Last week I wrote about American Realty Capital Properties (ARCP) and IPOs again, as mentioned, I was not impressed by the lack of diversification and improvement of the asset portfolio 63. While writing, there were 60 bank branches from Citizens Financial Group leased (CFIN.PK), two bank branches closed and a distribution system for The Home Depot (HD) for rent. Total supply was quoted at $ 12.50 per share, with a net profit of 69.75 million dollars.
REITs many major network platforms have been developed in a strategic investment banks are designed to manage risk, well diversified as a common model has become extremely sophisticated diversification that investors are more funds.The sensitive to the protection of property and everyone is looking for revenue growth with margins of safety. Most REIT shares best to maintain high levels of employment in the sector due to the high diversification of the basics. Unlike Warren Buffett, I like diversity I think it's a perfect indicator of performance future.
ARCP think it needs to diversify its portfolio of emerging network with increased rental income credit, leasing, media, and also create opportunities for the acquisition of different accretive to add some of the great names of his revenue stream. What do you do with a dollar vacant General (DG), when the lease expires in 7.6 years? Most stores are located in tertiary markets where there is no hope of moving to a qualified tenant or above-market rents (leases due). More importantly, investors will receive a title is $ 12.50 when the value closest in terms of risk for the cycle (replacement cost) the price is $ 10.00 (or less)? As mentioned in the previous article, the 60 bank branches in the place (dark and 2) were purchased at prices which were equal to or above net asset value and the new foreign investment portfolio needs to diversify its portfolio with new markets along the main lease term are not at risk (eg, diversification is more than playing roulette, where the little Paris is done with a brush for broader investment strategy. Michigan). There are hundreds of single-tenant assets that can be acquired through leases of 15 years or more. If so, you may have diversified in Enron, WorldCom, Global Crossing went bankrupt.
Show me a diversification "important" and some properties with a "juice" the rest (the lease) and I'll show you a better grade in his next report card. And remember to do your homework and you can sleep well at night!. The articleabove summarizes some of the "best in class" of the net lease REIT, the elder brother of the ARCP, American Realty Capital Trust, Inc. (non-traded REIT) was included. A common denominator of Realty Income and Cole is the margin "security" innovative investment strategies that are well defined and well executed. I see the new REIT in the formation of a diverse mix of existing assets with a high degree of concentration with a troubled bank once a tenant (lease residual average of 6.9 years). I do not see the value of the equity IPO, I can not see the value of the proposed addition on the property. ARCP 7% dividend looks good on paper but one should always Investors "pull the onion" and understand the true meaning of the activities and actions that drive value creation strategies. In short, I see no value in the new REIT. Diversification is very important for the "safety margin" of investors, but the management team must consider the diversification of ARCP other factors such as the lease term, geography (not Michigan, if you please) and a value about finding the source (rather than products without head). As an investor, you make money when you buy and do not see the "buy low, sell high" for opportunities here. Also included in this article have been exceptional network of several funds of real estate rental income (O) and capital Cole (no).
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