{"id":51942,"date":"2023-08-23T08:21:51","date_gmt":"2023-08-23T12:21:51","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/bloodshed-on-reit-street-5-high-quality-landlords-im-buying-for-the-long-haul\/"},"modified":"2023-08-23T08:21:57","modified_gmt":"2023-08-23T12:21:57","slug":"bloodshed-on-reit-street-5-high-quality-landlords-im-buying-for-the-long-haul","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=51942","title":{"rendered":"Bloodshed On REIT Street: 5 High-Quality Landlords I&#8217;m Buying For The Long Haul"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture><\/picture><figcaption><\/figcaption><\/figure>\n<\/p>\n<p>I&#8217;m like a kid in the candy store in this market.<\/p>\n<p>To explain why, let me back up and explain where I&#8217;m coming from.<\/p>\n<p>My goal as a dividend growth investor is to generate the<span class=\"paywall-full-content invisible\"> safest, largest, and fastest growing passive income stream possible. I&#8217;m neither a &#8220;value investor&#8221; nor a &#8220;growth investor,&#8221; although I like good values and growth as much as anybody else. Neither, really, am I a &#8220;dividend investor,&#8221; although every single stock and ETF I own pays a dividend.<\/span><\/p>\n<p class=\"paywall-full-content invisible\">I think of myself as an investor in high-quality businesses capable of generating ever-growing streams of cash flow. My fellow shareholders and I wish to take a portion of those cash profits as distributions\/dividends each year.<\/p>\n<p class=\"paywall-full-content invisible\">With that regular influx of cash from my various ownership stakes in high-quality businesses, I continuously reinvest<span class=\"paywall-full-content no-summary-bullets invisible\"> into whichever publicly traded businesses offer the most compelling value at the time.<\/span><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Since I prefer to regularly receive a portion of cash profits from my investments in the form of dividends, I only seek out companies wherein the shareholders (via their representatives in the board of directors) have chosen to pay a dividend. At the same time, since I like quality businesses with competitive advantages, I don&#8217;t simply invest in whichever company offers the highest dividend yield.<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>In short, I invest in quality businesses that pay dividends, and I seek to buy stakes (or shares) in those businesses at reasonable valuations.<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">I like to call my strategy &#8220;Quality At a Reasonable Price.&#8221;<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In today&#8217;s market, there are lots of quality dividend payers at better-than-reasonable prices, especially in the realm of real estate investment trusts (&#8220;REITs&#8221;).<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Higher interest rates have absolutely wreaked havoc on most REIT stock prices, and there have been several high-quality, low-leveraged REITs tossed out with the bathwater.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Below, I&#8217;ll highlight five of them that I&#8217;m buying today. But first, I want to discuss two quick points:<\/p>\n<ol class=\"paywall-full-content invisible no-summary-bullets\">\n<li>The bigger the REIT, the better the performance has been<\/li>\n<li>REITs can still grow their bottom line profits even if interest expenses grow significantly faster than revenue over multiple years<\/li>\n<\/ol>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Triumph Of The Big<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Over the last five years and especially in the COVID era, bigger REITs have significantly outperformed small and mid-sized REITs.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Take a look at the chart below. The purple line is the Vanguard Real Estate ETF (VNQ), which holds all US REITs but is heavily weighted toward large-cap names. The orange line is the equal-weight index of REITs in the S&amp;P 500 (SPY), which represent the ~30 largest REITs on the market. The blue line is the equal weighting of REITs in the S&amp;P 400 mid-cap (MDY) index, while the green line is the equal weighting of REITs in the S&amp;P 600 small-cap (SPSM) index.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_904e8a02922535116e85bb0270326b9c.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Generally speaking, the bigger the REIT, the better the performance over the last five years. The smaller the REIT, the worse the performance.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">There are a few explanations for this.<\/p>\n<ol class=\"paywall-full-content invisible no-summary-bullets\">\n<li>Larger market-cap REITs tend to be concentrated in a few high-growth, highly valued sectors like industrial, data centers, and cell towers, which have performed extraordinarily well in the COVID era. Meanwhile, small and mid-sized REITs tend to own other types of properties like office, retail, apartments, senior housing, hotels, hospitals, and self-storage that have had more mixed performance over the last several years.<\/li>\n<li>Bigger REITs tend to have higher valuations, higher credit ratings, and greater access to various forms of capital. Therefore, they tend to carry cheaper and less debt with longer maturities, which makes them less vulnerable to rising interest rates. In contrast, many smaller REITs have shorter maturity debt and more floating rate exposure, making them more vulnerable to rising interest rates.<\/li>\n<\/ol>\n<p class=\"paywall-full-content invisible no-summary-bullets\">As you can see, these explanations are unique to the real estate sector. If you compare the various performances of SPY, MDY, and SPSM, which include all kinds of stocks, over the last five years, you&#8217;ll notice that the performance gap is there but isn&#8217;t as stark.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_7cef985d97b981f9255f438e1d0b224f.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Does this mean small-cap REITs are a better value right now than large-cap REITs?<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">It depends on a lot of factors.<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>When will interest rates come down from here and how far?<\/li>\n<li>Does the REIT have a strong or weak balance sheet?<\/li>\n<li>Is the REIT in an industry with secular tailwinds like industrial or secular headwinds like office?<\/li>\n<li>Has the REIT been hobbled in the last few years by expensive refinancing, asset sales, or a dividend cut?<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">On that last point, consider the case of Medical Properties Trust (MPW). The REIT is doing all three: expensive refinancing, asset sales, and a dividend cut.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_83af0b624d1c0b5537cb15fbdcf86863.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Bulls will say the dividend cut was a good thing. I disagree. It was necessary, but not good. It will free up some cash for deleveraging, but the hit to investor confidence that MPW just took is massive.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Historically, the record of companies that cut their dividends is not good, in part because they leave a bad taste in investors&#8217; mouths. Many shareholders sell and never think about the company again, except to write the occasional critical comment on Seeking Alpha articles.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">MPW was and is an income stock for most of its retail shareholder base. For many of these investors, cutting the dividend is a betrayal, no matter how you spin it.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">As for me, I threw in the towel on MPW back in February and sold at a nearly 40% loss. Today, that would be about a 65% loss. The hospital labor shortage problem persists, and many high-margin services and surgeries formerly carried out in hospitals have moved to off-campus clinics and surgery centers. The troubles of MPW&#8217;s highly indebted, private equity-backed tenants aren&#8217;t going away anytime soon, and neither is MPW&#8217;s large debt load or low credit rating of BB.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In short, MPW is one of those smaller REITs that has massively underperformed, but I don&#8217;t think it&#8217;s primed for outperformance over large-cap REITs anytime soon.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">How (Modestly Leveraged) REITs Grow Even With Rapidly Rising Interest Expenses<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">It&#8217;s all about the relative sizes of the numbers.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">If a REIT enjoys an investment grade credit rating, modest debt, and no single years of massive debt maturities to be refinanced all at once, then interest costs should rise only at a steady but reasonable pace. But off of a low base of interest rates, the percentage growth will still look huge &#8211; 20% or 30% or 40% or more YoY growth in interest expenses.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">How can a REIT growing its revenue at only about 5% per year continue to see bottom-line profit growth when its interest expenses are rising at, say, 25% per year?<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Let&#8217;s do the math, assuming that our hypothetical REIT&#8217;s interest expenses are about 5% of revenue.<\/p>\n<p> <span class=\"table-responsive paywall-full-content invisible no-summary-bullets\"><span class=\"table-scroll-wrapper\"><span data-intersection-boundary=\"start\"><\/span><\/p>\n<table>\n<tr>\n<td> <\/td>\n<td><strong>Rental Revenue (Growing 5% Per Year)<\/strong><\/td>\n<td><strong>Interest Expense (Growing 25% Per Year)<\/strong><\/td>\n<td><strong>Revenue Growth Minus Interest Growth<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Year 1<\/td>\n<td>$10,000<\/td>\n<td>$500<\/td>\n<td> <\/td>\n<\/tr>\n<tr>\n<td>Year 2<\/td>\n<td>$10,500<\/td>\n<td>$625<\/td>\n<td>$375<\/td>\n<\/tr>\n<tr>\n<td>Year 3<\/td>\n<td>$11,025<\/td>\n<td>$781<\/td>\n<td>$369<\/td>\n<\/tr>\n<tr>\n<td>Year 4<\/td>\n<td>$11,576<\/td>\n<td>$976<\/td>\n<td>$356<\/td>\n<\/tr>\n<tr>\n<td>Year 5<\/td>\n<td>$12,155<\/td>\n<td>$1,220<\/td>\n<td>$335<\/td>\n<\/tr>\n<\/table>\n<p> <span data-intersection-boundary=\"end\"><\/span><\/span><button class=\"table-enlarge-button\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewbox=\"0 0 16 16\" class=\"table-enlarge-icon\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16 11a5 5 0 0 1-5 5H5a5 5 0 0 1-5-5V5a5 5 0 0 1 5-5h6a5 5 0 0 1 5 5v6zm-4.5-2.5h2v-6h-6v2h4v4zm-9-1h2v4h4v2h-6v-6z\"><\/path><\/svg>Click to enlarge<\/button><\/span> <\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The far right column shows the difference between revenue growth and interest expense growth each year.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">As you can see, because revenue is a much larger number than interest expense, it does not need to grow nearly as fast in order to produce a larger absolute amount of growth than the amount of growth in interest costs, even with interest expenses rising 5 times faster.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">This is also how net operating income (&#8220;NOI&#8221;) works. Operating revenue can grow slower than operating expenses and still produce positive NOI growth, because the former is a much bigger absolute number than the latter.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">That is how many modestly leveraged REITs can continue to grow their bottom-line cash profits even amid rapidly rising interest rates. All else being equal, even much slower revenue and EBITDA growth can more than offset high growth in interest costs.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">With that said, allow me to pitch you five high-quality, larger market cap REITs that I&#8217;m buying today.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">I discussed the unique qualities and competitive advantages of these five REITs in a recent article titled &#8220;If I Could Only Own 7 REITs, It Would Be These,&#8221; but I did not discuss valuations.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">For a fuller discussion of the &#8220;what&#8221; and &#8220;why&#8221; of these REITs, see that previous article. For the &#8220;why buy now,&#8221; keep reading.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Agree Realty (ADC)<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">ADC is my largest holding. The net lease REIT is laser-focused on the nation&#8217;s largest and strongest retailers that are capable of not only growing but thriving in the age of e-commerce and omnichannel. Think of names like Walmart (WMT), Dollar General (DG), and Tractor Supply Company (TSCO), which happen to be its three largest tenants.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/49873922-1692727808870733.png\" alt=\"ADC properties\" width=\"640\" height=\"295\" contenteditable=\"false\" data-width=\"640\" data-height=\"295\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">ADC August Presentation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In addition to high-quality tenants and real estate locations, ADC&#8217;s balance sheet exudes quality. Net debt to EBITDA is low at 4.5x, and only about 6% of ADC&#8217;s <em>total<\/em> debt matures before 2028, making the REIT highly insulated from rising interest rates.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Today, ADC is trading at under 14x its operating cash flow, compared to its 5-year average of about 21x.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_b0f91399c28074bf1dde9df994d88c72.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">As for adjusted funds from operations (&#8220;AFFO&#8221;), ADC currently trades at an AFFO multiple a little over 15x, compared to its historical valuation of around 19-20x.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Meanwhile, compared to its 5-year average dividend yield of about 3.75%, ADC currently sports a yield of 4.7%.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">If ADC continues its average dividend growth rate of about 6% going forward, then the yield plus growth alone should deliver 10%+ total returns for buyers at today&#8217;s price.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/49873922-16927279570905008.png\" alt=\"ADC dividend growth\" width=\"640\" height=\"492\" contenteditable=\"false\" data-width=\"640\" data-height=\"492\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">ADC August Presentation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">But I foresee 25-30% stock price upside as well once interest rates normalized at a lower level.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">By the way, if you compare ADC to its immensely popular net lease peer, Realty Income (O), you&#8217;ll find that ADC is higher quality in virtually every way.<\/p>\n<p> <span class=\"table-responsive paywall-full-content invisible no-summary-bullets\"><span class=\"table-scroll-wrapper\"><span data-intersection-boundary=\"start\"><\/span><\/p>\n<table>\n<tr>\n<td> <\/td>\n<td><strong>ADC<\/strong><\/td>\n<td><strong>O<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Investment Grade Tenancy<\/td>\n<td>68%<\/td>\n<td>40%<\/td>\n<\/tr>\n<tr>\n<td>Net Debt To EBITDA<\/td>\n<td>4.5x<\/td>\n<td>5.3x<\/td>\n<\/tr>\n<tr>\n<td>Debt Maturing Before 2028<\/td>\n<td>6%<\/td>\n<td>47%<\/td>\n<\/tr>\n<tr>\n<td>5-Year Avg. Dividend Growth Rate<\/td>\n<td>7%<\/td>\n<td>4%<\/td>\n<\/tr>\n<\/table>\n<p> <span data-intersection-boundary=\"end\"><\/span><\/span><button class=\"table-enlarge-button\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewbox=\"0 0 16 16\" class=\"table-enlarge-icon\"><path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16 11a5 5 0 0 1-5 5H5a5 5 0 0 1-5-5V5a5 5 0 0 1 5-5h6a5 5 0 0 1 5 5v6zm-4.5-2.5h2v-6h-6v2h4v4zm-9-1h2v4h4v2h-6v-6z\"><\/path><\/svg>Click to enlarge<\/button><\/span> <\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_a9445423cda22540a88a5cac0bd72f53.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Alexandria Real Estate Equities (ARE)<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">ARE is the only pure-play REIT in the ownership and development of life science real estate &#8212; laboratory buildings used by biotech companies for research &amp; development. Its buildings are among the most state-of-the-art and well-located, and its tenants are the biggest and most innovative in the world.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Moreover, ARE&#8217;s fortress balance sheet and BBB+ credit rating show no signs of stress. No debt matures until 2025. The weighted average maturity of debt is over 13 years.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">And yet, ARE has sold off hard over the last year. Its price to operating cash flow of 12.3x is roughly half its historical average of about 25x.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_f2418fd4a74fc06e576415542a4912fe.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">And its AFFO multiple of 15.5x is far lower than its 5-year average multiple of 25.5x.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Meanwhile, ARE&#8217;s 12-year dividend growth streak continues onward, and its payout ratio is only about 2\/3rds of AFFO.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><em>Even if<\/em> growth slows from here, and <em>even if<\/em> ARE doesn&#8217;t ever attain its historically average valuation again (which I find unlikely), there&#8217;s still a huge margin of safety built in to the current price.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Crown Castle (CCI)<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">CCI is the leading US-focused telecommunications infrastructure REIT. It owns ~40,000 cell towers, over 120,000 small cells, and ~80,000 route miles of fiber. It is taking a hit to growth over the next few years from lease cancellations due to the merger between T-Mobile (TMUS) and Sprint, but the market seems to fear that CCI will never be able to revive growth again thereafter.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Ask yourself these questions:<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>Will the huge growth in mobile data usage and 5G applications really not need any more infrastructure investment from the wireless carriers? (Of course it will.)<\/li>\n<li>Is it likely that we will see more consolidation among telecom providers? (No, it&#8217;s already an oligopoly.)<\/li>\n<li>Am I willing to wait until 2026 before I see AFFO and dividend growth pick up for CCI again?<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">CCI has become dirt cheap with a massive margin of safety.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_220f81c0dd2c42dbb91ab777894dce6f.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Its AFFO multiple of about 14x is well below its 5-year average of 23x, and its 6.3% dividend yield almost twice as high as its average of 3.4%.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">I&#8217;m in CCI for the long haul and believe it will return to mid- to high-single-digit growth after 2025.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Mid-America Apartment Communities (MAA)<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">MAA is the leader in Sunbelt apartments. Many of these Sunbelt markets are seeing big waves of new supply hit the market right now, but I think MAA&#8217;s apartments are mostly insulated. Why?<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li> <strong>Location<\/strong>: The new supply is mostly popping up in suburban areas further away from population centers and highways, while MAA&#8217;s locations are closer to urban areas and more convenient.<\/li>\n<li> <strong>Price<\/strong>: Developers are trying to get top-dollar rents for their newly built properties, with asking rents typically 10-20% higher than MAA&#8217;s existing apartments.<\/li>\n<li> <strong>Renter Profile<\/strong>: The type of renter attracted to the brand new, Class A apartment building is often not the same as the renter living in an existing community.<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Competition has long been more intense in the Sunbelt than in more supply-constrained coastal markets, but that&#8217;s why MAA relies on good old fashioned real estate fundamentals. Eventually, this wave of supply will end, but above-average demand growth in the Sunbelt is expected to persist.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Oh, and with net debt to EBITDA at an ultra-low level of 3.3x, MAA has incredible capacity to acquire or develop properties when opportunities become available.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Meanwhile, MAA is now cheaper than it was even for most of 2020, during the COVID-19 lockdowns.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_7da3a3b7338a906836d13811d414226a.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Its current AFFO multiple of 17x may not sound that low, but its 5-year average is 21.5x. That&#8217;s 25% upside to the historical average. I&#8217;m confident that I&#8217;ll see that upside in the next few years.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">VICI Properties (VICI)<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">When it comes to the Landlord of Las Vegas, the word that comes to mind is &#8220;resilient.&#8221; I can&#8217;t think of a more perfect storm for Las Vegas and casinos\/experiential real estate more broadly than a pandemic that causes strict lockdowns and social distancing. And yet, because of the resilience of VICI&#8217;s tenants, the REIT collected 100% of contractual rent through the pandemic.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Now one of the largest REITs in the world after its acquisition of MGM Growth Properties, VICI is expanding into other forms of experiential real estate with top-tier tenant-operators. The key differentiator for VICI&#8217;s investment philosophy, I think, is <em>selectivity<\/em>.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/49873922-16927320708172877.png\" alt=\"VICI acquisition criteria\" width=\"640\" height=\"446\" contenteditable=\"false\" data-width=\"640\" data-height=\"446\" loading=\"lazy\"><\/span><\/picture><figcaption>\n<p class=\"item-caption\">VICI May Presentation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The REIT is expanding partnerships with best-in-class destination resort operators like Great Wolf Lodge and Canyon Ranch. But what gives me confidence in management is the quality tilt of their investment philosophy.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">VICI may not be as heavily discounted as some other REITs, but it still has about 10% upside to its average price to operating cash flow.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/08\/saupload_500d4106872aca47e639c12a53d5c102.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The dividend yield of 5.2% is slightly above its historical average of about 5.0%, and I think investors can expect mid-single-digit growth for the foreseeable future.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">Bottom Line<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">I know these aren&#8217;t the highest yielding REITs out there. But I would argue that they are among the highest <em>quality<\/em> REITs. And they are trading at reasonable or better-than-reasonable valuations. This equates to a healthy margin of safety for long-term investors.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">For QARP (Quality At a Reasonable Price) dividend growth investors like me, REITs are arguably the best place in the market to look for deals right now.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4630426-bloodshed-on-reit-street-5-high-quality-landlords-buying-long-haul?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I&#8217;m like a kid in the candy store in this market. To explain why, let me back up and explain where I&#8217;m coming from. My goal as a dividend growth investor is to generate the safest, largest, and fastest growing passive income stream possible. I&#8217;m neither a &#8220;value investor&#8221; nor a &#8220;growth investor,&#8221; although I [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":51943,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-51942","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bloodshed On REIT Street: 5 High-Quality Landlords I&#039;m Buying For The Long Haul | iFintechWorld<\/title>\n<meta name=\"description\" content=\"I&#039;m like a kid in the candy store in this market. To explain why, let me back up and explain where I&#039;m coming from. 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