Capt. Brian - Here is how Ben Graham would have described the choppy water vs. the "sleep well at night" water:
“An investment operation is one which, upon thorough analysis, promises safety of principal and satisfactory return. Operations not meeting these requirements are speculative.”
I think you are wise bringing the ship into a safe harbor. Some of the "low payers" you referenced include O, NNN, WPC, MPW, HTA, VTR, ARCP, KIM, REG, and STAG, I plan to post my Top 10 List later today....
Thanks and Best of Luck with your Sleep Well at Night Picks in 2013....Brad
montrachet - Thanks for your comments...The reason I compared on O to LTC is because I consider LTC to be a net lease REIT with 1 category (health care) and 33 different tenants.
Now, comparatively speaking, O has 144 different tenants and 44 categories....and, as noted, O has NEVER cut its dividend.
In the 1990's I was developing singe tenant properties and I met Tom Lewis (CEO of O) when I was trying to sell some of my Econo Lube N Tune stores...Back then, O was predominantly an owner of stand-alone retail (O's first tenant was Taco Bell)....however, today O is a highly diversified REIT with retail just one component....as you call tell with tenants like KO, CAT, DEO, etc...
I am not advocating a rush to sell LTC...I hope the article provided a balance of risk and return....Thanks for your comments and best wishes in the new year. Brad
socksycat - I was just responding to a comment from a previous Seeking Alpha article on OHI (http://seekingalpha.co...) and one reader provided this comment below...It provides valuable inside intelligence relative to the skilled nursing sector:
Brad-I have been in the LTC business for almost 20 years.. I would suggest that their are many other revenue risks facing LTC operators over the next 5 years.... 1.) Loss of Medicare Bad debt at 100% for Dually eligilbe residents... This is being phased down to 65% over 3 years.... This is a significant loss, way more than the 2% being discussed in your article.. Currenltly there is a $142.50 copay after day 20 and if the resident doesn't have a supplemental policy and they are medicaid eligible some states don't pay anything.. This leaves the provider with a $142.50/day bad debt which Medicare has picked up at 100%. Once the bad debt provisions are fully phased in to only 65% operators will be loosing about $49.88/day from their Medicare Bad Debts, which is about 10% reduction on legnth of stays over 20 days. 2.) Obama Care- This is going to hit skilled nursing operators in a big way.. today a very small % of the work force has health care and once operators are forced to either provide it or pay a penaly of almost $2-$3,000 per employee it is going to be a big hit to LTC operators. 3.) Bundled payments, 4.) The federal and state goverments moving to managed care for Medicaid and Medicare 5.) RAC Audits with extrapolation of error rates across 100% of the claims for upto 36 months!!!
I think you will see continued deline in EBIDTAR coverage ratios over the next 5 years... Not sure it will get anywhere near 1:1 but they will be declining a fair amount...
I would just caution investors that there is more risk to the LTC sector than meets the eye.... I should know, I own one!!
Omega Healthcare: Is The Highest Paying Dividend REIT In The Healthcare Sector Sustainable? [View article]
tennkid - Thanks for your comments...I wrote on the REIT, LTC, yesterday...http://seekingalpha.co...
Several readers asked me about the risks in skilled nursing....you did a great job replying so I will post your comment to that article....Thank you for this inside intelligence as that is what makes Seeking Alpha such a valuable resource. Happy New Year, Brad
Soar To Fiscal Cliff Safety With These Sleep Well At Night REITs [View article]
gpaulallen - Thanks for reading and we share the same resolution: making money....I appreciate your comments and here is a link to my Forbes newsletter...the first issue is free: http://bit.ly/RdbmPT
Soar To Fiscal Cliff Safety With These Sleep Well At Night REITs [View article]
Bob J- You are absolutely right....I also like ACC and the ONLY thing that I see wrong with the stock is the flat dividend. I interviewed Bill Bayless, the CEO, last year and asked him about it....his answer was along the lines of "we will consider it"....remember, ACC has not raised its quarterly dividend in 7 years (pays a .3375 dividend every quarter)....but you are also right, this is one heck of a growth stock....
Have you looked at EXR (Extra Space Self Storage)...this is a good example of a hybrid (growth and income play).....similar to ACC - in that the growth is exceptional....but also the REIT is growing its dividend nicely...54% total return (over last 12 months).....
One final thing...both sectors (campus housing and self storage) are fragmented sectors meaning there is considerable opportunity for growth and branding.....Thanks and Happy New Year. Brad
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
GlowWorm - Hello and Thanks for commenting. I don't think the "brick and mortar" debate is a "yes" or 'no" proposition. I think we will continue to see an evolution .... that will mean some failures and some successes.
In retail, I focus more on the "necessity" based tenants...the grocery stores, dollar stores, drug stores, auto parts, etc..
I am actually working on a Barnes & Noble property now....As you mention, the book store sector is under pressure but in the case of my deal, there is considerable upside if Barnes & Noble vacates....so in real estate, it all goes back to location, location, location....
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
davidbc - Thanks for reading. One good thing about CBL is the considerable inside ownership....the Lebovitz family know how to run a mall....Happy New Year. Brad
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
Alvin5007 - I like CBL...not as much as SPG or TCO though.....I know several of the executives at CBL and I know, first hand, the REIT has very good management. Also, the mall in my home town (in SC) is a CBL mall so I get a "real time" feel of CBL's performance.
In fact, CBL has a shopping center beside the mall. Several of the larger tenants relocated to a better site and I was concerned that CBL would not be able to fill up the center. However, all of the larger vacancies are now leased....
Several concerns for me: (1) high debt market cap of 48% (2) no investment grade rating (3) modest dividend growth ... was .8400 in 2011 and .8008 in 2011. (4) modest dividend 4.15%
The occupancy has improved from 91.8% in Q1-12 to 93% in Q3-12.....
Bottom line is is that CBL's mall portfolio is not as high quality as TCO or SPG....so I consider CBL to be a B+ REIT with an C+ dividend....no value for me.....Thanks, Brad
swingtrades - Thanks for reading and connecting. First off, I think it is important to distinguish the difference between equity and mortgage REITs. The REITs you have identified are mortgage REITs.
I am not a big fan of mortgage REITs as I do not think they belong in a retirement account. I have written a few articles on SA providing factual (and historical) data that demonstrate equity REITs outperform mortgage REITs over time.
I am also a bullish REIT investor (I used to have 99% in real estate....not a good idea...save that story for another day). I am a strong advocate that investors should have around 10% in REITs...and potentially more. I am writing a Forbes article now on the subject of "REITs Should Be a Core Asset Class".
Now, some of the REITs you should research include O, NNN, OHI, MPW, HTA, STAG, KIM, TCO, SPG, ACC, EXL, ROIC, VTR, WPC, LSE, and OLP. (I have written on most of these in 2012).
Also, here is a link to my newsletter that I'm launching in a few days:http://bit.ly/RdbmPT
Let me know if I can help and Happy New Year. Brad
Is LTC The Right REIT For Me? [View article]
Is LTC The Right REIT For Me? [View article]
“An investment operation is one which, upon thorough analysis, promises safety of principal and satisfactory return. Operations not meeting these requirements are speculative.”
I think you are wise bringing the ship into a safe harbor. Some of the "low payers" you referenced include O, NNN, WPC, MPW, HTA, VTR, ARCP, KIM, REG, and STAG, I plan to post my Top 10 List later today....
Thanks and Best of Luck with your Sleep Well at Night Picks in 2013....Brad
Is LTC The Right REIT For Me? [View article]
Is LTC The Right REIT For Me? [View article]
Now, comparatively speaking, O has 144 different tenants and 44 categories....and, as noted, O has NEVER cut its dividend.
In the 1990's I was developing singe tenant properties and I met Tom Lewis (CEO of O) when I was trying to sell some of my Econo Lube N Tune stores...Back then, O was predominantly an owner of stand-alone retail (O's first tenant was Taco Bell)....however, today O is a highly diversified REIT with retail just one component....as you call tell with tenants like KO, CAT, DEO, etc...
I am not advocating a rush to sell LTC...I hope the article provided a balance of risk and return....Thanks for your comments and best wishes in the new year. Brad
Is LTC The Right REIT For Me? [View article]
Is LTC The Right REIT For Me? [View article]
Brad-I have been in the LTC business for almost 20 years.. I would suggest that their are many other revenue risks facing LTC operators over the next 5 years.... 1.) Loss of Medicare Bad debt at 100% for Dually eligilbe residents... This is being phased down to 65% over 3 years.... This is a significant loss, way more than the 2% being discussed in your article.. Currenltly there is a $142.50 copay after day 20 and if the resident doesn't have a supplemental policy and they are medicaid eligible some states don't pay anything.. This leaves the provider with a $142.50/day bad debt which Medicare has picked up at 100%. Once the bad debt provisions are fully phased in to only 65% operators will be loosing about $49.88/day from their Medicare Bad Debts, which is about 10% reduction on legnth of stays over 20 days. 2.) Obama Care- This is going to hit skilled nursing operators in a big way.. today a very small % of the work force has health care and once operators are forced to either provide it or pay a penaly of almost $2-$3,000 per employee it is going to be a big hit to LTC operators. 3.) Bundled payments, 4.) The federal and state goverments moving to managed care for Medicaid and Medicare 5.) RAC Audits with extrapolation of error rates across 100% of the claims for upto 36 months!!!
I think you will see continued deline in EBIDTAR coverage ratios over the next 5 years... Not sure it will get anywhere near 1:1 but they will be declining a fair amount...
I would just caution investors that there is more risk to the LTC sector than meets the eye.... I should know, I own one!!
Regards
Omega Healthcare: Is The Highest Paying Dividend REIT In The Healthcare Sector Sustainable? [View article]
Several readers asked me about the risks in skilled nursing....you did a great job replying so I will post your comment to that article....Thank you for this inside intelligence as that is what makes Seeking Alpha such a valuable resource. Happy New Year, Brad
Soar To Fiscal Cliff Safety With These Sleep Well At Night REITs [View article]
Happy New Year, Brad
Soar To Fiscal Cliff Safety With These Sleep Well At Night REITs [View article]
Have you looked at EXR (Extra Space Self Storage)...this is a good example of a hybrid (growth and income play).....similar to ACC - in that the growth is exceptional....but also the REIT is growing its dividend nicely...54% total return (over last 12 months).....
One final thing...both sectors (campus housing and self storage) are fragmented sectors meaning there is considerable opportunity for growth and branding.....Thanks and Happy New Year. Brad
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
In retail, I focus more on the "necessity" based tenants...the grocery stores, dollar stores, drug stores, auto parts, etc..
I am actually working on a Barnes & Noble property now....As you mention, the book store sector is under pressure but in the case of my deal, there is considerable upside if Barnes & Noble vacates....so in real estate, it all goes back to location, location, location....
Happy New Year. Brad
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
In fact, CBL has a shopping center beside the mall. Several of the larger tenants relocated to a better site and I was concerned that CBL would not be able to fill up the center. However, all of the larger vacancies are now leased....
Several concerns for me: (1) high debt market cap of 48% (2) no investment grade rating (3) modest dividend growth ... was .8400 in 2011 and .8008 in 2011. (4) modest dividend 4.15%
The occupancy has improved from 91.8% in Q1-12 to 93% in Q3-12.....
Bottom line is is that CBL's mall portfolio is not as high quality as TCO or SPG....so I consider CBL to be a B+ REIT with an C+ dividend....no value for me.....Thanks, Brad
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
Retail REITs Outperform: Some Things Can't Be Replicated Online [View article]
Intelligent REIT Investing: Consistency Always Wins [View article]
I am not a big fan of mortgage REITs as I do not think they belong in a retirement account. I have written a few articles on SA providing factual (and historical) data that demonstrate equity REITs outperform mortgage REITs over time.
I am also a bullish REIT investor (I used to have 99% in real estate....not a good idea...save that story for another day). I am a strong advocate that investors should have around 10% in REITs...and potentially more. I am writing a Forbes article now on the subject of "REITs Should Be a Core Asset Class".
Now, some of the REITs you should research include O, NNN, OHI, MPW, HTA, STAG, KIM, TCO, SPG, ACC, EXL, ROIC, VTR, WPC, LSE, and OLP. (I have written on most of these in 2012).
Also, here is a link to my newsletter that I'm launching in a few days:http://bit.ly/RdbmPT
Let me know if I can help and Happy New Year. Brad