Another Day In REIT Paradise: A New “Growing Like A Weed” Portfolio

Summary

• Congratulations to all of you Tampa Bay Buccaneers fans!
• As it turned out, the big game wasn’t a nail biter at all (unless you count the referee-related drama), ending at 9-31.
• That’s just how the cookie crumbles sometimes.
• This weekend, I published the top climber’s list, which lists the top 25 fastest-growing REITs in 2021.
• As a result, we also decided to create a new portfolio called the “Beanstalk Portfolio.”.

Quote for Today:

“While money doesn’t buy love, it puts you in a great bargaining position.” – Christopher Marlowe

(Source)

Congratulations to all of you Tampa Bay Buccaneers fans! Though, at the risk of sounding egotistical, congratulations to me as well.

It looks like I called it on Thursday when I wrote, “I’m really beginning to wonder if Sunday’s Super Bowl can possibly be this dramatic…” compared to the Reddit-fueled activity that had some stocks shooting up one moment and plummeting the next.

As it turned out, the big game wasn’t a nail biter at all (unless you count the referee-related drama), ending at 9-31. That’s just how the cookie crumbles sometimes.

Obviously, both teams were extremely talented. They had to be to get to the Super Bowl in the first place. And Kansas City won last year, of course.

But sometimes one side has more talent than the other. Sometimes a more superior strategy emerges. And sometimes the game goes the way the game goes based on factors that aren’t controllable by one side, the other, or anyone at all.

That’s certainly the case with investing. But, fortunately, we don’t have to rest everything on one trade per year. There’s no Super Bowl to plan for, only a larger game plan that amasses one solid team of assets that can benefit us no matter what curveballs come our way.

(Wrong sport, I know. But I couldn’t come up with an appropriate football analogy off the top of my head.)

That means we’re not banking on government treatment of REITs. We’re confident our collection of companies will handle the changing landscape appropriately, including the new environmental, social, and governance (ESG) rules being proposed by Congress concerning real estate.

Then again, we’re not going to object to the legislation introduced last week either. If passed, it will allow REIT landlords to infuse more capital into struggling retailers. To quote The Real Estate Roundtable:

“The bill would modify existing related-party rent rules that treat rental income received by a REIT from a tenant in which the REIT owns more than a [10%] interest as bad income for REIT purposes. Specifically, among the changes, the bill would 1) increase the capacity of a REIT to own the equity of a tenant from 10% to 50% and 2) conform the ownership attribution rules used for determining what is considered related-party rent under the REIT rules to the general ownership attribution rules that apply to corporations.”

We’ll see if this proposal passes. But at this stage, I like what I see.

The World According to Commercial Real Estate

This weekend, I published the top climber’s list, which lists the top 25 fastest-growing REITs in 2021.

In the process, my team and I upgraded a number of companies to Strong Buy status. This simply means we’re projecting that they’ll generate returns of at least 25% over the next 12 months.

As a result, we also decided to create a new portfolio called the “Beanstalk Portfolio.” We all know what happened when Jack traded his family cow for a handful of magic beans…

And while we hardly recommend going all in like that, we find the results to be a fitting analogy. These “magical” REITs are forecasted to grow to the sky, and we want to own them as they do.

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This morning, several REITs announced strong external growth opportunities, including the following, as highlighted by the Daily REITBeat:

• Rexford Industrial Realty (REXR) acquired three industrial properties amounting to 176,670 square feet, as well as a 2.5-acre industrial outdoor storage site and a 5.6-acre redevelopment site for a combined cost of $72.7 million.
• Innovative Industrial Properties (IIPR) purchased about 3.5 acres in Southern California that’s adjacent to an already existent property it leases to Kings Garden. Together, the two plan to add a set of buildings to promote further cannabis cultivation.
• Stag Industrial (STAG) made several balance-sheet moves, including increasing the capacity of its unsecured credit facility to $750 million while also refinancing $300 million of its term loan debt.

Meanwhile, it seems that mall REITs (shown below in yellow) ultimately fell back down last week, as the Reddit army has moved onto greener pastures.

(Source: The Daily REITBeat)

Oh, and before you go, I want to point out my latest “Ask Brad Anything” videos. I posted quite a few of them on Friday afternoon considering how popular they’re becoming.

That’s fine with me since I’m always looking for the most efficient ways to communicate with members at iREIT on Alpha.

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