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Marc Gordon

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  • What Is The World's Largest Net Lease REIT Worth? [View article]
    Thank you for this very interesting analysis Brad! I think part of the value of this is general education of what goes into NAV calculations, as well as that it gives readers a basis for figuring out where they agree and disagree with your valuations, adjusting the figures of your model to their expectations (such as cap rates, Cole's value, etc.) and being able to come up with their own estimate of NAV.
    I also like charleyzap's comments, although I must note that if "triple net REITs have become a bond substitute" then ARCP must be the junk bond substitute.
    Jan 29, 2015. 12:24 PM | 3 Likes Like |Link to Comment
  • 5 Reasons I Am Accumulating A Long-Term Position In Verizon [View article]
    Frank you make an excellent point. I am a current Verizon subscriber and I cannot say that I am a happy customer. However, they are still better than ATT, S, and TMUS. In a business with a huge moat and as essential and massive as wireless, you don't have to be good, you just have to be better than the competition, have adequate financials, and have a sustainable dividend to be a worthwhile investment, and VZ qualifies.
    Jan 28, 2015. 11:19 PM | 1 Like Like |Link to Comment
  • Beware Of The Sucker Yield: Bumpy Roads Ahead For Wheeler REIT [View article]
    Brad, I have always liked the rather pithy definition of "sucker yield" that I read back in the April 2008 edition of Morningstar DividendInvestor (on page 15) "I can see that I fell for just the kind of “sucker yield” that I’ve been warning investors against for years. Their fat dividends were not a way of rewarding investors for steady business success, but rather a “bribe” to draw capital into a risky operation."
    Jan 28, 2015. 02:41 PM | Likes Like |Link to Comment
  • Camden Property Trust: Peering Inside The Strong Balance Sheet [View article]
    Interesting article ColoradoWealthManageme... but do you recommend buying CPT? I note that the yield, at 3.3%, is a bit on the low side, and your conclusion seems more like 'it's okay but ...' rather than a recommendation. Am I reading between your lines correctly?
    Jan 26, 2015. 10:36 PM | Likes Like |Link to Comment
  • Realty Income Corp: Why Now's A Good Time To Sell [View article]
    ron3637, I strongly recommend that you consider O, NNN, WPC, and HTA. All are extremely well run, financially strong, and are consistent and reliable dividend payers. I put my money where my mouth (keyboard?) is years ago and bought these (along with REITs having more risk), and I have always considered in retrospect the decisions to buy these four REITs were a very smart thing to have executed. I expect that I will maintain my positions in these for many years to come, and sleep well at night with them. Quality REITs like these have run up in price over the last few years (similar to just about all good dividend payers) so you also need to consider what you think will be an acceptable (and achievable) entry price. Best of luck to you!
    Jan 18, 2015. 01:15 PM | 3 Likes Like |Link to Comment
  • Realty Income Corp: Why Now's A Good Time To Sell [View article]
    Casey, I have to respectfully disagree with you on this. I think your thesis is flawed when you use only a recent two year period, comprised of a single down and uptrend in rates, to draw the conclusion that this indicates an inverse correlation between interest rates and REIT prices. This is an improper analysis from a statistical point of view. One could just as easily choose one of many other two year periods that show the opposite. For example, during the period June 2004 through June 2006 the Fed raised rates 17 times over the two-year period: from 1.00% to 5.00%. Also during that time frame the 10-Year Treasury Yield went from 4.7% to 5.1%. Yet the cumulative return of REITs was 57.9%, compared with 15.5% for stocks and 6.5% for bonds. So from that two year period one would conclude with justifiable certainty that a period of increased rates results in increased REIT stock prices. But ANY two year period, including the latter, is too small a sample to base any such conclusion on! So if your sample period is too small to be useful, how about a longer period? If you look back in detail at the last 20 years, you will see that an analysis of interest rate increases and decreases since 1995 fails to show any consistent correlation with REIT performance.

    You agree that Realty Income's fundamentals are good. And Realty Income's pays a nice and seemingly ever increasing (if slowly) dividend. You note "overall rates will remain low and that there is no need for further tightening from the Fed" despite your earlier assertion that higher rates will be bad for REITs, so that if you think that "overall rates will remain low" by your logic that would support O's price. You finish by concluding that Realty Income stock should be sold, simply because the stock is slightly overvalued, even though you "do believe that Realty Income should trade at some premium to its average valuation." So it might right now be (very roughly) 15% overvalued, which is likely within the price noise range of being fairly valued. It strikes me as a huge mistake for an investor (versus a speculator) to sell one of the most established, longest dividend paying, financially strongest REITs in existence because of that small an amount of overvaluation. O is not a strong buy, but it is certainly not the time to sell. It is time to hold the stock, and sit back and enjoy the consistent and secure income that Realty Income stock provides!
    Jan 18, 2015. 02:37 AM | 16 Likes Like |Link to Comment
  • American Assets Trust: REIT Gold In The Golden State [View article]
    Thanks James, for this interesting article on this under the radar REIT. But I must note that I find it hard to get excited about the low 2.1% dividend (which will keep me from buying AAT) even though the rest of the story looks good.
    Jan 15, 2015. 11:22 PM | 1 Like Like |Link to Comment
  • My REIT Underdog Pick For 2015 [View article]
    For REITs, dividend distributions for tax purposes are allocated to ordinary income, capital gains and return of capital, each of which may be taxed at a different rate. All public companies, including REITs, are required early in the year to provide their shareholders with information clarifying how the prior year's dividends should be allocated for tax purposes. This information is distributed by each company to its list of shareholders on IRS Form 1099-DIV. If it is not on the 1099-DIV (such as a gain in the share price) then you are not taxed on it as a capital gain until you sell the stock.

    A return of capital distribution is defined as that part of the dividend that exceeds the REIT's taxable income. A return of capital distribution is not taxed as ordinary income. Rather, the investor's cost basis in the stock is reduced by the amount of the distribution. When shares are sold, the excess of the net sales price over the reduced tax basis is treated as a capital gain for tax purposes. So long as the appropriate capital gains rate is less than the investor's marginal ordinary income tax rate, a high return of capital distribution may be attractive.
    Jan 15, 2015. 03:58 PM | Likes Like |Link to Comment
  • My REIT Underdog Pick For 2015 [View article]
    Thanks for this interesting article on a REIT that I have not previously considered. I have two questions for you, first, if as is likely natural gas and oil prices continue to drop possibly towards $2 and $30 respectively (only to illustrate a point, not because I have the slightest idea of where they will go), will this put pressure on CORR as some of it tenants face substantial financial pressure?, and second, if interested rates start to go up this year due to increased economic activity that is in part driven by low energy prices, will this "double whammy" negatively impact CORR? Or do you think CORR 's business model is rather impervious to these external factors?
    Jan 14, 2015. 12:02 AM | 4 Likes Like |Link to Comment
  • Charlie Brown's List Of 10 REIT Gems Under $10 [View article]
    Brad, If I were advising your daughter on how to invest a few hundred dollars into REITs, I would be much more comfortable with her buying six shares of a solid, proven, and regular dividend increasing company like O (Realty Income) rather than 3 shares of each of the Charley Brown portfolio. Do you agree?
    Jan 13, 2015. 11:10 PM | Likes Like |Link to Comment
  • Acadia Realty Trust: A REIT To Remember [View article]
    I appreciate that you are writing about little covered stocks; I am always looking for new ideas, so please continue doing this! I hope that you find one or more "small" little covered triple net REITs worth writing about. All the best, Marc
    Jan 10, 2015. 04:55 PM | 1 Like Like |Link to Comment
  • An Appetizing REIT With 9% Icing On The Cake [View article]
    buster0391, it would be very helpful if you would list each of the "missed points" and "half truths" to inform the rest of us.
    Dec 10, 2014. 01:38 PM | 3 Likes Like |Link to Comment
  • An Appetizing REIT With 9% Icing On The Cake [View article]
    Brad, if you gain an interview with the CEO two questions that I suggest you ask are:

    1. Is it planned that NRF's remaining 20% mREIT component will be disposed of and the cash converted to eREIT holdings?
    2. If the answer to (1) is yes, what is the anticipated time to rough completion?
    Lunco suggets in his earlier comment that NRF will continue to rapidly decrease its mREIT component, and it would be illuminating to find out at what rate (if any) the CEO plans to do so.

    Also, a third question for the CEO that may be of interest is what the approximate dividend yield would be if it was calculated solely for the 80% of NRF that is currently eREIT holdings. An answer to this would give information that would be important to investors who might buy NRF in anticipation of it becoming a pure eREIT.

    Thank you!
    All the best,
    Dec 10, 2014. 01:08 PM | 3 Likes Like |Link to Comment
  • An Appetizing REIT With 9% Icing On The Cake [View article]
    Brad, thanks for this article, but I do not understand your reasoning. You state that for mREITs "the volatility of the underlying investments, the leverage embedded in the portfolio and many unsustainable dividends, these investments should be avoided or minimized." I agree with you on this. NRF is 80:20 an eREIT:mREIT combination, so that for every 1,000 shares of NRF, one gets essentially a basket containing 800 shares of eREIT with 200 shares of mREIT. Since you would not buy 200 shares of an mREIT on its own, why would you buy them embedded in a mixed company like NRF?

    Personally, since I agree with your position that mREITs do not deserve a place in my portfolio, I am going to pass on NRF.
    Dec 9, 2014. 05:19 PM | 2 Likes Like |Link to Comment
  • A Fundamental Analysis Of American Realty Capital's Likely Dividend Cut [View article]
    Philipsonh, what you are missing is that ARCP already owns Cole Capital (ARCP closed its purchase of Cole on 2/17/14), and RCS Capital Corp., known by its ticker symbol RCAP, said around 10/1/14 it was acquiring Cole Capital Partners and Cole Capital Advisors from ARCP, but then backed out of the deal at the start of November, leaving ARCP to continue owning Cole.
    Dec 8, 2014. 02:40 PM | Likes Like |Link to Comment