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Buy These 3 REITs With A 100-Year Time Horizon

May 07, 2020 7:00 AM ETFRT, O, OHI150 Comments


  • I have a birthday coming up this weekend. And no, I’m not telling my age.
  • But I'm old enough to be thinking about succession and the REIT portfolio I’ll be leaving my kids and grandkids.
  • I must make intelligent decisions with recommendations that can stand the test of time… even up to 100 years. Or more.
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In case you missed it, the Oracle of Omaha, Warren Buffett, held his very first virtual annual meeting on Saturday, May 2.

It was an interactive, informative, four-hour call that gave a lot of food for thought for a lot of people. I know because I listened to it.

For anyone who was worried, Buffett was adamant that he’s not breaking up Berkshire Hathaway (BRK.A) (BRK.B). To quote him directly, “It isn’t going to happen.”

However, he did sell certain stocks in the past quarter, including every single share of his airline positions. That place in his publicly-traded portfolio simply doesn’t exist anymore. "The world has changed for the airlines,” he told his audience, adding:

“… I hope it corrects itself in a reasonably prompt way. I don’t know whether the Americans will have now changed their habits or will change their habits because… we’re semi-shut down in the economy.”

I got the impression he was generally sorry to see them go. And he complimented their CEOs, wishing well to all four airlines he used to own.

But they’re going to have to do so without his financial backing nonetheless.

Even with that bearish stance though, Buffett still has a positive outlook on Wall Street. And that’s because he still has a positive outlook on America.

Believe it or not, there’s still good news to grasp.


What Warren Buffett Said on Saturday

There are two more parts of the call I’d like to point out, starting with this one:

“(The government-mandated shutdowns are) quite an experiment, and… we may not know the answers to some very important questions for many years. So it still has this enormous range of possibilities. But even facing that, I would like to talk to you about the economic future of the country because I remain convinced as I have.

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This article was written by

Brad Thomas profile picture

Brad Thomas has over 30 years of real estate investing experience and has acquired, developed, or brokered over $1B in commercial real estate transactions. He has been featured in Barron's, Bloomberg, Fox Business, and many other media outlets. He's the author of four books, including the latest, REITs For Dummies.

Brad, with his team of 10 analysts, runs the investing group iREIT® on Alpha, which covers REITs, BDCs, MLPs, Preferreds, and other income-oriented alternatives. The team of analysts has a combined 100+ years of experience and includes a former hedge fund manager, due diligence officer, portfolio manager, PhD, military veteran, and advisor to a former U.S. President. Learn more

Analyst’s Disclosure: I am/we are long O, FRT, OHI. 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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Comments (150)

100 years from now, neither you nor these 3 REIT stocks will exist
Brad Thomas profile picture
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Brad Thomas profile picture
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(20% off iREIT on Alpha through midnight today)
VYM is good too
FRT putting in a solid bottom. Been basing here for some time. Look at the chart. I think it’s a good time to accumulate some. Now with zero commissions you can be comfortable buying 10 shares at a time or whatever floats your boat. Then hold for long term.
Actionable Conclusion profile picture
"FRT putting in a solid bottom."

And just how many bottoms has FRT put in since May 2019?
@Actionable Conclusion More REIT "bottoms" out there right now than a California beach in July.
Brad Thomas profile picture
National Retail Properties: Is The 30 Year Dividend Record At Risk? seekingalpha.com/...
Brad Thomas profile picture
iREIT TV: Interview With CEO Of Omega Healthcare Investors seekingalpha.com/...
Just for laughs I looked up the DJIA stocks in 1920:
- American Can
- American Car and Foundry
- American Locomotive
- American Smelting & Refining
- American Sugar Refining
- American Telephone & Telegraph
- American Copper Mining
- Baldwin Locomotive Works
- Central Leather
- Corn Products Refining
- General Electric
- BF Goodrich
- Republic Iron and Steel
- Studebaker
- The Texas Company
- US Rubber
- US Steel
- Utah Copper
- Western Union
- Westinghouse

Guess thing change a bit over time ;)
Diesel profile picture
All look like buffet stocks.
Michael Dolen profile picture
Speaking of what you're leaving to kids and grand kids, as well as quoting Buffett, don't forget to also quote what he says about inheritance. He's against it.

Me too. Vehemently.

Unless it's for an offspring who is disabled and therefore can't provide for self, I see inheritance as a deterrent to giving life your all.

Fortunately, there are other good reasons to own $FRT and $O for the long term.
Conner M urphy profile picture
"Speaking of what you're leaving to kids and grand kids, as well as quoting Buffett, don't forget to also quote what he says about inheritance. He's against it."

It's not quite as simple as that. It's more nuanced than that.

Yes it's correct that he has pledged to donate a vast portion of his wealth to charity upon his death, and I commend him and Gates and others who will being this, but that doesn't mean that he isn't passing anything along to his children. My understanding is that he indicated he will leave them sufficient monies that they will be financially comfortable for life, he just won't be passing along his entire $50B+ net worth to them. I don't know what the breakdown is, whether it's 90% to charity and 10% to family or 95% to charity and 5% to family or whatnot, but it's not as black and white as you are trying to make it to be that inheritance is some sort of inherent evil that must be avoided at all costs.

I was fortunate to achieve significant wealth in my career, way below Mr. Buffet's level but certainly not a small sum and I live very comfortably in my retirement. While I too have set up my will that a substantial portion of my wealth will go to various charitable causes upon the passing of my wife and I, I am likewise allocating a portion to my two kids so that they are financially comfortable. And I find nothing wrong with that whatsoever and will not apologize for that decision.

Perhaps one day when you have a family of your own, you will understand the rationale behind this.
Michael Dolen profile picture
You're conflating right and wrong with what's best for someone @Conner M urphy

I didn't say inheritance is wrong, morally. I said it is a deterrent for giving life your all.

Trust me, if your kids knew they weren't getting a dime and knew that from the get go, they would try harder. They would spend wiser. Because a retirement plan of inheritance wouldn't be in their future. That may sound callous but it's generally the case.
Conner M urphy profile picture
Michael, I think you are missing a key aspect in the "cause and effect" argument that you are trying to lay out that perhaps you will better grasp once you have kids of your own.

Whether or not one's children have a sense of entitlement and lack drive to accomplish on their own and set their own path is much more a function of the values one as a parent instills in them and how they raise their children.

You brought up Buffet as the basis for your argument, so let's stick with that example. Howard Buffet appears to be an incredibly sound individual, hard worker and a model member of society. Yet he, despite your incorrect belief that Warren Buffet is leaving everything to charity, has received tremendous financial gifts from his father already (the $90k in BRK stock for his 19th birthday is a well-known example) and will receive more via an inheritance once his father passes. Despite this, Howard has been incredibly frugal, hard working and certainly appears to be giving it his all. This is because Warren prioritized raising him in such a manner and instilling these values in him. Individuals who instead are lackadaisical and entitled tend to be that way due to them being raised in a manner where they were never taught the value of hard work and getting what you earn.

Inheritance plays no role in this whatsoever, trust me.
I, Investor profile picture
Happy birthday, Brad! Hope you have a great weekend.

Like you, O is my biggest position. Also long IRM, STOR, MPW, GMRE.
Brad Thomas profile picture
Thank you @I, Investor Have a great weekend.
purplemountaingirl profile picture
@Brad Thomas Have a wonderful Birthday. Sure your only 35 ish!!
Brad Thomas profile picture
@purplemountaingirl Wishful thinking....Thank you and all the best. Brad
Diesel profile picture
I'm surprised that Buffet isn't loading up on REITs.
Great read thx! GEO ?
Brad Thomas profile picture
@atlantaheli Working on prison REIT update this weekend. All the best. Brad
Do you see any disruption in FRTs model due to its heavy investment in multi family and COVID going forward?
Brad Thomas profile picture
@UnderTheHood19 We just published a deep dive on iREIT: Federal Realty: A Dividend King That Will Likely Rise From The Ashes And Soar To New Heights seekingalpha.com/... Sign up for the 2 week free trial.
Will do. Thank you.
Blue Sky 777 profile picture
I noticed on the REIT Coronavirus Dividend Cuts chart above that Park Hotels (PK) is listed, and showing a zero dividend. I have looked on the PK website, and numerous financial news sites and can't find a reference to any cut.

The PK Conference call transcript from last week (27Apr), the PK Chairman, President & CEO, Thomas Baltimore, said "we will continue to prioritize our commitment to maintain a strong and flexible balance sheet and a healthy dividend payout for investors." Also, the PK Executive VP, CFO & Treasurer, Sean Dell'Orto, says "Based on our full year adjusted FFO guidance and targeted payout ratio in the range of 65% to 70%, we remain committed to paying out the $0.45 per share quarterly dividend with potential upside in the fourth quarter."

I believe the upside in the fourth quarter is referencing a fourth quarter bump in dividend that has occurred in each of the last three years, and may be the reason that PK appears to cut it's dividend due to the current crisis. The dividend has been lower in each of the last few first quarters, as compared to the three quarters that precede it.

Just wondering if I missed the news of a dividend cut. Your comment would be appreciated.

Thank you for sharing your experience and great insight in all the excellent articles you have written.

All the best,
careful investor 1 profile picture
PK only paid 1st QTR dividend, They are not paying a dividend in Q2 or Q3.
They will advise on Q4 dividend once they have their financials for the year.
We'll be back to normal 2021.
What are your thoughts on Iron Mountain?
Brad Thomas profile picture
@usmansamikhan It's not what I think, it's what Mr. Market thinks IRM +12% today ;) Breaking down earnings on iREIT seekingalpha.com/...
Happy Birthday Celebration! Relax, and enjoy your family.
Brad Thomas profile picture
@1caflash I certainly will.... Thank youu
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