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Up To 12.3% Yields - Why Invest In This High Yield Asset Class

Published Tue, 13 Mar 2018 08:00:00 -0400 on Seeking Alpha

Net Lease Properties Offer Durable High Yields and Growth Net lease investments are a deeply misunderstood and underrated asset class - suffering from the stigma of being "bond-proxies" with little else to offer than income with no growth and high interest rate risk. While this may be the common perception of the public market participants towards net lease REITs, we note that most private market investors take a much more bullish position - one that we share and believe to make more sense in light of the strong fundamentals.
Net lease properties can greatly vary in type, size and design, but the typical net lease property could be a CVS Pharmacy (CVS)/Walgreen (BA):

Source: Blau Journal
Or a store occupied Dollar General (DG)/Dollar Tree (DLTR):

Source: loopnet
Or even an office building occupied by GE (GE) or a distribution center leased to FedEx (FDX) to show a few examples:

Source: crexi
Private net lease investors realize that such investments produce the best results when hold for the long run. Yet, public market REIT investors commonly trade in and out based on short term fears such as the recent rise in interest rates, despite not even really having much of an impact on the fundamentals of the net lease REITs. It occasionally leads to large sell-offs which we often consider to be unwarranted, and creates great opportunities for us to buy shares of highly discounted net lease REITs with excessive dividend yields... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VEREIT 8.50   0.0 -0.16 0.55 6.52
ONE LIBERTY PROPERTIES 28.67   27.3 1.05 1.80 6.08
EPR PROPERTIES 76.39   23.4 3.27 4.50 5.92
GRAMERCY PROPERTY TRUST 27.49   38.2 0.72 1.50 5.46
WP CAREY & CO 77.93   23.3 3.34 4.13 5.30
REALTY INCOME 73.25   58.1 1.26 2.71 3.73
NATIONAL RETAIL PROPERTIES 54.41   32.6 1.67 2.00 3.69
CVS CAREMARK 54.95   0.0 -0.55 2.00 3.57
AGREE REALTY 68.76   38.4 1.79 2.22 3.27
BOEING 370.46   20.7 17.88 8.22 2.27
SPDR S&P 500 ETF 279.04   0.0 0.00 5.24 1.88
FEDEX 172.07   12.7 13.56 2.60 1.49
DOLLAR GENERAL 118.75   19.9 5.98 1.28 0.99
GENERAL ELECTRIC 9.88   0.0 -2.62 0.04 0.40
DOLLAR TREE 101.96   0.0 -6.66 0.00 0.00


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