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A Look Inside Our Safe-Haven Portfolio: SRC.PA Is A Strong Buy

Summary

  • As we transition into the new year, we are putting greater focus on "investment safety" to prepare our portfolio for the next market downturn.
  • Our Safe-Haven Portfolio aims to deliver a stable 6-8% annual yield through preferred shares and other debt instruments that are backed by real assets.
  • With more muted growth expectations, and less interest rate hikes on the horizon, we find great value in the high yielding preferred shares of soundly-financed REIT.
  • The 6.6% yielding preferred shares of Spirit Realty Capital appear to be particularly safe and rewarding for this low risk profile.
  • We are issuing a "buy alert" and adding it to our Safe-Haven portfolio.
  • Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Start your free trial today »

2019 marks the 11th year to an already-extended bull market which started in in the aftermath of the great financial crisis. It has been a long and very rewarding run for all investors… Especially REIT investors who have continued their long streak of market outperformance - returning over 1,700% since 1989:

Now, while this is all great, we should remain mindful that such gains cannot continue forever and that sooner or later, we will need to go through another recession with negative returns for stocks and REITs.

Historically, recessions occur on 5-10-year intervals when unemployment rates hit 4-5% figures:

  • Today we are 10+ years into the cycle.
  • Unemployment rate is at the lowest level in many decades.

What does this tell us?

We are likely to hit a recession sooner rather than later. We are not here to pointlessly scare you, but the data is not on the side of the market at this point any longer. We believe that the market still has 1-2 good years ahead of it and therefore, we are now taking the necessary steps to position ourselves accordingly before it is too late.

What are we doing about it?

At High Yield Landlord, we manage three real estate investment portfolios and we are currently in the process of making the following changes:

  • 1) The "Core" Portfolio is our opportunistic real estate portfolio targeting maximum total returns with an ~8% on-going yield. It invests mostly in deeply discounted common shares of small cap value REITs.

In 2019, we will gradually shift more and more capital towards our safer investments such as Spirit Realty Capital (SRC) and W.P Carey (WPC). When presented with the right price, we will take gains off riskier positions and reallocate to safer companies. A recent example is the sale of

High Yield Landlord recently became the #1 ranked service in real estate on Seeking Alpha. To ensure that the quality of our service remains at its highest, we will increase memberships rates and then soon after, close memberships completely. Subscribe now and secure yourself one of our last discounted spots.

If you are looking to expand your real estate investments in 2019, take action now and find out why over 200 investors follow the "High Yield Landlord" approach to real estate investing. For more information click here.

This article was written by

Jussi Askola profile picture
59.1K Followers
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.

Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. Today, he is the author of "High Yield Landlord” - the #1 ranked real estate service on Seeking Alpha. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. Click here to learn more! 

Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. In addition to having passed all CFA exams, Jussi holds a BSc in Real Estate Finance from University Nürtingen-Geislingen (Germany) and a BSc in Property Management from University of South Wales (UK). He has authored award-winning academic papers on REIT investing, been featured on numerous financial media outlets, has over 50,000 followers on SeekingAlpha, and built relationships with many top REIT executives.


DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. Do your own research or seek the advice of a qualified professional. You are responsible for your own investment decisions. High Yield Landlord is managed by Leonberg Capital.

Analyst’s Disclosure: I am/we are long SRC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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