it’s important that investors don’t distill a full quarter of results into a single number.
    • Whatever you’re considering, it’s important to compare apples to apples. That is, make sure that you’re comparing the growth rate of two numbers provided in the filing.
    • When I was a boy scout, I could easily recite the oath and I could never forget the scout’s motto: BE PREPARED.
  • It May Be Time To Check Into Chatham Lodging Trust
    Editors' Pick • Jul. 22, 2014 CLDT 36 Comments

    Summary

    • Chatham pursues a unique strategy of focusing on premium brand select service hotels such as Residence Inn, Homewood Suites, Hyatt Place, Courtyard and Hampton Inn.
    • Over the last 3 years Chatham has increased its annual dividend by an average of 11.1%.
    • Chatham is one of the cheapest Lodging REITs (based on P/FFO) in the peer group.
    • In a perfect world, I would like to own Chatham at $18.00, but that’s not reality.
  • Silly Rabbit, Dividends Do Matter In Retirement
    Editors' Pick • Jul. 21, 2014 O 282 Comments

    Summary

    • The most common reason for a company to avoid paying dividends is to avoid subjecting itself to capital market discipline.
    • The author went on to cite the “Joe and Theresa” analogy which (upon reading it) it clearly suggests that the author doesn't have the slightest understanding of the Modigliani-Miller theorem.
    • It’s not that investors have an “emotional” attachment to a dividend payment, it’s simply that dividends represent a commitment by the company to its shareholders.
    • Realty Income has built its brand value on 4 words: The Monthly Dividend Company.
  • An Intelligent Investor Should Consider REITs
    Jul. 18, 2014 ARCP 100 Comments

    Summary

    • In terms of investing, I would consider a “cheerleader” to be more of a public relations firm.
    • So while I may not be a “cheerleader” for REIT investing, I’m certainly a bullish proponent for the asset class.
    • If I’m every called a cheerleader, I prefer to be called the cheerleader who is known for protecting principal at ALL costs.
  • Whitestone Looks Cheap, Should I Make The Leap?
    Jul. 18, 2014 WSR 12 Comments

    Summary

    • Whitestone's non-credit oriented model is unique to the shopping center REIT space, but does the riskier revenue stream provide investors with out-sized opportunity?
    • The company's value proposition is to buy distressed assets and apply some TLC (tender loving care) and produce enhanced cash flow.
    • This REIT is cheap and I believe the shares don’t adequately reflect the risk premium.
  • Are There Any Blue Chip REIT Bargains?
    Jul. 15, 2014 DLR, ESS, FRT 92 Comments

    Summary

    • The name “blue chip” may have originated from the speculative game of poker.
    • I would never recommend buying a blue chip for the sake of owning a blue chip.
    • The blue chip REIT must have demonstrated a sustainable track record for contributing a long record of stable and reliable growth.
  • How Do You Buy An Irreplaceable Corner?
    Editors' Pick • Jul. 14, 2014 AMRE 8 Comments

    Summary

    • With 20 shopping center REITs today, the sector has become extremely crowded.
    • It’s extremely difficult to find a meaningful value proposition that translates into powerful forms of differentiation.
    • The only shopping center that I covet is Federal Realty.
    • If Regency expects to be successful in its bid to take over AmREIT, it will have to increase its offer significantly.
  • Will This Healthcare REIT Spread Some Dividend Love?
    Jul. 14, 2014 HTA 29 Comments

    Summary

    • HTA entered the MOB space at a perfect time – when new MOB development started to decline.
    • If I was a physician and I wanted to be as close to my customers as possible, where would I lease?
    • All I ask is for management to increase the dividend and spread the love.
  • Where Are The Digital Shorts Now?
    Editors' Pick • Jul. 10, 2014 DLR 131 Comments

    Summary

    • To me, it was obvious that the Highfields wager was foolish, since the data center landlord had strong operating fundamentals and an equally impressive balance sheet.
    • REITs have a much better barometer for valuing earnings, and if I were shorting a REIT today I would be focused on the stability of the dividend stream, not book.
    • Whenever the financial markets fail to fully incorporate fundamental values into securities' prices, an investor's margin of safety is high.
    • S&P just revised the outlook on Digital to stable from negative, as well as affirming the "BBB" corporate credit rating on the company.