Entering text into the input field will update the search result below

Cash Flow Is King

Jun. 08, 2020 7:00 AM ETDRI, EPR, EPRT, FCPT, HASI, LADR, VNQ, VTR, WELL82 Comments


  • As you may recall, we put together a simple property sector risk model to demonstrate the lowest and highest risk categories.
  • The purpose for our new Cash is King portfolio is to generate above-average returns as it relates to mispricing and the “temporary” impact on certain business models.
  • My objective is to seek out powerful sources of income in which the company has strong competitive advantages.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

Almost 90 days ago I wrote an article titled “Cash Is King” that generated over 479 comments and over 35,000 page views. In case you missed it, here are a few nuggets from that article:

  • Our primary objective is to be tactical REIT investors and that means we will not be rushing out to deploy capital just to get exposure to cheap REITs.
  • We will be stress testing each prospective REIT in granular detail to determine whether it's worthy of ownership.
  • Now is not the time to become a high-yield REIT investor, always focus on nothing less than quality, quality, quality.

In that same article, I explained that we were debuting the all-new Cash Is King Portfolio that follows that same philosophy. I wrote,

“Future investment decisions should be made on data, not emotions. The only way to navigate these periods with sanity and resilience is to have a very long-term view.”


I don’t know about you, but the last 90 days have been stressful, as I have been working mostly at home, up until my recent decision to travel to the office for a few hours a day. However, in a recent blog post I explained,

“Although all of us are paying the price of sheltering in place (i.e. cabin fever), there are obvious benefits, and by taking advantage of the irrational market behavior, we have been able to generate significant alpha.”

As you may recall, we put together a simple property sector risk model to demonstrate the lowest and highest risk categories. For the most part, we have adhered to sticking with property sectors that were either in the yellow (medium risk) and green (lower risk) categories:

Source: iREIT

Over the last 30 days, as the U.S. economy has begun to thaw out, and we have gained more clarity

Become Part of the Wide Moat Research Family

iREIT on Alpha and Dividend Kings are two of the fastest-growing marketplace services with a team of eight of the most experienced analysts (including 3 CFAs). We offer unparalleled services including customized portfolios that are doing extremely well in the moment - but are built to stand the test of time too. Moats Really Do Matter!

For more information about iREIT on Alpha, please visit our LANDING PAGE (and activate your 2-week free trial).

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 FCPT, HASI, LADR, VTR. 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.

Recommended For You

Comments (82)

Just so I'm clear... You've been touting LADR for more than a year but you say you "Pulled the trigger" in March for 114% return. And, you compare that to VNQ. I've got a number for you. Here is the total return for VNQ vs LADR since LADR's inception in 2014: Through yesterday, VNQ is +58.62%. LADR is -38.83%. If you're a trader looking to buy dislocation...okay. If you're a long term investor you're better off with VNQ.
Brad Thomas profile picture
@jiimw I have owned LADR for several years and as stated in the article, we purchased shares in the new cash is king portfolio. My original investment in LADR has returned over 53% annually since Feb 2016 (my durable income portfolio). And by the way, my durable income portfolio has returned 19.9% annually since inception vs 7.74% annually for VNQ... better off with VNQ...? Hardly
Well, here are the numbers from Feb 2016. VNQ +13.2. LADR -14.03 through Tuesday close. I'm not sure what I'm missing but it doesn't look like much. VNQ for the long run for me.
Brad Thomas profile picture
@jiimw For subscribers only, I provide all of the details for the portfolio, and I can assure you that I have crushed VNQ (by the way, it has outsized exposure to retail and office)
moblackty profile picture
Any thoughts on EPR???? moblackty
Brad Thomas profile picture
@moblackty EPR & AMC: Distressed Bond Swap & A Tough 2020 Ahead seekingalpha.com/...
70 years is long time and it is what it took for the SP 500 to reach its peak. My long term model is now flashing red. Peak is probably in already.
Typical retracements of long term bubbles are at least 50%. Target:1600/1800
It is going to be ugly.
Bruce Miller profile picture
Hi Brad. Good to hear from you.
"Cash Flow is King"....but nothing off the Statement of Cash Flows?
Looking forward to some of those REITs whose history shows excellent cash flow metrics before being struck down by a virus.

Brad Thomas profile picture
@Bruce Miller Ha. glad to hear from you Mr Cash Flow.... hope all is well with you - all the best. Brad
Brad Thomas profile picture
What Midstream Investors Need To Know About The Great Rally In Industry History seekingalpha.com/...
Brad Thomas profile picture
TPG RE Finance Trust, Inc. Receives Critical Investment From Starwood, Now What? seekingalpha.com/...
CBL was up strong today .Closed at $ .41. BK is a real possibility for that company as you have indicated for some time . From an owner's perspective is there any advantage at this point to try and salvage and keep the company going . I respect your expert opinion . Thanks .
SMHB is up over 150%, a major holding in my portfolio . . . most REITs have done extremely well based on emotions, and do not contemplate the 2nd and subsequent COVID waves, and the fact that unemployment is actually over 16% (despite Friday's incorrect 13.3%) and only going up. When the stimulus ends, reality will set in.
Robert Hutten profile picture
While it is easy to agree that the pandemic was a black swan, it needs to also be said that many of the REITS previously recommended were much more volatile that the market as a whole. And while they have experienced a nice dead cat bounce, they are nowhere near the price they were pre-pandemic and even less near their all-time highs. And with a bunch of dividend cuts, they have definitely ceased to be reliable income vehicles. This is not true of the S&P 500 in general which is within about 7% of its all time high. LADR for instance has had a major short term run up but is still 47% below its 52 week high. Stocks with this type of volatility are really not good candidates for the long term investor.
Yea but brad shed all that nasty no good stuff and just created a new portfolio at the bottom! Now he can sell this new portfolio to more subscribers!
Indeed. Like I said, the author was already bullish and long on most of these stocks before the pandemic and unless he quadrupled his stake exactly at the bottom, he’s still in the red overall on all of these stocks. But hey, just stamp them as a new portfolio and look how great he’s done. No mention whatsoever about his trading activity before the pandemic.

It’s like throwing a hundred darts at the dartboard, then pulling out the 97 that didn’t make it into the triple 20, and then posting a picture on Instagram boasting what a great darter you are.
What about all the real losses when he cleared out the likes of Tangers and other mall REITs. Its just paper money. Buying these REITs under a new portfolio at a real depressed prices would make anyone a hero! The REITs have recovered but have a way to go while my non-REIT S&P500 stocks with solid dividends are booming.

Lesson 1: dont just have a portfolio with REITs for dividends... keep that at under 10-15% of the portfolio - mostly data center and single family issues.

Lesson 2: stay AWAY from shopping centers and malls

Lesson 3: Dont fall for catch phrases - "Cash is the king," "Once in a lifetime opportunity", and

Lesson 4: ALWAYS evaluate if the money spent on stock recommendation services are worth the expense.
Your brother Mike profile picture
Great article Brad! I like WELL also.

But what I like the best is building your own "REIT" by learning to buy and manage rental property yourself. Check out my latest article "How to buy your first rental property": cashflowplayground.com/...
Brad Thomas profile picture
@your brother Mike Thank you! I'll take a look at the article.....also, we are doing a compare and contrast for WELL/VTR on iREIT this week: seekingalpha.com/...

Thanks again and have a great week. Brad
Interesting read, as is normal for your articles. Thanks for making it available to non-subscribers as well.

WSJ had an opinion piece today on the effects of dividends on equity pricing. Opinion contrary to what I normally consider is helpful.
Brad Thomas profile picture
Thanks @Flyover Country We are beginning to post our detailed research on the marketplace. Sig up for our 2 week free trial: seekingalpha.com/... All the best. Brad
Just another advertising piece giving a history lesson . No investing help with this report . Disappointed reader !!!!
Brad Thomas profile picture
@Uncle Ted Unfortunately we are being forced to publish our detailed research on the marketplace....it's not our decision to do so....I think you will see the value in our premium service: seekingalpha.com/... All the best. Brad
What about REITS like QTS?? Bought SPN and up 50%
Brad Thomas profile picture
@Maddyrima We are working on a deep dive 5 G piece this week for the marketplace: seekingalpha.com/... Thanks for reading and all the best - Brad
Sorry meant to say SPG REIT. I’m assuming the 5G deep dive analysis doesn’t have anything to do with the REITS??
Brad Thomas profile picture
@Maddyrima 5G = data centers and cell towers...

Check out iREIT on Alpha (2 week free trial): seekingalpha.com/...
Pretty silly to tout this supposedly astute portfolio when SPY is up the same amount since it was “launched” - ahhh congrats for being in line with the S&P 500?
In late March, VNQ fell to below 60 and RQI to near 7-- now above 86 and 12 respectively. Can't knock those recoveries for investors who prefer an equity REIT ETF or CEF.
Brad Thomas profile picture
@jazznut We track most all REIT ETFs and CEFs on iREIT: seekingalpha.com/...

Thanks for reading and commenting - have a great week. Brad
Thanks Brad! We got into VTR and HASI at roughly the same price point. Just wish I had more dry powder to accumulate more!!! I also got into WPC FRT RTX CARR MGM IRM and added to O and OHI so I was really spreading it around lol takes money to make money, unfortunately I'm just starting out so not much capital..... Long way to go to that 15M net worth goal 😋
Brad Thomas profile picture
@Donquiote60 Nice job. Thanks for reading and all the best. Brad
Bhughes7918 profile picture
Today most banks way up as is OPY again we are selling another 15% today down to about 60% of all funds. Looks like $27 is in the cards now.
We sold all of these in full AROW, CHMG, Friday .
Bought a bunch more FBSS up to $14.75 the past few days. Very cheap still.
Bought a ton PCSB under $13, wait for a 10% pullback to get in.
FFIC under $12 got in heavy, moved to fast now, wait for a 10% pullback and get in heavy. We might sell all today.
FCNCA we sold all today, wow what a move.
Vandooman profile picture
All my 10 REITs are in the black, with an average gain of 39%, thanks to PLD, DLR. CCI, HASI, and MPW. Small retail losses because almost no retail. No Ventas loss because no Ventas. Small losses on CIO, STOR and CORR which are gone. My main switch from retail RIETs to retailers 2 1/2 years ago led to gains of LOW 75%, TGT 116% and WMT 25%. Other RIETs are DEA, DOC, LXP, STAG and WPC. 2 closed end real state funds, RQI and RNP, are in the money. Real estate is about 13% of the portfolio with a yield on book of 7.05%.

Most REIT portfolios are full of retail REITs because they breed like rats.

Note to Investors: Consider selling all stocks with losses in your taxable accounts and locking in the tax losses. Just replace them with similar investments or switch holdings between your IRA/401K and the taxable accounts if you want to retain them. Also a good opportunity to use the losses to sell down anything with gains that you have too much of.
Brad Thomas profile picture
@Vandooman Nice job. Thanks for reading and all the best - Brad

PS: Plenty of rat traps around....so I have modest exposure in retail. (overweight technology and net lease)
@Vandooman thanks for the Note concerning selling stocks with losses... this made me think hard about cutting some of my losses in GE and F, but I don't want to make a stupid mistake...as I've never sold at a loss before. It sounds intuitive, but can you give me a sanity check: If keep the recent GE shares I picked up last month at $6 and $5.50/share, but sell my older higher priced shares at a loss of apx. $1000, will that $1000 loss directly offset a $1000 gain I realize on another sale? Is it that simple?
Thank you for sharing your keen insights into REITdom , Mr. Thomas.

Retired income investor
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
Darden Restaurants, Inc.
EPR Properties
Essential Properties Realty Trust, Inc.
Four Corners Property Trust, Inc.
Hannon Armstrong Sustainable Infrastructure Capital, Inc.

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.