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Contributor ○○○

Triple-Net First Quarter Results

The 10Qs are out for the Triple-Net Lease REITs, O, NNN and WPC.

All Revenues per share came in higher for the quarter and Net Operational Cash (CFFO) per share improved at the margin, except NNN, using rolling 4Q.

triplenets 1q20 cffo.jpg

Interest expense and PORs also came in looking good

troplenets 1q20 int.jpg

But with the lockdown of so many businesses occurring late in the quarter, we're not going to see its effects on cash flows until next quarter, and all have warned of lower expected rent collections. O is likely the strongest, with a total of 6% of revenues coming from leisure, theater and other crowd sensitive businesses.

NNN is going to be a bit more of a concern as a higher % of their rents come from crowd-sensitive businesses

NNN renters 1q20.JPG

WP Carey trending is the most favorable as its Cash Flows come more into line with O and NNN, having lagged them for years. From their recent press release, 95% of April rents have been collected and they claim a  "Well-diversified portfolio with underweight exposure to retail (17% of ABR) and minimal exposure to fitness, movie theaters and restaurants (2% of ABR) at quarter end"

The other concern I have is with O's very large capital expenditures of $1.076B 2Q19 and $1.532B 4Q19, with not much CFFO growth to show for it

1q20 O cffi.jpg

So the dividends are well covered for now. But how deep rent delinquencies go 2Q20 and beyond will depend on how long social distancing policies remain and the effect of the Feds loan program on the small businesses (<500 local employees) these REIT lease space to.

BruceM

5 Replies
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Participant ○

Re: Triple-Net First Quarter Results

Thanks Bruce for a very thorough recap.  The only one I hold right now is WPC and was pleased with their numbers and what they had to share.  I like their tenant mix and the fact that they are internationally diversified.  I will hope for the best going forward into the current quarter.  Stay well.

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Explorer ○

Re: Triple-Net First Quarter Results

Fellow Shareholder (FS),

Thanks for the "heads up".   I added to O last month and it is my largest REIT holding.  I am curious to know if there are any REITs that you recommend or think warrant further analysis.  Most of my REIT investments are in their preferreds.  Besides O I also hold OHI, VTR, LTC, WELL and PEAK.   See a theme here?  I sold WPC to take a CG and I did not like their financials.

A long time ago (maybe 2015) you posted your REIT holdings:  O HCN NHI NNN OLP DLR SNH held in taxable.

LTC HCP VTR PSA  held in ROTH, and BXP MAA EQR SKT in taxable IRA's.

I apologize for hijacking your thread.  One other question:  Beavers or Ducks?

Cheers,

Your FS Dry Fly (Trout)

 

 

 

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Contributor ○○○

Re: Triple-Net First Quarter Results

Hi DryFly

I've long ago sent SNH packing along with OLP. Deteriorating fundamentals. But still hold the other HC REITs you've shown along with the triple nets, PSA, DLR, MAA and EQR.

My dividend cuts so far, at least that I know of, are SKT, CBRL, SBRA (very small position, thankfully) & WELL. Other HC REITs may have to cut, particularly OHI (I don't hold), PEAK and VTR. Not sure about LTC and I think NHI is ok. I think this is going to depend on exposure to ALF and SNFs, along with MOBs (thats assisted living, skilled nursing and medical office) and how the PPP will help. Many of these, particularly OHI, WELL and PEAK were at maxed-out payout ratios and although slowly improving, this virus has changed everything.

I've not yet started tracking the Oregon schools. With Hebert gone don't know much yet about the new QB. I know zip about OSU. We'll see.

BruceM

 

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Explorer ○

Re: Triple-Net First Quarter Results

Hi Bruce,

This is not a REIT as of yet and may never become one.   I do like their "spirit".  Perhaps we could take a PIK in lieu of cash.  Cliff might like this after a long day taunting trolls about his VGR.  Let me know what you think:

https://www.sec.gov/Archives/edgar/data/838875/000165495420006638/wvvi_fwp-18029.htm

Cheers,

Dry Fly

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Frequent Contributor

Re: Triple-Net First Quarter Results

Hi Bruce ...  My REITs were my best performers today.  STOR, HTA, O and NHI were each up between 3% and 6%,  REITs remain a target of 25% of my equity portfolio. 

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