Real estate investment trust REIT on an office desk.
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From Tuesday through Thursday, I attended REITweek in New York City, which is always a great experience.
There’s so much to do there. So many well-placed people to meet. So much information to gather. So many seminars to attend (like the MoneyShow next week in Seattle).
And when I say “so many” on that last one, I mean so many. And then some.
Because REITweek is filled with dozens and dozens and dozens of real estate investment trust CEOs and other company reps. These professionals are everywhere, presenting on their companies and answering questions such as:
- How their businesses have handled recent issues
- Whether or not they plan on raising their dividends any time soon
- Where they’re headed going forward.
Nareit, which sponsors the event, describes it this way:
Nareit’s REITweek: 2019 Investor Conference provides an opportunity for investors to meet with REIT management teams. During REITweek, Nareit corporate members will share their business plans, forecasts and strategies with institutional investors in a series of individual company presentations, one-on-one meetings, luncheons, and networking events. In addition, REITweek offers attendees compelling panels that provide the latest perspectives on the economy, industry trends and other investment insights and information.
It sounds rather neat and organized that way, but take it from someone who’s been there and done that… It’s hectic.
Well worth it, but hectic nonetheless.
A Constant Reel of REIT Action
Here’s how it works every year…
Starting out nice, bright and early – i.e., 8:00 in the morning – on Tuesday, five scheduled REIT company reps step up to the plate in five different rooms filled with five different audiences to present their individual reports and then take questions and answers… all in a half-hour space. Attendees then have all of 15 minutes to get to the next round of fives.
This year, there were 10 solid such rounds, featuring a total of 49 REITs. On Tuesday alone. And then it started up all over again on Wednesday before winding down Thursday afternoon.
That right there, my friends, is REITweek.
Naturally, I attended as many presentations as I could manage. And I took notes at every one I went to. I can’t share every single bit of it here and now (not even close), but I do want to offer some highlights.
So here’s a breakdown of just some of what I heard, saw and thought about REITweek 2019…
Editor’s Note: Please do not take any of these write-ups as endorsements unless stated or included in one of my Forbes Real Estate Investor portfolios.
(For a special discount to that valuable service, click here.)
STORE Capital (STOR)
STORE Capital – which stands for Single Tenant Operational Real Estate – is a U.S.-based that’s “supplied more than $15 billion in real estate mortgage and lease solutions to customers across the U.S.,” according to its website.
At REITweek, it said that:
- It wants to focus on middle-market opportunities, since the largest and most underserved areas can be found there.
- For several years, it was doing $1.2 billion per year in acquisitions. But in its last fiscal year, it escalated its reach to $1.6 billion.
- Its risk doesn’t lie in its tenant credit, since STORE is not an unsecured creditor. It’s intensely particular about the contracts it signs, which guarantee that, in the case of bankruptcy, it gets paid first just as long as the property in question has profitable assets left. In addition, its portfolio is comprised of only 18% retailers that are handpicked and actively adding value to their operations.
CyrusOne, Inc. (CONE)
Self-described as operating “a network of more than 45 data centers in key North American, European, South American, and Asian markets, CyrusOne enables the computing needs for the businesses that change the world.” And this fast-expanding data center REIT had a lot to say in its half-hour space.
- It’s one of the fastest growers in the industry right now thanks to the “explosion of data,” allowing the company to repeatedly exceed expectations, and prompting positive assessments going forward.
- Data does not respect borders, and CyrusOne sees Europe especially as a place of prime expansionary opportunity. The wave of demand is growing 40%-50%, with no competitors to speak of. And its Latin American market is on the company’s radar as well.
- Because of what it does and how it does it, CyrusOne isn’t worried at all about the trade disputes that have come up between the U.S. and certain other countries.
Iron Mountain (IRM)
This powerhouse is “a global business dedicated to storing, protecting, and managing information and assets,” as described on its website. That would be both data and physical items. Considering that it is almost 70 years old at this point, Iron Mountain has more than enough to fill up a 30-minute bracket.
- It’s the only company in the industry that’s inspected by the Fed, making it automatically more transparent than its competitors.
- Due to its age, it’s not so much focused on accelerating growth as it is allocating capital. Its leverage is currently at the REIT midpoint mark, and it wants to delever going forward.
- Even though it does a lot of work with storing physically recorded data (i.e., paper copies), Iron Mountain isn’t hurting in that regard thanks in part to its increasing services to government institutions – which are required to maintain hard copies as well as electronic forms. While it has still seen volume decrease in this regard, that’s been more than offset by pricing.
Tanger Factory Outlet Centers (SKT)
“Everyone” knows Tanger, even if they have no idea what a REIT is. Millions of people drive by their outlet supercenters every day. And scores of them stop by to shop, dine and otherwise engage with these properties filled with brand-name entities offering advertised discount items.
Many investors would prefer to “shop” elsewhere, but this company is going strong, both by my estimations and its own:
- The only publicly traded outlet REIT on the market, Tanger maintains a fortress balance sheet that’s in better shape than ever… as evidenced by its dual investment-grade ratings. And its dividend is well-covered as well at 61% of its FFO.
- Unlike many of its struggling mall REIT cousins, it has a lower cost of occupancy with fewer store closings on its hands. And for those failing companies it is exposed to, such as Dress Barn, it has a cushion in place to soften the blow.
- The company is actively adapting to the changing times, pruning properties, investing further in the ones that it does keep, and adding amenities such as VIP shopping lounges, golf, and water features that have been well-received so far.
Welltower (WELL)
Welltower, listed as one of Fortune’s Most Admired Companies in 2019, “delivers the healthcare infrastructure necessary to facilitate better treatment at lower costs and keep patients out of the hospital.” As its website goes on to say, its clients are seniors housing operators, health systems, and post-acute care providers.
It already has 1,600 properties across the U.S., U.K., and Canada. Can it grow even further? The CEO seemed to dance around the topic, but here’s what he did have to say:
- Welltower is located in great markets with a curated portfolio that it’s proud of. Plus, it has a specialized data analytics team that keeps it in-the-know about the occupants it serves.
- Capital recycling is in the company’s “DNA.” It’s not a cap rate buyer though, and all the decisions it makes are based on total return. They’ve also been made with the dividend in mind, especially since that dividend hasn’t been growing lately. But it hopes to change that going forward.
- It’s bullish about the opportunities available to restructure strategic assets and develop the next generation of healthcare assets that keep patients out of hospitals.
Regency Centers (REG)
You would think that the largest shopping center REIT out there, with 419 properties, would be panicking as the “retailpocalypse” continues. Yet CEO Hap Stein seemed upbeat about the company he runs.
Perhaps that’s because of its website-listed byline about it crafting “the new retail experience every day with innovative people and exceptional properties.” Or perhaps it’s because, as the site also boasts, it operates out of “affluent and densely populated trade areas.”
Either way, Stein’s presentation at REITweek included the following points:
- The constant change in real estate is nothing new. Besides, shoppers still want brick and mortar stores to some degree. It’s just about figuring out what and where that degree is, and then capitalizing on it.
- Shopping center space must be rented out to better retailers, such as grocers and other establishments that understand the value of drawing their customers in through multiple channels.
- On being asked about getting an A rating anytime soon, Stein replied with, “We’ll strive to get to the A rating, but it will happen when it happens.” He was clearly not worried about this issue and confident about Regency’s future.
Final Thoughts About REITweek 2019
There was plenty more of that kind of information to digest at REITweek 2019 – far too much more to include in one single article.
With that said, I’m sure I’ll be capitalizing on this wealth of information going forward… using it to better inform the analyses I give and the recommendations I make.
So stay tuned to see what insights are coming up next!
I own shares in SKT, IRM, CONE and STOR