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Our High Yield REIT Portfolio Designed For Outperformance

Published Tue, 10 Jul 2018 10:48:50 -0400 on Seeking Alpha

REITs have been quite disappointing with a 2 year return of just 5.65% which represents less than 2 years of dividends.
Source: SNL Financial
Returns this low are just not enough and we refuse to accept the inevitability of low returns that so many pundits are describing.
Frankly, REIT returns have been low because the index consists primarily of large caps with bloated valuations. Through an active approach, we can own more of the good stuff and avoid the overvalued names that are so prevalent in the major REIT indices. We have done precisely that in the 2 nd Market Capital Corsaires High Yield Portfolio (2CHYP) and it has so far generated favorable results.

Since 2CHYP’s inception on 7/1/16, it generated returns of 25.5% compared to the iShares US Real Estate ETF (IYR) which came in at 5.8% or the MSCI US REIT Index (RMS) which returned 2.7%. With full acknowledgment of our fallibility, we intend to continue to outperform.
Following are the holdings of 2CHYP as of 6/30/18 along with analysis detailing why we believe we are well positioned and our investment process.

Portfolio analytics While no metric is a perfect gauge of a stock’s return potential, funds from operation or FFO is one we have grown to like quite a bit. The more FFO a company generates relative to its share price, the more it can pay dividends and the more it can reinvest in its business for growth. 2CHYP as a whole has an FFO yield of 10.91% with a somewhat... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
WP GLIMCHER 4.29   13.8 0.31 1.00 24.04
IRON MOUNTAIN 32.08   26.5 1.21 2.44 7.71
CORECIVIC 23.80   16.6 1.43 1.76 7.42
MEDICAL PROPERTIES TRUST 18.03   6.6 2.71 1.00 5.55
UMH PROPERTIES 13.38   0.0 -0.63 0.72 5.31
STAG INDUSTRIAL 31.09   51.0 0.61 1.43 4.66
GOVERNMENT PROPERTIES INCOME 6.87   0.0 0.00 0.00 0.00
WINDSTREAM 0.33   0.0 -55.88 0.00 0.00


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