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I Put Half Of My Net Worth Into These Investments - Part 2

Apr. 05, 2021 8:25 AM ETABNB, AMZN, BXP, BXP.PB, DG, FPI, FPI.PB, HST, LAND, LANDO, O, SKT, SPY, STAG, WBA, YUM, ZM43 Comments


  • I invest most of my wealth into real assets.
  • But that does not mean that I am bullish on all real assets. Opposite of that, I am very selective and only invest in specific real asset sectors.
  • I present 3 real asset sectors to avoid and 3 to favor.
  • Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Learn More »

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In a recent article, I explain that my portfolio is very unique in its composition.

The majority of individual investors invest most of their wealth into stocks and bonds and then diversify with

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This article was written by

Jussi Askola, CFA profile picture

Jussi Askola is the President of Leonberg Capital, a value-oriented investment boutique that consults hedge funds, family offices, and private equity firms on REIT investing. He has authored award-winning academic papers on REIT investing, has passed all three CFA exams, and has built relationships with many top REIT executives.

He is the leader of the investing group High Yield Landlord, where he shares his real-money REIT portfolio and transactions in real-time. Features of the group include: three portfolios (core, retirement, international), buy/sell alerts, and a chat room with direct access to Jussi and his team of analysts to ask questions. Learn more.

Analyst’s Disclosure: I am/we are long O; STAG;. 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 (43)

How has or will the eviction moratorium affect apartment REITs?
Jussi Askola, CFA profile picture
@saluda01 Very little impact. REITs focus on higher-quality properties and are selective about their tenants. Rent collection rates have remained at near-normal during the pandemic. Most REITs are collecting 97-98%. It is not in the tenant's best interest to stop paying. It only delays the eviction.
Thank you Jussi.
You say “we” throughout when talking of HYL. Who is “we”?
Jussi Askola, CFA profile picture
@Snow and Ice Thanks for your question. we are 5 analysts. You can see our bios here: seekingalpha.com/...

Have a great day!
3 beach dogs profile picture
Don't forget that LAND has preferreds LANDM and LANDO...LANDO at 5%+ and very stable, almost like a utility for the divi/drip-ers. They just retired LANDP which I held for 6 years. Many holdings in California with irrigated properties. LAND has very different niche portfolio than commodity rise/fall of FPI.
Jussi Askola, CFA profile picture
@3 beach dogs Thank you for sharing. Not necessarily poor options if you are looking for defensive income. I would favor FPI's preferred shares in that case which participate in the upside of the underlying land. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...

Have a great day!
kaplanassetmgt profile picture
Interesting article. As for SKT, we are long for several reasons. Before the Covid, the company had increased its deividend for 27 years in a row. So you know the management cares about the shareholders. They correctly stoppd paying the dividend when the crisis hit as no one knew how severe the pndemic would be and the federal gov't down played the crises. Short sellers buried the stock price. The company pulled out all the protective moves and borrowed the full amount under their loan agreements. That too was the corrct move. The management then was in a position to work with the tenants and delayed (not lost) some portion of the rents. That was in March and April of last year. This year, the stores are paying their respective rent and part of the delayed payments so cash flow is excellent. The company has repaid all of the loan and sold some stock at an average of $19.02 per share and used that money to further reduce the debt. And, in January 2021, the company resumed a reduced cash dividend to shareholders. About 45% of the outstanding shares have been sold short. hence, at sometime, they will be buyers. Debt reduction means less cash interest costs leaving more money for shareholders and more debt reduction. I am quite sure that th eBoard is considering another increase in the dividend. The short sellers would hate that as they slowly get squeezed. I believe you have underrated the expereince and determination of the management to "bring home the bacon".
Jussi Askola, CFA profile picture
@kaplanassetmgt Thanks for sharing your thoughts. I agree that SKT has great management. However, I prefer to own urban class A malls than more remote outlet centers. Therefore, I would favor MAC or SPG in this space.
Jussi Askola, CFA profile picture

Thanks for reading!

We just published our monthly portfolio review for members of High Yield Landlord. You can read a portion of it for free here: seekingalpha.com/...

Have a great day!

.....the "assets" listed are just pieces of paper....they'll come in handy to stuff the holes in your shoes in Winter; that's about it.....forget "assets".....buy tangibles that'll keep you alive....that means spare magazines, tourniquets, anti biotics, non-perishable food, land that you can live on ect....Jan 6, BLM, Antifa, George Floyd ect are merely the warm up acts for what's to come....and one more thing....move out of urban areas while you can still get something for your house....tempus fugit!
Jussi Askola, CFA profile picture
@Tar Heel Fan REITs are real estate investments traded in the form of stocks. As a result, they can be quite volatile at times. However, despite occasional periods of high volatility, it should be noted that REITs have historically always recovered from past crises, and tracked the performance of the real estate market in the long run.

In other words, they behave like stocks in the short run, but correlate with real estate markets in the long run. A study by Cohen & Steers (CNS) confirms this as it found that the returns of REITs and real estate are near-perfectly co-integrated in the long run. This is not really surprising when you consider that REITs do not own anything else than real estate.
birder 4000 profile picture
I am in agreement with your analysis except for farmland. Too much depends on the weather and commodity prices and the farmland REITs are too unproven for me. Give me O, STAG, STORE, MAA, EQR, CCI, and DLR. Long solid records.
Jussi Askola, CFA profile picture
@birder 4000 Note that the nice thing about a REIT is that the weather and commodity risk can be diversified. But this generally comes at a price. REITs like LAND trade at a premium to NAV today. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...

Have a great day!
c4dancer profile picture
I have exactly the opposite feeling. While farmland might depend on weather and commodities in the short term, it seems like a better inflation hedge than gold or bitcoin for the long term. The other REITs might be a good inflation hedge as well but depend more on management IMO.
Jussi Askola, CFA profile picture
@c4dancer Thank you for the addition.
I cannot completely agree with the analysis that real assets are a safer investment than stocks and shares. Real estate and land still have significant inherent risks that will generate volatility in the value. This volatility is less transparent because the liquidity value of real estate/land- the price someone is prepared to pay for it when it is actually sold- is not published on a daily basis like share prices are. This means REIT NAVs can never be accurate because the value of the underlying properties are only estimates not real liquidity values. REITs therefore feel safer and less volatile but this is an illusion. When people buy equities they tend to check the price movements on a regular basis and this can have a draining affect on their decision making. The Warren Buffet approach is useful, do your research before you buy and then put the shares away, forget short term volatility and then only sell if you have to. Over trading is the greater cause of underperformance not market volatility.
Jussi Askola, CFA profile picture
@notpersonal Thank you for sharing your thoughts. Historically, however, REITs have been less volatile than regular stocks during most time periods. This is not surprising given that they earn steady rental income from long term leases and well-diversified portfolios. As long as you don't overdo leverage, it is much safer to own real estate than to operate a business. It is more durable.
Aquarama profile picture
Hot tip: real estate in Ohio
Jussi Askola, CFA profile picture
@Aquarama It is relatively cheap, but I am not sure that's where I would invest. There are better opportunities out there.
Jussi, thanks for another well written article,
I have a question, I don't live in the US but I read a lot about water shortages in the US , does this water shortage pose a risk to farmland? I assume when you don't have water the farmland is useless.
Thanks for your insight.
Jussi Askola, CFA profile picture
@Adrian_L Thank you for your question. Yes, it can pose a risk, but it is also an opportunity if reduces the supply of good land. Buying the right land and diversifying is key.
Jussi Askola, CFA profile picture

Thanks for reading!

We just published our monthly portfolio review for members of High Yield Landlord. You can read a portion of it for free here: seekingalpha.com/...

Have a great day!

Everytime I see an article of yours where you title it "I Put Half Of My Net Worth Into These Investments", you know it is REITs and it is a good article. I am waiting for the day you throw everyone a curve ball by going "I Put Half Of My Net Worth Into These Investments - Beanie Baby and Pet Rock NFTs!" :)
Jussi Askola, CFA profile picture
@I_Buy_Quality_REITS Haha :) Thanks for your support, I appreciate it!
SnufferBottle profile picture
Agree to disagree on office. I had the same thoughts until I started to see that companies such as Google, Amazon, etc. (the most tech-forward, with their own video conferencing software used for many years) will require employees to work from the office. If Google thinks you need a special exception to work from home, I don't see why the rest of the fortune 500 will be able to do without offices. It's much harder to onboard new employees + build culture remotely let alone all of the distractions (kids, YouTube, etc.) that exist at home.

Most companies will move to a hybrid WFH/office in the long run but I doubt many will move to "floater" desks for people to drop into rather than static desks because companies want to incentivize people to work from the office. I imagine they will just have assigned desks that don't have butts in them 100% of the time, but they'll still need to pay for that office space if they want the full benefits from being located in a given market. Unless you are reducing the number of desks/meeting rooms needed for your office, then you are still going to pay the same amount to rent it even if your employees get 2 "work from home" days every week.

I am lightly invested in BXP (high end gateway, which I agree will always be occupied - lower end properties will bear the burden similar to lower end malls) and heavily invested in CIO (Class A in 18-hour cities such as Denver, Portland, Phoenix, Dallas, Orlando). Demand for office depends on the demographics of the working age population, covid has accelerated millennials migrating away from NYC/LA/SF/Chicago to these "18 hour cities". I believe CIO should be trading at least as high as it was pre-covid, it was only lightly impacted and the future is exceptionally bright for their properties.

Fully agree that business travel will be reduced, making business oriented hotels such as PK less profitable. Sales/project management/etc. still benefit from in-person visits, but Zoom has permanently reduced the amount of business air travel/hotels that will be needed. Sold my whole PK stake this morning (my largest Mar 2020 buy, bought at $6, sold for $22) - had my fingers crossed for months that prices would stay unreasonably high so I could exit with long term capital gains.
Jussi Askola, CFA profile picture
@Snuffer Thank you for your comment. I think that our opinions on the office space differ less than you might think. I am not one of them who thinks that we will see an "office apocalypse".

But already before the crisis, I disliked office buildings as property investments. This is because they are cyclical and require a lot of capex to keep competitive in the long run and that eats into your returns. Back in PE, that was a recurrent theme. Our office building investments were fine as long as the lease lasted, but we nearly always overestimated returns due to capex.

The covid crisis makes things even worse of course. Now we have many more variables at play and a lot of more uncertainty. I think that this will force property owners to double down on capex to please tenants.

So I am not against investing in office buildings, but it needs to be at the right price, and right now, the discount relative to some other sectors isn't large enough for me.
Report risk profile picture
I’d say that outlet malls have a strong clothing component which online hasn’t had much luck breaking into. I still buy my clothes in person. No idea why. I buy most other things on amazon though.
Jussi Askola, CFA profile picture
@Report risk Thanks for sharing your thoughts. Fashion is experiencing rapid growth online. The main issue with outlets is that due to their layouts and location, it is very difficult for them to adapt to the changing environment.
Last Saturday I visited Stanford Mall, a Simon property, which is near the University. It’s large and in an affluent area. Stores include Nordstrom, Wilkes Bashford, Gucci, many other names. It was so crowded we couldn’t find a place to park. Many people walking around with full shopping bags, especially Nordstrom. All the restaurants had waiting lines. Seeing this makes me want to buy more SPG and MAC.
Jussi Askola, CFA profile picture
@Petermevans That's great to hear! Thank you for sharing.

High-quality urban malls will do just fine in the long run as they redevelop space and become mixed-use destinations.
SnufferBottle profile picture
@Petermevans Stanford Mall is a gem, when I worked in Palo Alto I visited at least once a week without fail due to the mix of great restaurants + personal trainers.

This mall was the reason I bought into the investment thesis for SPG/MAC back in the summer. Class A's are curated, not just a mix of random apparel tenants which keeps a constant flow of traffic.
onebassplayer5 profile picture
Well done and thank you!
Jussi Askola, CFA profile picture
@onebassplayer5 Thank you for your interest!
Many people are over invested in real estate when you consider a primary residence and often times a vacation home. People’s biggest asset is usually made up of these two concentrated sources of wealth. You should look at your home as part of your overall investment portfolio.
Jussi Askola, CFA profile picture
Note that housing and commercial real estate are two completely different investments and investors shouldn't substitute one for the other.
Dear Jussi, good article again! are you still long with MAC?
I am also long with HHC (+60%)
Jussi Askola, CFA profile picture
@Yulay Bikbulat Thanks for your question. Yes, I still own MAC. Thanks for sharing your pick in HHC. What do you see in it?

Have a great day!
@Jussi Askola regarding to HHC: Net Asset Value per share is much more higher than market price and well diversified. So I see there is good upside.

Have great day!
Jussi Askola, CFA profile picture
@Yulay Bikbulat Thanks for sharing. I will take a closer look.
Liquidors profile picture
I own the favorites. Do you have any further thoughts on FPI, which I don't own, Jussi?
Jussi Askola, CFA profile picture
@Liquidors Thank you for your comment.

I think that FPI is still undervalued, but slowly approaching fair value. For this reason, we would favor other companies at this time. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...

Have a great day!
Another good piece. Thanks.
Jussi Askola, CFA profile picture
@ozhabesh Thank you for your kind comment
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