Published Wed, 25 Mar 2020 15:16:53 -0400 on Seeking Alpha
Easterly Government holds a resilient portfolio of GSA-focused properties, currently boasting a 100% occupancy ratio.
The company is rapidly growing its underlying asset base while paying a considerable ~4.5% yield.
Management has acquired specialized knowledge of the GSA appropriation process, protocols, and culture.
The faith and credit-worthiness of Uncle Sam is the company's greatest asset.
Many were expecting a potential recession at some point in the foreseeable future. A considerable pullback was not unexpected, considering the market's euphoria over the past couple of months. Investors would find it reasonable to reallocate their capital towards REITs. The argument that individuals and businesses need to pay their rent, even under weaker economic conditions, is rational, after all.
However, with the Coronavirus kicking equities straight off a cliff, including real estate, it makes for an excellent example as to how risk always looms and prime economic conditions should never be taken for granted. Suddenly, the valid reasoning behind real estate as a safe source of cash flow fails to hold, as businesses are forced to shut down, potentially failing to meet their rent obligations.
In fact, not only the real estate sector (VNQ) has taken a beating, but AAA names like Realty Income (O), and Simon Property (SPG) can't seem to find a bottom, as their tenants are forced to freeze their businesses.
Although the damage on cash flow generation will take place even on the highest quality REITs, there is a company that will most likely notice zero impact on its rental income. I am talking about Easterly Government Properties (DEA), whose rental income is backed by the deep pockets of Uncle Sam. Relative to the market, the stock has suffered minimal losses over the past month.
A REIT with the most potent moat
For those unfamiliar with the company, Easterly Government specializes in providing roof exclusively for the U.S government and its... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|SIMON PROPERTY GROUP||155.27||20.8||7.48||8.40||5.21|
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