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Why a conservative investor diversified his portfolio with Jacksonville, Florida, rental properties

On a recent video episode of the Not Your Average Investor Show, Bob Weisner joined us as the guest investor. During the episode we talked with Weisner about why he decided to diversify his investment portfolio to real estate, how he found JWB Real Estate Capital, and his success investing with us thus far. Why invest in rental properties? Weisner is a well-diversified investor who has a hand in many asset classes. Before real estate, his main investing platform was the stock market. As an investor….....»»

Category: topSource: bizjournalsJun 23rd, 2022

21 Investing Myths That Just Aren’t True

With all of humanity’s collective knowledge available at our fingertips, you’d think investing myths would have disappeared by now. Q3 2021 hedge fund letters, conferences and more Yet they persist, largely because too many people consider money a “taboo” subject and avoid talking about it. Many of us also never question these assumptions, so we […] With all of humanity’s collective knowledge available at our fingertips, you’d think investing myths would have disappeared by now. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Yet they persist, largely because too many people consider money a “taboo” subject and avoid talking about it. Many of us also never question these assumptions, so we don’t bother running a quick web search in the first place. These persistent investing myths cost you money though, in a very real sense. Once you move past these myths, a wider world of investing opportunities open up for you. Myth: You Can Time the Market to Earn Higher Returns When it comes to new investors learning how to invest their money one of the biggest myths is that you can time the market and earn better returns. To profitably time the market, you need to get it right twice. You need to buy at or near the bottom of the market, just as it turns upward. Then you need to sell at or near the top of the market, just as it prepares to plunge. The most experienced, best-informed professionals can’t do this predictably. If they can’t do it, you certainly can’t. Imagine you’re standing on the sidelines, telling yourself that you’ll invest “once the market drops.” But the market continues to rise for the next year or two before its next dip. When the dip does come, its low point might still cost more than today’s price. And that’s assuming you were able to buy at the low point, which you almost certainly won’t time properly. In the meantime, you’ve missed out on years of passive income from dividends or rents, or interest. Rather than trying to time the market, practice dollar-cost averaging. While it sounds complicated, it simply involves investing a set amount every month into the same diversified investments, based on what your budget allows for each month. You ignore timing and just mimic the broader upward trend, to earn better returns in the long run. Myth: You Need a Lot of Money to Start Investing A common myth that many people assume is investing a little bit of money doesn’t make sense. They think that investing $5 a month is pointless so they never even bother to start. That couldn’t be further from the truth. And it leads to wasted opportunities to save and invest over time. The truth is, investing a small amount of money can grow into large sums of money. Jon Dulin, owner of MoneySmartGuides, offers this example: “Let’s say you are 25 years old and invest $20 a month for 25 years. During this time you earn an average 8% return — nothing spectacular, just average returns. “At the end of 25 years, your $20 monthly investment has grown to nearly $19,000. If that doesn’t sound impressive, consider that your measly $20 each month could help your child or grandchild pay for college. Or it could pay for a family reunion vacation that you have on a tropical island. “If you instead keep the money invested for another 25 years, when you reach age 75, you’ll have close to $149,000. This can cover several years’ worth of living expenses during retirement.” Don’t make the mistake of assuming a small amount of money is a waste of time. Thanks to compounding, your money will grow into far larger sums over time. Literally anyone can get started even with little capital. Take the first step now and start investing any excess money you have, regardless of the amount. Read more: Invest in Art like the Ultra Wealthy Without Spending Millions Myth: I’m Too Young (or Too Old) to Start Investing The sooner you start and the longer you keep the money invested, the more it will grow. At an 8% return, you’d have to invest $5,467 each month to reach $1 million in 10 years. But it only takes $287 invested each month to reach $1 million in 40 years. That means that even people working for minimum wage can become millionaires if they invest consistently over time. On the other end of the spectrum, some older adults look at those numbers and despair, wondering why they should bother investing at all. But that’s the price of delaying: you need to save and invest more each month to reach the same goal. As the proverb goes, the best time to plant a tree was 20 years ago. The second best time is now. Start investing today with what you have, and let compounding work its magic for you. Read more: Don’t Miss These 12 Stocks Pay Monthly Dividends Myth: It Takes Decades to Save Enough to Retire In personal finance, the concept of “financial independence” means being able to cover your living expenses with passive income from investments. To make your day job optional, in other words, allowing you to retire if you like. It takes hard work and an enormous savings rate, of course. If you plod along with a 10-15% savings rate, then yes, it will take you decades to save enough to retire. My wife and I got serious about financial independence at 37, three years ago. We’re on track to reach financial independence within the next two or three years, in our early  40s. How? With a savings rate of 60-65% of our annual income and aggressive investing. Neither of us earns a huge salary either, but we still enjoy a comfortable lifestyle with plenty of international travel. We can save so much of our income because we house hack for free housing, avoid owning a car by living in a walkable area, and get full health insurance through my wife’s job. Nor are we alone. Read up on the FIRE movement (financial independence, retire early) to see how thousands of other people are achieving fast early retirement. Myth: Popular Companies Make Better Stock Picks The idea that popular companies make for good stocks sounds appealing on its surface. After all, if a company is popular, it’s probably growing its business. But the popularity and even the quality of a business only tell half the story. The other side is the price you pay for it. “Imagine someone approached you with two offers,” illustrates Ben Reynolds of Sure Dividend. “The first offer is to buy a $100 bill for $150. The second offer is to buy a $1 bill for $0.50. We all know the $100 bill is worth much more than the $1 bill… But any rational person would rather buy $1 for $0.50 than $100 for $150.” Two Warren Buffett quotes sum this up nicely: “For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.” “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” The reason it is difficult to do well investing in popular stocks is because they tend to be overvalued. Everyone already “knows” the business is going to be wildly successful, and that’s baked into the price. If there’s any hiccup in results, the price is likely to decline significantly. Also, as evidenced by the GameStop fiasco, amateur traders can make a significant impact on popular investments. Just because something is popular doesn’t make it a good investment. Read more:  Discover these 19 Blue Chip Dividend Stocks Myth: You Need to Spend Time Researching Stocks or Frequently Trading Many people believe that it takes a lot of time to research stock and make frequent trades to make money, resulting in people leaving their investments with a professional or relying on expensive mutual funds. But individual investors don’t need expensive investment advisors or managed mutual funds (more on them shortly). “For most retail investors, utilizing low-cost passive index ETFs is the easiest and cheapest approach,” explains Bob Lai of Tawcan.com. “These index ETFs track a special index, like the S&P 500 or the NASDAQ Composite Index. Because of index-tracking nature, you get to own all the stocks listed in that index.” There’s no need to spend time determining the earning trend of companies like Apple, Facebook, Amazon, or Pfizer because you own them all. By owning all these stocks in the index ETFs, you are also not making frequent trades. Counterintuitively, frequent trades generally lead to lower returns. Think of your investment portfolio like a bar of soap: the more you touch it, the smaller it gets. Read more: Related read: Diversify Your Portfolio With These Top 10 International ETFs Myth: Expensive Managed Mutual Funds Outperform Passive Index Funds Experienced, professional investors with the best data available to them still can’t pick stocks or time the market better than passive index funds. Need proof? Over the last 15 years, nearly 90% of managed mutual funds underperformed compared to their respective benchmark index. “The best investment strategy would be to invest in index funds of stocks or bonds that track an entire segment of the market — so you don’t have to worry about which specific security will give you the best return over short investing periods,” offers Kelan Kline, cofounder of The Savvy Couple. “My personal favorite low cost broad market index fund is Vanguard’s VTSAX.” Myth: Only the Wealthy Can Hire Investment Advisors A survey from JPMorgan Chase found that 42% of people who aren’t investing are staying out because they don’t think they have enough to invest. On some level, this isn’t surprising. After all, historically people had to work with private wealth managers who require $100,000 or more. Even many popular index funds required a minimum of $10,000 to get started, just 20 years ago. “That is changing with algorithm-driven investment tools such as robo-advisors,” says Jeremy Biberdorf of ModestMoney.com. “In many cases, robo-advisors have no minimum investment and allow you to invest for a small fee. Even investing a small amount every year can make a big difference.” Robo-advisors also won’t run off with your money or engage in insider trading. Many investors let their guard down and trust human investment advisors without doing any due diligence on them, especially when referred to them by friends of family members. “This makes investors vulnerable to conflicting advice in even the best-case scenarios. In the worst-case scenarios, they are easy prey for scammers. That’s why I call this blind faith in financial professionals the worst investment advice I hear everywhere,” explains Chris Mamula of Can I Retire Yet?. Read more: Can I Retire at 62 With 400k In My 401(k)? Myth: Bonds Are Inherently Safer than Other Asset Classes Bonds offer one type of safety — but leave you exposed to other types of risk. When an investor buys a bond from the US Government or most municipalities, there’s little risk of the borrower defaulting. So investors can sleep at night knowing that as long as they hold that bond, they’ll probably receive their modest interest payments. But bond values gyrate on the secondary market just like stock prices. Investors who plan to sell their bonds rather than hold them can find themselves with paper that’s gone down in value, not up. Which says nothing of the corroding effect of inflation on bond interest payments. When inflation runs at 3% in a year, a bond paying 3% interest-only generates a 0% real return. That in turn means that bonds may not actually protect retirees against running out of money before they die. Sure, the stock market is volatile, but in the long term, it generates an average return of 10% per year. At a 4% withdrawal rate, investors will see their stock portfolio go up in value rather than down, in most years. Even conservative income stock investing, such as in dividend kings, can yield 3-4% in dividends alone, on top of share price growth. But bonds paying paltry 3-4% interest will cause a slow decay in your nest egg. None of that means that you should never invest in bonds. But every investor should understand all the risks — not just the risk of default. Myth: Options Trading is Risky For many, selling options is a risky business.  And strategies such as Iron Condors add to the complexity.   “However, when managed correctly, options trading can be a handy addition to an overall portfolio”, explains Gavin McMaster of IQ Financial Services, LLC. An iron condor is a delta-neutral option strategy that consists of both call options, and put options.  The strategy works if the underlying stock stays within a specific range during the course of the trade. The key with iron condors is trading an appropriate position size (never risk your whole account on an iron condor) and knowing how to manage them. Here are a few quick tips to reduce the risks with iron condors: Never risk more than 2-3% of your account size on any one trade Close the trade before the stock breaks through one of the short strikes Avoid earnings announcements Have one or two adjustment strategies ready in case the trade moves against you Focus on stocks and ETF’s with a high IV Rank “While iron condors can be risky if you don’t know what you are doing, using appropriate position sizing and risk management rules can reduce the risks”, adds McMaster.  Generating income from iron condors can be a superb way to increase the returns on your portfolio. Myth: Pay Off Your Student Loans Before Buying a Home Paying off student loans before buying a home is a common misconception. While there is no “one size fits all approach,” many people believe their student loan debt will prohibit them from purchasing a home, however, this isn’t always the case. “For example, doctors and dentists often carry large amounts of student debt, and typically have relatively high debt to income ratios. Therefore, exploring a Physician Mortgage, which allows individuals to carry more debt, may be a better fit than a traditional mortgage”, explains Kaitlin Walsh-Epstein with Laurel Road. For those nonhealthcare professionals looking to purchase a home while managing high outstanding student loan balances, refinancing their student loans can be a good option. By refinancing to a longer-term mortgage, the borrower may lower their monthly payments. However, this may also increase the total interest paid over the life of the loan. “Refinancing to a shorter-term mortgage may increase the borrower’s monthly payments, but may lower the total interest paid over the life of the loan.”, adds Walsh-Epstein. Questions to consider: What is your current student loan interest rate? (Calculate the true cost over the life of your loan) What are mortgage interest rates and are they projected to go up or down?  (Currently mortgage rates are low) Do you pay rent each month and if so, how will your rent payment compare to a mortgage payment?  (As well as carrying costs of owning a home) Is the home (or real estate) projected to appreciate in value? The first step is to review and understand your credit score, student loan terms, and financial goals. Working towards making payments to lower your overall debt will help to raise your credit score, yet again increasing your chances of getting into your dream home faster! Myth: The “Rule of 100” In the 20th Century, investment advisors droned out the same advice to most clients: “Subtract your age from 100, and that’s the percent of your portfolio that should be invested in stocks.” They pushed clients to move their money into bonds instead, as they grew older. A sound strategy — back when Treasury bonds paid 15% interest. This century has seen perpetual low-interest rates, and bonds have offered poor returns compared to stocks. This says nothing of the fact that people are living and working longer, so they both have more risk tolerance and need their nest eggs to last longer. Today, investment advisors tend to instead advise subtracting your age from 110 or 120 instead, if they bother issuing such generic advice at all. Everyone has their own unique risk tolerance and needs; as a real estate investor, I can earn safer, higher returns from real estate than bonds, so I avoid bonds altogether. A high earner nearing retirement might appreciate the tax benefits and security of municipal bonds and tailor their portfolio accordingly. Be careful of anyone peddling such a broad rule of thumb as the “Rule of 100.” Read more: Find Expert Tax Preparers Now! Myth: You Must Pay Off All Debt Before Investing There are plenty of great reasons to pay off consumer debt early. You earn an effective return equal to the interest rate, and it’s a guaranteed return on your money when you use it to pay off debt early. Mark Patrick of Financial Pilgrimage explains it like this: “Our family even went so far to pay down our mortgage debt despite record low-interest rates. With that said, throughout the entire process we invested in our retirement accounts, such as our 401(k) account. The benefits are just too good to pass up. “The company that I work for provides a 401k match of up to 6% plus an additional 1% that every employee receives regardless. Therefore, if I contributed 6% of my salary to my 401(k) I would receive an additional 7% in contributions from my employer. I was more than doubling my money right away! “If you decide to wait to pay down all of your consumer debt instead of starting to invest for your retirement you’ll miss out on years of compound interest. Compound interest is one of the most powerful forces in personal finance. The earlier you can get started, the better. For example, if someone invests $5,000 per year from age 25 to 35 and then never invests another dollar, they would likely have more money at age 65 than someone that invests the same amount every month from age 35 to 65. “While I am a huge proponent of paying down debt, it shouldn’t come at the expense of forgoing investing. Especially when you want that money to grow until retirement. Try to find the balance between paying down debt and investing. We certainly could have paid down our debt faster if we decided not to invest throughout the process, but after 15 years in the workforce I’m sure glad we didn’t. Those dollars invested early on have compounded into much larger amounts over the years. Read more: Should you Pay off Debt or Save for Retirement Myth: You Should Pay Off Your Student Loans Before Buying a Home It might make more sense to pay off student loans before buying a house. Or it might not. Ultimately it depends on your goals, your housing market, your loan interest rates, and your other finances. For example, you might live in a housing market where it’s cheaper to rent than own a home. In that case, it makes sense to pay off your student loans rather than rush into buying. Alternatively, if you plan on buying a duplex and house hacking, and thereby eliminating your housing payment, it probably makes more sense to buy. Just think about how much faster you could pay off your student loans, with no housing payment! Think holistically about how owning versus renting for another year or two would affect your finances. Don’t rush into buying a home — but don’t avoid it without deep analysis, either. Myth: Buying Is Always Better than Renting Despite having owned dozens of properties as a real estate investor, I live in a rental apartment. In some markets, renting makes more sense than buying. Look no further than San Francisco, where the median home price is $1,504,311, but the median rent for a three-bedroom home is $4,567. After adding in property taxes and homeowners insurance, it would cost roughly double the monthly payment to buy a median home as rent, despite all the perennial complaints by San Francisco tenants. And that says nothing of maintenance and repair costs, which average thousands of dollars each year for the typical homeowner. Renters don’t have to pay those costs or do that labor. They delegate them to the landlord. Nor do renters need the fiscal discipline to budget money each month for those irregular, but inevitable expenses. Not everyone has that discipline, and they’re better off with the steady, predictable housing cost of monthly rent. Finally, renting allows flexibility. Tenants can sign a month-to-month lease agreement and move out with a few weeks’ notice. Homeowners don’t have the flexibility; it takes months to sell a home, and typically tens of thousands in closing costs. Myth: Your Home Is an Investment Buyers love to delude themselves that they’re buying an “investment” rather than spending money on shelter. It helps them justify overspending on the biggest, fanciest house they can possibly afford. But make no mistake: housing falls under the “Expenses” category in your budget, not the “Investments” category. It costs you money every month, rather than generating it. House hacking marks a notable exception however, since your home helps you avoid a housing payment. Sure, real estate often goes up in value. So do baseball cards, but that doesn’t justify hobbyists spending as much as they possibly can on them, while patting themselves on the back for their wise “investments.” By all means, invest in real estate. But do it by buying true investment properties, or REITs, or real estate crowdfunding investments. The more you spend on housing, the less you can put toward true investments. Read more: House Hacking – 18 Ways to Never Pay Rent Again Myth: You Should Put the Bare Minimum Down When You Buy a Home Making the bare minimum down payment often enables buyers to overspend on housing. They end up overleveraging themselves, mortgaged to the hilt with an enormous monthly payment and little money left to actually furnish the place, or to enjoy any social life. It also leaves homeowners vulnerable to becoming upside-down on their home, owing more than the home is worth. At that point, they become prisoners in their own homes, unable to sell without the lender’s permission. They end up stuck there until the housing market either improves or they pay their loan balance down enough to be able to afford seller closing costs without coming out of pocket. While it sounds nice to put down next to nothing on a home, look at the bigger picture. If you spend far less on a home than you can afford, then a low down payment can serve you well. But if you’re straining against the limits of your budget, beware of putting every last penny into a tiny down payment with a huge monthly bill. Myth: You Should Put Down as Much as Possible on a Home The common wisdom was once to put down as much as possible when you buy a home, and 20% at the very least. However, this locks up a good portion of the money that could be growing at a faster rate with other investments. “Putting down less than 20% does increase the monthly mortgage payment due to the higher interest rate and PMI (private mortgage insurance),” explains Andy Kolodgie of The House Guys. “However, you should compare your expected returns on that extra down payment if you were to invest it elsewhere, to the annual savings on your mortgage. For example, investing in stocks and bonds could allow you to earn more money while providing the added benefit of easy liquidity. “A lesson learned from the 2008 mortgage crisis was you can’t eat equity in your home. During the recession, it was nearly impossible to refinance the equity out of any home, as home prices dropped below most people’s mortgage balance. Putting less than 20% down to stay more liquid and investing in alternative assets diversifies your portfolio, keeping buyers more risk-averse.” Again, look holistically at your personal finances. As you near retirement, it makes more sense to play conservatively with a larger down payment to avoid PMI and reduce your monthly mortgage bill. For younger borrowers looking to buy a first home, it often makes more sense to put down 3-10%, and invest their other cash more aggressively in the stock market or other assets with high return potential. Myth: You Need 6-12 Months’ Living Expenses in an Emergency Fund To hear the pundits crying from their soapboxes, we all need at least a year’s worth of living expenses parked in a savings account in cash to protect us from a financial apocalypse. And some people do. But not everyone. Those with either irregular incomes, irregular expenses, or both do need a deep cash cushion. For example, as an entrepreneur, there have been months where I didn’t earn enough to take a personal distribution for myself from the company, so I earned $0 in personal income those months. Someone like me does need 6-12 months’ worth of living expenses saved in an emergency fund. Salaried employees with safe jobs at stable employers don’t need as much cash in an emergency fund. That goes doubly if they live a predictable middle-class lifestyle with the same expenses month in and month out. They may only need 2-3 months’ expenses set aside in cash. I go a step further with my emergency fund and think of it as tiered levels of defenses, like a medieval castle. The first level comprises cash savings — you can tap it if you need it. I also keep several unused credit cards with low-interest rates, that I can also draw on in a pinch. Then I keep several low-volatility, short-term investments that I can also turn to if needed. All of which means I don’t actually need 6-12 months’ living expenses in cash after all. Myth: More Education Inherently Means a Higher Income From a statistical standpoint, education level correlates strongly with income. People with college degrees earn more than those with high school diplomas on average, and those with advanced degrees earn a higher average income still. On a personal level, it often doesn’t work out that way. I have plenty of friends and family members with advanced degrees, and most of them earn modest, middle-income salaries. Salaries with ceilings, and little room for advancement beyond their specialized niche. I can’t tell you how many teachers I know with several master’s degrees, who earn little or nothing more than their colleagues with bachelor’s degrees. In fact, my friends and family with the highest incomes all stopped at bachelor’s degrees and while some got high-paying jobs, others went into business in some capacity. This doesn’t mean you shouldn’t pursue an advanced degree if it’s required for your dream job. By all means, pursue your passion. But don’t assume that an advanced degree inherently means an advanced salary. Read more: How to Make $100k/yr As A Brand Ambassador Myth: Gold Offers the Best Hedge Against Inflation Many investors flock to gold when they fear inflation. But historically, gold often performs badly during times of high inflation. From 1980-1984, for instance, gold lost around 10% in value, even as inflation raged at a 6.5% annual rate. Historically repeated itself in the late 1980s as well. Gold actually works best as a hedge against a weakening currency — compared to other world currencies. When investors think the US dollar is about to crumble in value compared to the euro, pound, or yen, that marks a good moment to grab some gold. But investors more generally worried about inflation should consider better hedges against it. Real estate offers an excellent hedge against inflation, for example. It has inherent value: people will pay the going rate, regardless of the value of the currency. The same goes for commodities like food staples; no one stops eating just because inflation surges. Most professional investment advisors recommend holding no more than 5% of your portfolio in precious metals, if that. I personally own none, preferring to invest in stocks, real estate, and the occasional speculative gamble such as cryptocurrency. Article By G. Brian Davis, The Financially Independent Millennial Updated on Oct 5, 2021, 5:10 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 5th, 2021

NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUST REPORTS STRONG FOURTH QUARTER AND FULL YEAR 2021 RESULTS, PROVIDES STRATEGIC UPDATE AND ANNOUNCES $765 MILLION US PORTFOLIO ACQUISITION

TORONTO, March 15, 2022 /CNW/ - NorthWest Healthcare Properties Real Estate Investment Trust (the "REIT") (TSX:NWH) today announced its results for the three and twelve months ended December 31, 2021. NorthWest's high quality and defensive $9.2 billion, 197 property portfolio performed exceptionally well in 2021 and the REIT delivered record financial results, highlighted by 2.2% and 9.0% AFFO (see Exhibit 2) and NAV per Unit (Exhibit 5) growth, respectively, while also reducing leverage by 840 bp year-over-year. Underpinning these results was a 16.3% increase in fee bearing capital and resulting 60% increase in proportionate asset management fees (Exhibit 7). This trend is expected to continue as the REIT transitions to a more capital light model with an outsized growth opportunity in healthcare real estate globally. Subsequent to year-end, the REIT is pleased to announce significant progress on several key initiatives that will accelerate growth in 2022 including: UK JV tracking to Q2-2022 close: Completion of UK value creation initiatives and entering into agreements to refinance the portfolio, position the UK JV for execution in Q2-2022; New $2.2 billion (A$2.4 billion) Australian JV expansion: Building upon its successful Australian core hospital JV, GIC (Singapore's sovereign wealth fund) agreed to expand the JV by $2.2 billion increasing total commitments to $5.6 billion; US market entry: After a year of extensive diligence, the REIT is pleased to announce its US market entry with the acquisition of a $764.3 million portfolio of cure-focused healthcare assets comprised of hospitals, ambulatory/out-patient facilities and medical office buildings; Global Healthcare Precinct Strategy: With a growing investment pipeline and a focus on opportunities at the intersection of healthcare, research and education the REIT is launching a new global healthcare precinct development fund. Commenting on NorthWest's strong results and progress on key strategic initiatives Paul Dalla Lana, Chairman and CEO said: "We are excited with the performance of the business in 2021 but believe that NorthWest is really just beginning to hit its stride in terms of unlocking the full potential of its platform to become a clear global leader in healthcare real estate. Our long-planned entry into the US opens up new growth opportunities in the world's largest healthcare market. Additionally, over the last 12 months, NorthWest has created a $2 billion plus pipeline of development opportunities that align with its global healthcare precinct strategy. As healthcare systems recover from the pandemic, we see increasing opportunities to work with new and existing partners across a variety of high-quality and accretive long-term strategies." Summary of 2021 Investment Activity 2021 was another busy year for the REIT with total investment activity of more than $1.0 billion inclusive of three major transactions totaling $360 million that closed in Q4-2021. Q4-2021 acquisitions included (i) the Tennyson Centre acquired by Vital Trust in New Zealand for approximately $83.9 million (NZ$95.8 million); (ii) Epworth Geelong & Elim Hospitals acquired by the REIT's Australian institutional joint venture for approximately $124.2 million (A$134.7 million) and (iii) Cheshire Hospital for approximately $153.3 million (£89.7 million) which was acquired directly by the REIT in a sale and leaseback transaction with Spire Healthcare. Cheshire is a high quality 50 bed hospital located between Manchester and Liverpool in England. Cheshire is highly productive with strong profitability and a CQC rating of "Outstanding". The acquisition adds scale and diversification to the REIT's high quality UK portfolio. During Q4 the REIT entered into firm contracts to acquire a rehabilitation clinic in Germany for approximately $60 million (€39.9 million), a Dutch MOB for approximately $10.5 million (€7.0 million), and the fund through of a fully leased development of a cancer centre in Australia. On-Going Strategic Initiatives: Rapidly Progressing UK JV Formation In Q4-2021, the REIT recorded a fair value gain of $25.2 million increasing the cumulative value creation over the past two quarters to approximately $200.0 million while also expanding its portfolio with a $153.3 million acquisition of Cheshire Hospital – a 50 bed acute care hospital occupied by the Spire Hospital Group, the UK's third largest private hospital operator. Post quarter end, the REIT entered into agreements to refinance its existing UK debt with a new approximately $454.6 million (£265 million), non-recourse debt facility led by a local UK lender. The new facility is portable to the planned joint venture, is interest only and at an approximately 100 bp lower interest rate. The facility is expected to close in Q2-2022 and is subject to typical closing conditions. With value creation and refinancing initiatives complete the REIT is on track to close its UK JV initiative in Q2-2022. As a reminder, the REIT intends to seed the new fund with its best-in-class UK hospital portfolio which is anticipated to generate more than $350 million of capital for the REIT based on a target hold position of 20% to 30%. Executing $2.2 billion Australian Joint Venture Upsize The REIT's Australian institutional JV has now deployed, committed, or allocated $3.2 billion (A$3.4 billion) of the total committed capital of $3.4 billion (A$3.7 billion) in its initial Australian Institutional joint venture. To continue the successful partnership, the REIT and GIC have reached an agreement to expand the investment commitment with an incremental commitment of $2.2 billion (A$2.4 billion) of debt and equity. US Market Entry Subsequent to year-end, the REIT entered into a binding agreement to acquire a portfolio of US healthcare real estate for $764.3 million (US$601.9 million; the "US Portfolio"). The US Portfolio is the REIT's first acquisition in the United States, is subject only to typical closing conditions and is scheduled to close in Q2-2022. The US Portfolio comprises 27 properties including 7 hospitals, 5 micro-hospitals, and 15 MOBs totaling 1.2  million square feet. The portfolio is 97% occupied, with a weighted average lease expiry of 10.7 years and is geographically diversified across 10 states with approximately 60% of NOI coming from top 20 US MSAs with a focus in the Greater Chicago Area and Sunbelt States. The portfolio includes an attractive mix of single-tenant (78% of NOI) and multi-tenant (22%) properties and 91% of NOI either triple or quadruple net. The acquisition will initially be funded from a combination of new corporate and property level financing and the REITs existing resources. The transaction will be immediately accretive to AFFO per Unit. As the REIT integrates the US Portfolio and expands on its market entry strategy over the course of 2022 it intends to recapitalize the acquisition with a new co-investment partner. Commenting on the transaction, Paul Dalla Lana, CEO of the REIT, said: "The US Portfolio is an excellent starting point to launch the REIT's US strategy because of the defensive nature of the portfolio's long-term cash flows, attractive contractual rent growth and low management intensity; all of which aligns strongly with the REIT's core investment strategy. Moreover, this portfolio is a launching pad for accretive expansion with US pricing typically approximately 100 bp higher on a cap rate basis than the REIT's other global markets with transaction volume that is unmatched globally." Funds Management Platform & Outlook With the agreement to increase the Australian joint venture by $2.2 billion (A$2.4 billion), the REIT now has fee bearing assets under management ("AUM") and capital commitments totaling $11.4 billion. Looking ahead to completion of the UK JV, its planned US co-investment and global healthcare precinct initiatives, all of which are expected to close later in 2022 total AUM plus capital commitments are expected to increase to approximately $20.0 billion in the near-term. As the REIT's funds management platform continues to scale at pace, it is targeting an ultimate ownership level of between 20% - 30% across its capital platforms and anticipates generating market leading growth in both AFFO and NAV on per unit basis as a result of leveraging its capital light model to fund growth. 2021 Fourth Quarter Financial and Operational Highlights: For the three months and year ended December 31, 2021, the REIT delivered strong financial and operational performance with an increasingly conservative balance sheet across an expanded 197 property, 16.4 million square foot defensive acute healthcare real estate portfolio underpinned by long-term inflation indexed leases. Key highlights are as follows: Q4 2021 revenue stable year over year at $96.4M; Q4 2021 AFFO of $0.23 per unit is in-line with the previous quarter; FY 2021 AFFO of $0.87 per unit, up 2.2% and 11.8% year-over-year on a constant currency, leverage neutral basis (Exhibit 3). AFFO payout ratio of 88% based on the REIT's $0.80 per unit annual distribution; Year to date Same Property NOI growth of 3.6%, driven primarily by annual rent indexation (see Exhibit 4); Strong portfolio occupancy of 97.0% is in line with the previous quarter; Weighted average lease expiry of 14.5 years is underpinned by the international portfolio's Hospital and Health Care Facility Assets' weighted average lease expiry of 16.9 years; Total assets under management ("AUM") increased 17.3% year over year to $9.2 billion; Total capital deployed in fee bearing vehicles is $5.2 billion up 16.3% year over year. Undeployed capital in existing fee bearing vehicles totals $3.7 billion; Net asset value ("NAV") per unit increased by 9.0% year over year to $14.47 and 16.6% on a constant currency basis (see Exhibit 6); Debt to Gross Book Value - Including Convertible Debentures of 41.9% has decreased 611 bp, year over year, and is expected to decrease by a further 810 bp through the seeding of the new UK JV as well as the conversion of in the money convertible debentures. Selected Financial Information: (unaudited) ($000's, except unit and per unit amounts) Three months endedDecember 31, 2021 Three months endedDecember 31, 2020 Number of properties 197 188 Gross leasable area (sf) 16,391,724 15,498,485 Occupancy 97% 97% Weighted Average Lease Expiry (Years) 14.5 14.5 Net Operating Income $74,436 $71,007 Net Income (Loss) attributable to unitholders $139,452 $143,763 Funds from Operations ("FFO") $49,376 $40,252 Adjusted Funds from Operations ("AFFO") $50,436 $38,539 Debt to Gross Book Value - Declaration of Trust 39.9 % 42.9 % Debt to Gross Book Value - Including Convertible Debentures 41.9 % 48.0 % Q4 2021 Conference Call: The REIT invites you to participate in its conference call with senior management to discuss our fourth quarter 2021 results on Friday, March 14, 2022 at 10:00 AM (Eastern). The conference call can be accessed by dialing 416-764-8609 or 1 (888) 390-0605. The conference ID is 37093308#. Audio replay will be available from November 12, 2021 through November 19, 2021 by dialing 416-764-8677 or 1 (888) 390-0541. The reservation number is 093308#. In conjunction with the release of the REIT's third quarter 2021 financial results, the REIT will post a current investor update presentation to its website where additional information on the REIT's investments and operating performance may be found. Please visit the REIT's website at www.nwhreit.com/Investors/Presentations. Vital Healthcare Property Trust On February 24, 2022 Vital Trust also announced its financial results for the six months ended December 31, 2021. Details on Vital Trust's financial results are available on Vital Trust's website at www.vitalhealthcareproperty.co.nz. About NorthWest Healthcare Properties Real Estate Investment Trust NorthWest Healthcare Properties Real Estate Investment Trust (TSX:NWH) (NorthWest) is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. As at December 31, 2021, the REIT provides investors with access to a portfolio of high quality international healthcare real estate infrastructure comprised of interests in a diversified portfolio of 197 income-producing properties and 16.4 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Europe, Australia and New Zealand. The REIT's portfolio of medical office buildings, clinics, and hospitals is characterized by long term indexed leases and stable occupancies. With a fully integrated and aligned senior management team, the REIT leverages over 250 professionals in nine offices in five countries to serve as a long term real estate partner to leading healthcare operators. Non-IFRS Financial Measures Some financial measures used in this press release, such as SPNOI, Constant Currency SPNOI, FFO, FFO per Unit, AFFO, AFFO per Unit, AFFO Payout Ratio, NAV, NAV per Unit, portfolio occupancy and weighted average lease expiry, are used by the real estate industry to measure and compare the operating performance of real estate companies, but they do not have any standardized meaning prescribed by IFRS. As such, they are unlikely to be comparable to similar measures presented by other real estate companies. These non- IFRS measures are more fully defined and discussed in the exhibits to this news release and in the REIT's Management's Discussion and Analysis ("MD&A") for the three months and year ended December 31, 2021, in the "Performance Measurement" and "Results from Operations" sections. The MD&A is available on the SEDAR website at www.sedar.com. Forward-Looking Statements This press release may contain forward-looking statements with respect to the REIT, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe", "normalized", "contracted", or "continue" or the negative thereof or similar variations. Examples of such statements in this press release may include statements concerning the REIT's position as a leading healthcare real estate asset manager globally, geographic expansion, ESG initiatives, expanding AUM, balance sheet optimization arrangements, the proposed U.K. joint venture and potential acquisitions, dispositions and other transactions, including a potential UK joint venture and a potential transaction involving Australian Unity. The REIT's actual results and performance discussed herein could differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on numerous assumptions which may prove incorrect and which could cause actual results or events to differ materially from the forward-looking statements. Such assumptions include, but are not limited to (i) assumptions relating to completion of anticipated acquisitions, dispositions, development, joint venture, deleveraging and other transactions (some of which remain subject to completing documentation) on terms disclosed; (ii) the REIT's properties continuing to perform as they have recently, (iii) the REIT successfully integrating past and future acquisitions, including the realization of synergies in connection therewith; (iv) various general economic and market factors, including exchange rates remaining constant, local real estate conditions remaining strong, interest rates remaining at current levels, the impacts of COVID-19 on the REIT's business ameliorating or remaining stable; and (vii) the availability of equity and debt financing to the REIT. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transactions contemplated herein are completed. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risks and Uncertainties" in the REIT's Annual Information Form and the risks and uncertainties set out in the MD&A which are available on www.sedar.com. These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release, and, except as expressly required by applicable law, the REIT assumes no obligation to update such statements. NORTHWEST HEALTHCARE PROPERTIES REAL ESTATE INVESTMENT TRUSTCondensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)(in thousands of Canadian dollars)Unaudited For the three months ended December 31, For the year ended December 31, 2021 2020 2021 2020 Net Property Operating Income Revenue from investment properties $ 96,368 $ 92,845 $ 374,613 $ 373,818 Property operating costs 21,932 21,838 85,093 88,024 74,436 71,007 289,520 285,794 Other Income Interest and other 1,068 302 4,597 1,947 Development revenue 4,608 — 10,350 — Management fees 3,396 4,241 16,545 11,666 Share of profit (loss) of equity accounted investments 51,930 34,831 107,483 52,091 61,002 39,374 138,975 65,704 Expenses and other Mortgage and loan interest expense 22,299 23,893 90,461 97,748 General and administrative expenses 10,426 7,516 40,203 29,439 Transaction costs 7,652 3,309 37,984 34,933 Development costs 4,437 — 9,441 — Foreign exchange (gain) loss (5,716) 6,872 (14,735).....»»

Category: earningsSource: benzingaMar 15th, 2022

ON THE SCENE: Latest middle market sales, acquisitions

Christopher Okada, CEO of Okada & Company, has acquired 109-111 West 24th Street, a seven-story, 44,500 s/f commercial property in the Flatiron District (pictured top) for $16.25 million. The elevatored property sits on a 50 by 115 s/f. lot one block west of Madison Square Park. the sale prices equates... The post ON THE SCENE: Latest middle market sales, acquisitions appeared first on Real Estate Weekly. Christopher Okada, CEO of Okada & Company, has acquired 109-111 West 24th Street, a seven-story, 44,500 s/f commercial property in the Flatiron District (pictured top) for $16.25 million. The elevatored property sits on a 50 by 115 s/f. lot one block west of Madison Square Park. the sale prices equates to $365 psf. The seller was owner/user Montauk Rug & Carpet which had owned the property for approximately 80 years. Okada led an acquisition group that includes Francis Leung of Okada & Company. Okada, who owns the retail at 148 West 24th Street ,had been negotiating to purchase the property since 2015. The brokers on the transaction were Bob Knakal and Jonathan Hageman of JLL representing the seller with Brock Emmetsberger and Cameron Stafford of B6 Realty Advisors representing the purchasers. A $15 million debt package was provided by Jason Behfarin’s G4 Capital Partners, with borrower representation by Emanuel Westfried and Jonathan Bodner of Two Bins Capital. 970-998 FRANKLIN AVENUE ••• Schuckman Realty announced the sale of a seven-tenant retail building at 970-998 Franklin Avenue, Garden City, NY, for $16 million. The trophy property is fully occupied tenants Santander Bank, Cold Stone Creamery, Kinha Sushi, Grimaldi’s Pizza, My Three Sons Bagels, among others. The 16,350 s/f building sits on a 21,780 s/f lot at the Southeast corner of 10th Street and Franklin Avenue. Schuckmanʼs Matt Colantonio and Ari Malul represented both parties in the off-market transaction. The seller had owned the property since 2003 and the buyer, a family-office out of New Jersey, completed the purchase as part of a 1031-exchange. ••• Cushman & Wakefield announced the sale of 420 Grand Avenue, a 15,940 s/f medical office building in Englewood, NJ, for $3.55 million. Andy Merin, Andrew Schwartz, Jeffrey Prezant, Seth Pollack, Jordan Sobel and Andre Balthazard represented the buyer and procured the seller, East Park Real Estate. The two-story medical office building sits on a 1.16-acre property. The asset is currently occupied by two medical tenants and is located within an Opportunity Zone. The building offers 52 parking spaces. ••• The Corbin Group at Rosewood Realty announced the sale of a Far Rockaway Apartment Building in bankruptcy for $2.9 million. Greg Corbin and Brandon Serota arranged the sale of 157 Beach 96th Street, a stalled construction site. An additional $1.2 million is needed to complete the building. The sale equates to $410,000 a unit and $389 psf after completed construction. Upon completion, the five-story building which is located three blocks from the beach, will be 10,548 s/f and consist of 10 apartments, six private terraces, and private parking. ••• NAI Fennelly negotiated the reacquisition of a 23,000 s/f office condo at 1 Union Street in Robbinsville, NJ. Jerry Fennelly represented the buyer, Sharbell Development, and CBRE represented the seller, the American Heart Association in the transaction. NAI Fennelly previously sold the condo to the American Heart Association. 225 MAY STREET ••• Colliers International HealthCare Investment Sales team announced the sale of 225 May Street, in Edison, NJ. The 30,000 s/f medical office building was purchased by Thomas Park, a private equity real estate firm. Kim Kretowicz, HealthCare Investment Sales Fellow within the Colliers Healthcare Services Group, represented the seller, and procured the buyer. The Core plus inflation protected NNN investment was delivered 83 percent leased with five tenants comprising investor-preferred health system, surgery center and cardio specialty practice tenancy. 1336 14TH STREET NW ••• Douglas Development has sold 1336 14th Street NW in Washington, DC, to its tenant, JINYA Ramen, for $5 million. Aris Noble of JLL represented the buyer of the freestanding 6,000 s/f retail property. Douglas Development originally acquired the property for $1.75 million in 2015. ••• Denholtz Properties has acquired Interstate Commerce Park, a five-building, 218,570 s/f industrial park located in Greensboro, N.C. for $12.1 million from CIP Real Estate. The acquisition marks the firm’s first investment in North Carolina. Currently fully leased to a diversified lineup of tenants, t he property is located within the Piedmont Triad region. Denholtz has a capital improvement plan for the property paired with a proactive long-term leasing strategy. Robert Cochran, Bill Harrison, Nolan Ashton and John Schultz of Cushman & Wakefield represented the seller, CIP Real Estate. 3700 and 3720 US HIGHWAY 421 NORTH ••• Treeline has made its first investment in the Southeast with the $9 million acquisition of a two-building industrial portfolio in Wilmington, NC. Treeline acquired the assets at 3700 and 3720 US Highway 421 North from Burgess Corp., a NC-based construction and project management company, in an off-market transaction. The properties consist of a 66,274 s/f recently renovated to Class A industrial building at 3700 US Highway 421 North and a newly constructed 40,000 s/f industrial property at 3720 US Highway 421 North. Both buildings are fully leased to market rate tenants. The properties total of more than 106,000 s/f of modern warehouse, distribution and office space including ample truck and car parking, six high-door loading docks and three drive-in bays. The property at 3700 US Highway 421 North is occupied in its entirety by South-Tek Systems, Inc. an industry leader in nitrogen generation technology. 3720 US Highway 421 North is occupied by Mid Atlantic Roofing Systems and Aprinnova Inc., a leader in sustainable manufacturing and specialty chemicals used in the creation of non-toxic cosmetics. RIVERCHASE APARTMENTS ••• Wynmor Management, a NY-based private equity investment firm, has acquired Riverchase Apartments, a 252-unit apartment complex in Oklahoma City, Oklahoma for $13.6 million. The multi-family property, located at 11239 N Pennsylvania Avenue, features 10, three-story rental buildings and an additional building that serves as an office. The complex contains 217,500 rentable square feet and was built in 1971. Wynmor plans to upgrade the majority of units and implement institutional-style property management. The development features covered parking, a pool, basketball and tennis courts. The seller is a Texas-based company, Casa Claire Apartments, LP. Wynmor, along with its investment partners, invested its own equity while the remaining capital — $12.9 million required to acquire and renovate the property — came from Bedrock Capital Associates as an acquisition and renovation loan with a three-year term. This is Wynmor Management’s second acquisition in Oklahoma. Derek Wilson of Cushman Wakefield’s Oklahoma City office represented the seller. The post ON THE SCENE: Latest middle market sales, acquisitions appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyNov 2nd, 2021

SL Green (SLG) Acquires 450 Park Avenue in Joint Venture

SL Green Realty Corp.'s (SLG) acquisition of 450 Park Avenue in a newly formed joint venture marks a notable boost for SL Green's growing investment management platform. SL Green Realty Corp. SLG is positioning itself well to capitalize on the recovery of the New York City real estate market and leverage the capital deployment interest of international investors in the market. Recently, it announced the closing of the 450 Park Avenue acquisition in a newly formed joint venture. It marks a notable boost for SL Green’s growing investment management platform.The ownership group comprises institutional investors from South Korea and Israel. SLG, which retained a 25.1% stake in the property, will administer the leasing and management of the property on behalf of the partnership.450 Park Avenue is a prominent 33-story Class A tower encompassing a total of 337,000 square feet of luxury office and prime retail space. With its premium location at the corner of 57th Street and Park Avenue, the property boasts of high-end boutique financial services and luxury tenants, including Banco Bradesco, BDT Capital Partners and Oxford Properties. Also, the corner retail location will be occupied soon by Aston Martin’s first-ever Manhattan showroom.On behalf of the ownership group, SL Green has plans for capital investments, including developing a new amenity offering, providing high-quality, tailored programs and services for building tenants.Markedly, SL Green has a mono-market strategy focus with an enviable footprint in the large, high-barrier-to-entry New York real estate market. This, along with the ownership of premier Manhattan office assets, has enabled the company to enjoy decent occupancy across its portfolio over the years. Additionally, the company aims at maintaining a diversified tenant base to hedge the risk associated with dependency on single-industry tenants. As a result, its largest tenants include renowned firms from different industries. Moreover, with long-term leases to tenants with strong credit profile, it is well-poised to generate stable rental revenues over the long term.The U.S office real estate market continues to struggle with the aftereffects of the health crisis, with negative absorption and increasing vacancy levels. The lackluster environment can be attributed to pandemic-led job cuts and remote-working models, which have diminished office space utilization.While a significant government stimulus and increasing vaccination coverage are likely to support job growth, a significant turnaround is less likely, specifically at older office properties that are witnessing rent declines amid the increasing tenant preference for high-quality buildings. Also, the emergence of the new variants of COVID-19 could further dampen the ongoing recovery in the office real estate market.Shares of this Zacks Rank #3 (Hold) company have declined 36.2% over the past six months compared with the industry's fall of 19.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchStocks to ConsiderSome key picks from the REIT sector include Extra Space Storage Inc. EXR and OUTFRONT Media OUT.The Zacks Consensus Estimate for Extra Space Storage’s 2022 funds from operations (FFO) per share has moved marginally upward in the past month to $8.25. EXR presently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 7.7% over the past two months to $2.09. OUT sports a Zacks Rank #1 currently.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SL Green Realty Corporation (SLG): Free Stock Analysis Report Extra Space Storage Inc (EXR): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks1 hr. 35 min. ago

Marriott Vacations Worldwide ("MVW") Raises Full Year 2022 Guidance

ORLANDO, Fla., June 16, 2022 /PRNewswire/ -- In conjunction with its investor day, Marriott Vacations Worldwide Corporation (NYSE:VAC) (the "Company") is raising its full year guidance. "We continue to see very high owner occupancies at our resorts, enabling us to drive strong tour growth and contract sales during the second quarter of 2022.  As a result of this, combined with the continued strength in our VPGs, we are increasing our full year contract sales guidance by $100 million for 2022," said Stephen P. Weisz, chief executive officer. The Company continues to expect Adjusted development profit margin to remain strong for the full year 2022.  However, with owner occupancies exceeding expectations, the Company has allocated more rental inventory for owner usage to increase their vacation choices. Similarly, the Company continues to see higher owner usage at resorts affiliated with Interval International, which has impacted member deposits and exchanges. Given the increased owner usage, the updated guidance reflects the expected impact on rental and exchange revenue and profit this year.  The Company expects owner usage to normalize in 2023. "Notwithstanding the increased owner usage, we expect our strong Adjusted development profit margin on higher contract sales will allow us to deliver full year 2022 Adjusted EBITDA and Adjusted free cash flow above our previous guidance," said Tony Terry, executive vice president and chief financial officer. Full Year 2022 Outlook (in millions) The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2022 expected GAAP results for the Company. Net income attributable to common shareholders $330 to $352 Net cash, cash equivalents and restricted cash provided by operating activities $405 to $431 Contract sales $1,775 to $1,875 Adjusted EBITDA $880 to $930 Adjusted free cash flow $590 to $670 Investor Day Webcast The Company will host an investor day today beginning at 12:30 p.m. ET.  Participants may watch the live webcast by registering at ir.mvwc.com. A replay of the event will be available for 60 days on the Company's website. About Marriott Vacations Worldwide Corporation Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The Company has over 120 vacation ownership resorts and approximately 700,000 owner families in a diverse portfolio that includes some of the most iconic vacation ownership brands. The Company also operates exchange networks and membership programs comprised of nearly 3,200 affiliated resorts in over 90 countries and territories, as well as provides management services to other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International, Inc. and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com. Note on forward-looking statements This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about expectations for future growth and projections for full year 2022, that are not historical facts. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous and evolving risks that we may not be able to predict or assess, such as: the effects of the COVID-19 pandemic, including variations in  demand for vacation ownership and exchange products and services, worker absenteeism, quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic, including its short and longer-term impact on consumer confidence, global supply chain disruptions and price inflation; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaJun 16th, 2022

Here"s Why You Should Retain Realty Income (O) Stock Now

Realty Income (O) should gain from top industries selling essential goods and services and its accretive buyouts. However, exposure to single-tenant assets and the adoption of e-commerce are woes. Realty Income’s O portfolio is well diversified with respect to tenant, industry, geography and property type. The company’s properties are located in all U.S. states, Puerto Rico, the United Kingdom and Spain. Moreover, with top industries selling essential goods and services and accretive buyouts, the company is well-poised to grow.As of Mar 31, 2022, Realty Income derived roughly 93% of its annualized retail contractual rental revenues from its tenants with a service, non-discretionary and/or low-price-point component to their business. Such businesses are less susceptible to economic recessions and competition from Internet retailing, thereby ensuring a steady stream of cashflows.Realty Income’s solid underlying real estate quality and prudent underwriting at acquisition have helped the company maintain high occupancy levels consistently. In fact, since 1996, the company’s occupancy level has never been below 96%. As of Mar 31, 2022, its portfolio occupancy of 98.6% expanded 60 basis points (bps) year over year.A high volume of property acquisition of well-located properties at decent investment spreads aids the company’s external growth and offers it a competitive edge over its net lease industry. During the first quarter of 2022, it invested $1.56 billion in 213 properties and properties under development or expansion, including $796.4 million in Europe.Furthermore, solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Realty Income remains committed to that. Shareholders have been rewarded with 98 consecutive quarterly dividend hikes, the latest being in March 2022. Notably, the company enjoys a trademark of the phrase “The Monthly Dividend Company” and is also one of the 65 companies in the elite S&P 500 Dividend Aristocrats® Index. Moreover, this retail REIT has witnessed compound average annual dividend growth of 4.4% since its listing on the NYSE. The latest dividend rate is likely to be sustainable based on its strong financial position and lower debt-to-equity ratio compared with the industry.Shares of Realty Income have appreciated 1.7% in the past three months against the industry’s fall of 8.9%. Image Source: Zacks Investment ResearchHowever, as of Mar 31, 2022, Realty Income’s tenant roster comprised 99% of single-tenant properties, thereby exposing it to the risks associated with single-tenant assets. In case of the financial failure of, or default in payment by a single tenant, the company’s rental revenues from that property and the value of the property suffer significantly.Also, the adoption of e-commerce by consumers has lowered the demand for the retail real estate space. With more and more consumers preferring online shopping, the demand for physical stores has taken a backfoot and the competition has intensified. Owing to this, retailers are either opting for store closures or filing for bankruptcies, adding to Realty Income’s concerns.Analysts seem bearish about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The estimate revisions trend for 2022 funds from operations (FFO) per share does not indicate a favorable outlook for the company as it has moved south by 1% in the past two months to $3.91.Stocks to ConsiderSome better-ranked stocks in the REIT sector are Prologis PLD, Rexford Industrial Realty REXR and OUTFRONT Media OUT.The Zacks Consensus Estimate for Prologis’ 2022 FFO per share has moved 1.8% upward in the past two months to $5.15. PLD presently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for Rexford Industrial Realty’s current-year FFO per share has moved 1.6% northward in the past two months to $1.93. REXR carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 51.5% over the past two months to $2.09. OUT carries a Zacks Rank #2, currently.Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prologis, Inc. (PLD): Free Stock Analysis Report Realty Income Corporation (O): Free Stock Analysis Report Rexford Industrial Realty, Inc. (REXR): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 13th, 2022

How Web3 Is Transforming The Real Estate Market

The advent of Web 3.0–a new era of the Internet which uses blockchain technology to transform how information is stored, shared, and owned–is one of the most exciting technological prospects of our time. Where some skeptics believe that a less centralized internet poses a threat to privacy and even security, those of us who welcome […] The advent of Web 3.0–a new era of the Internet which uses blockchain technology to transform how information is stored, shared, and owned–is one of the most exciting technological prospects of our time. Where some skeptics believe that a less centralized internet poses a threat to privacy and even security, those of us who welcome the Web3 era believe that it will make for a truly democratic web that counteracts the problem of identity theft with encrypted wallets, allows freedom of speech for everybody, and gives its users a voice on their favorite networks. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Regardless of where one stands on Web3, its relevance to the real estate market can be a difficult thing to wrap one’s head around. While the connection between something as intangible as bitcoin and as solid as a home might not seem clear at first, Web3 is poised to have profound impacts on the way we purchase and invest in real estate. Below are five of the major opportunities that Web3 offers the forward-thinking real estate investor. NFTs Lead The Way Owning real estate is more popular than ever in the U.S., with demand outpacing supply in many markets. Web3 allows for an even broader range of investors to enter the market–for example, those who lack the capital necessary to make a down payment and those who don’t have the time to wait around for a mortgage or the completion of a liquidation process–to make these transactions, using unique digital tiles called non-fungible tokens (NFTs). Best-known for their use in the acquisition of digital music and art, NFTs have since developed into profoundly multifaceted tools. According to ButterflyMX, $690 million worth of real estate was tokenized in 2020, a number that skyrocketed to $14.3 billion in 2021. Proprietary technology that includes a legal framework and allows NFTs to stand in for property ownership has also been developed, enabling purchase records to be lodged on blockchain along with legal documents. These systems make use of triple-ledger accounting, which registers a property’s buyer and seller while securing signatures from both parties. This is an extraordinarily simple and effective system for proving ownership. What was once an arduous task that could take weeks can now be completed almost instantaneously. In the process, it cuts costs and allows buyers to purchase property more quickly than ever. DeFi Subverts The Norm Decentralized finance (DeFi) avoids the bureaucratic processes of traditional banks and makes investing less clunky by means of linked smart contracts, oracles and blockchains. Automated workflows oversee its financial decisions, rather than individuals; a smart contract monitors the money coming in, the money going out, and adjusts to changes in the marketplace. Mortgages can be facilitated quickly and painlessly. Where the ownership of properties is shared, NFTs can be used to obtain mortgages from lending platforms. However, investors will need to stay well-informed when it comes to regulations, which may change over time as this form of investment becomes more popular. They should also hire a legal expert who has expertise in blockchain technology to assist them in such transactions. Younger generations of potential buyers, who’ve grown up online and use the web as their go-to marketplace, will likely find purchasing real estate online using DeFi, cryptocurrency, or fiat currency perfectly intuitive. This group also represents a new, powerful brand of investor overall, prepared to take big risks in expectation of even bigger rewards. DeFi’s ability to facilitate nimble, transparent transactions will help them make their mark in this space. Real Estate Investing For Everyone Reliance on DeFi may make some people nervous, but intrepid realtors recognize the potential of this system’s efficiency and transparency. Turning real estate into tokens allows investors to use concrete assets to create readily liquefiable portfolios on blockchain. It also opens up the world of real estate investment to less wealthy individuals. This is because tokenizing assets–in this case, property--makes fractional investing possible. As 101 Blockchains put it, fractional ownership tokenization is like a “crowdfunding platform for real estate,” and as of early 2022, was less fraught with regulatory issues than Entire Asset (EA) tokenization. An individual who might never be able to afford to buy an investment property apartment for $250,000, for example, might be able to afford a fraction of that amount, entitling him or her to a fraction of its ownership, which he or she could trade for an equivalent fraction of another property at any time. One AI platform allows multiple investors to purchase a fraction of turnkey rental properties for as little as $50 apiece. This expedited process also enables homeowners to use NFTs to sell portions of their own home equity to others, so buyers can invest in that property’s potential for appreciation. Believe In Bitcoin The controversy surrounding bitcoin and other cryptocurrencies makes some wary of using them. However, those who see their potential are finding innovative ways to leverage cryptocurrencies to transform their financial operations. United Wholesale Mortgage, for example, recently launched a pilot program where it will allow crypto to be used by its customers, starting with bitcoin but potentially including Ethereum. Bitcoin-based 30-year crypto mortgages are also now in the works. Some fintech companies are addressing the issue of price volatility with an interest rate based on a ratio of cryptocurrency value to loan amount, with a margin call issued if the ratio hits below a certain percentage, such as 65%. If it drops to 30%, the assets are liquidated and their value stored in USD. It’s also crucial to note that transactions involving cryptocurrencies need not be fully cryptocurrency-based. While some transactions can be done entirely using cryptocurrency, investors and sellers alike may want to use or receive cash for part of the payment. It’s important to be aware that government agencies and third parties involved in any given deal may require cash payments for their services. A Marketplace Of Equals As soon as NFTs became capable of representing real estate properties, it was inevitable that a booming marketplace for NFT-based transactions would spring up, allowing those who already own property to sell a portion of it to free up funds, possibly to invest elsewhere. This marketplace provides all the necessary paperwork to create an NFT for a property. Likewise, those who choose to invest can profit in a fractionalized way from the appreciation realized by the properties they purchase. This is a new model for building a real estate portfolio, available to people at a wide range of income levels. So, bring on Web3: savvy real estate investors are ready and willing to explore this vibrant, modern way of doing business. Updated on Jun 9, 2022, 2:04 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 9th, 2022

5 Reasons to Add Mid-America Apartment (MAA) Stock Right Now

Mid-America Apartment (MAA) to gain traction from a Sun Belt-focused portfolio, strategic redevelopment efforts and a robust balance sheet. Residential REITs are anticipated to benefit in the upcoming days as the rental housing demand remains robust, with young adults forming new households and the job market showing an improvement. While gateway metros are showcasing a strong rebound, product absorption continues in Sun Belt markets, making Mid-America Apartment Communities, Inc. MAA, commonly known as MAA, a solid addition to your portfolio.Shares of Zacks Rank #2 (Buy) MAA have outperformed the industry in the past year. The company’s shares have rallied 10.5%, while the industry has declined 2.9% over this period. Given its strong fundamentals, there is room for further price appreciation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchFactors That Make MAA a Solid ChoiceMAA’s diversified Sun belt portfolio of suburban-focused communities was less severely affected by the pandemic and the economic shutdown. The pandemic has accelerated employment shifts and a population inflow into the company’s markets as renters seek more business-friendly, lower-taxed and low-density cities. These favorable longer-term secular dynamic trends are increasing the desirability of its markets. Amid this, MAA is well-poised to capture recovery in demand and leasing compared with expensive coastal markets.MAA continues to implement programs like interior redevelopment, property repositioning projects and Smart Home installations. The programs will help the company capture the upside potential of rent growth, generate accretive returns and boost earnings from its existing asset base in 2022. The company completed 1098 interior unit upgrades and 11,018 Smart Home packages in the first quarter of 2022. In 2022, the company plans to complete more than 6,000 interior unit upgrades and approximately 23,000 Smart Home packages. By the end of the year, management projects the total number of smart units to reach 71,000. In addition, MAA completed the repositioning work at eight properties and is at the final stage of repricing leases.MAA enjoys a solid balance sheet, with low leverage and ample availability under its revolving credit facility. As of Mar 31, 2022, the company has $1.0 billion in combined unrestricted cash and cash equivalents and available capacity under its revolving credit facility. It generated a 95.2% unencumbered net operating income in the first quarter of 2022, providing the scope for tapping additional secured debt capital if required. Hence, with manageable near-term maturities and funding obligations, the company is well-positioned to bank on growth scopes.Solid dividend payouts are arguably the biggest enticements for REIT shareholders and MAA remains committed to that. In May 2022, the company announced a common stock cash dividend of $1.25 per share, marking a 15% hike over the prior payout. Moreover, in December 2021, the company announced a common stock cash dividend of $1.0875 per share, which marked a 6.1% sequential hike and the 12th consecutive annual increase in the company’s dividend. Given its financial strength and lower payout ratio compared with the industry, the company’s dividend payout is expected to be sustainable.The estimate revision trend for full-year 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as estimates have been revised upward by 1.5% in the past month. Given the progress in fundamentals and upward estimate revisions, the stock has more room to rally in the near term.Other Key PicksSome other key picks from the REIT sector include BRT Apartments Corp. BRT and Independence Realty Trust, Inc. IRT.BRT Apartments sports a Zacks Rank of 1 at present. BRT Apartments’ long-term growth rate is projected at 6%.The Zacks Consensus Estimate for BRT’s 2022 FFO per share has been revised 18.5% upward in the past month to $1.54.The Zacks Consensus Estimate for Independence Realty Trust’s 2022 FFO per share has moved marginally north to $1.05 over the past month.Currently, Independence Realty Trust carries a Zacks Rank of 2.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Zacks' Top Picks to Cash in on Electric Vehicles Big money has already been made in the Electric Vehicle (EV) industry. But, the EV revolution has not hit full throttle yet. There is a lot of money to be made as the next push for future technologies ramps up. Zacks’ Special Report reveals 5 picks investorsSee 5 EV Stocks With Extreme Upside Potential >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MidAmerica Apartment Communities, Inc. (MAA): Free Stock Analysis Report BRT Apartments Corp. (BRT): Free Stock Analysis Report Independence Realty Trust, Inc. (IRT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 3rd, 2022

3 Top Stocks From a Thriving Residential REIT Industry

The Zacks Equity REIT - Residential industry is riding on solid demand amid supply and regulatory woes, aiding Mid-America Apartment Communities, Inc. (MAA), Sun Communities, Inc. (SUI) and Camden Property Trust (CPT). The REIT And Equity Trust - Residential constituents are anticipated to benefit in the upcoming days, as rental housing demand remains robust with young adults forming new households and the job market showing improvement. Also, de-densification and the desire for more space is resulting in fewer adults per apartment, thereby creating incremental demand for renting units. Moreover, due to the high cost of homeownership, transition from renter to homeowner is difficult, making renting of apartments units a viable option. While product absorption continues in the Sun Belt and other non-gateway metros, the gateway metros are also showcasing a strong rebound. Therefore, residential REITs like Mid-America Apartment Communities, Inc. MAA, Sun Communities, Inc. SUI and Camden Property Trust CPT are expected to ride the growth curve, despite elevated deliveries and regulation woes.About the IndustryThe Zacks REIT And Equity Trust - Residential category is engaged in owning, developing and managing a variety of residences. The types of residences include apartment buildings, student housing, manufactured homes and single-family homes. Residential REITs rent spaces in these properties to tenants and earn rental income in return. Markedly, some residential REITs also focus on specific classes or types of residences, or a particular geographical region. Moreover, unlike apartment buildings, manufactured homes and single-family homes that are open for leasing to all, the student housing units are leased only to students. Such real estates are, therefore, generally required to be set up within or in places closer to colleges and universities. Furthermore, enrolment growth of educational institutes is a major driver of student housing assets.What's Shaping the REIT and Equity Trust - Residential Industry's Future?Robust Rental Demand, Rent and Occupancy Growth: With the reopening of offices and returning of lifestyle amenities to the established markets, a continued flow of residents is observed in the urban and job-centered suburban markets, which is encouraging. Moreover, de-densification and the desire for more space are resulting in fewer adults per apartment, thereby creating incremental demand for renting units. Also, higher household income is supporting rent growth. In fact, there is strong demand from young adults who are gaining from tight labor market conditions and record wage growth. Also, due to the high cost of homeownership, the transition from renter to homeowner is difficult, making renting of apartments units a viable option. With these positives, the residential REITs are expected to experience a solid peak leasing session with high occupancy and rent growth. In terms of markets, what is encouraging is that while there is a rebound in demand for the coastal markets, the Sun Belt markets too continued to experience high demand compared to supply. Moreover, after the past leasing sessions were affected by the pandemic, there has been a significant rebound in demand for student housing properties on the reopening of campuses and in-person classes as well as extracurricular activities. This is driving leasing activity and rent growth.Technology Adoption: Technological adoption gathered steam amid the social-distancing trend, as the global health crisis needed an almost-overnight shift to virtual operations for the continuation of business operations. Now, landlords are binding together technology with sales and service expertise, aiming at driving revenues, trimming costs, improving operating margins, as well as enhancing customer experience. The residential REITs are focusing on virtual leasing assistance, virtual and self-guided tours, and a digital move-in process. Improvement in search and tour booking as well as smart home access has gained much attention and residential REITs are focusing on these. Such efforts are aimed at generating incremental net operating income in the years ahead.Elevated Deliveries of New Units: Although supply chain woes and labor challenges have impacted construction activity to some extent, deliveries of new units are likely to accelerate in a number of markets in the upcoming quarters as the ongoing construction activity remains high, resulting in a struggle on the part of landlords to lure renters. However, although construction costs are up, landlords have been able to pass on the burden to renters, who are supported by wage growth to absorb cost increases through rent hikes.Rent Control and Higher Interest Rates: The rent-control regulations in some of the major markets might curb the growth tempo. Moreover, the hike in interest rates to counter inflation poses a risk to the flow of capital for this asset category. This is likely to lead to volatility in asset prices. Also, interest expenses are expected to climb with rate hikes.Zacks Industry Rank Indicates Bright ProspectsThe REIT And Equity Trust - Residential industry is housed within the broader Finance sector. It carries a Zacks Industry Rank #61, which places it at the top 24% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive funds from operations (FFO) per share outlook for the constituent companies in aggregate. Looking at the aggregate FFO per share estimate revisions, it appears that analysts are gaining confidence in this group’s growth potential. Since June 2021, the industry’s FFO per share estimate for 2022 and 2023 has moved 7.9% and 6.1% north, respectively.Before we present a few stocks that you might want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Lags on Stock Market PerformanceThe REIT And Equity Trust - Residential Industry has underperformed the S&P 500 composite and the broader Finance sector in the year so far.The industry has declined 17% during this period compared with the S&P 500 composite’s fall of 13.9% and the broader Finance sector’s 9.6%.Year-to-Date Price PerformanceIndustry's Current ValuationOn the basis of the forward 12-month price-to-FFO (funds from operations) ratio, which is a commonly-used multiple for valuing Residential REITs, we see that the industry is currently trading at 19.71X compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 17.73X. The industry is trading above the Finance sector’s forward 12-month P/E of 14.49X. This is shown in the chart below.Forward 12-Month Price-to-FFO (P/FFO) RatioOver the last five years, the industry has traded as high as 25.36X, as low as 15.70X, with a median of 18.90X.3 Residential REIT Stocks Worth Betting OnMid-America Apartment Communities, Inc.: This residential REIT is engaged in owning, acquiring, operating and developing apartment communities, located primarily in the Southeast, Southwest and Mid-Atlantic regions of the United States. Healthy demand for the company’s well-positioned Sunbelt properties will likely aid this S&P 500 company’s performance in the days to come.MAA’s diversified Sunbelt portfolio was less severely affected by the pandemic and the economic shutdown. In fact, the pandemic has accelerated employment shifts and population inflow into the company’s markets, as renters seek more business-friendly, lower-taxed and low-density cities. These favorable longer-term secular dynamic trends are increasing the desirability of its markets. Amid this, MAA is well-poised to capture recovery in demand and leasing as compared to the expensive coastal markets.MAA continues to implement its strategic programs — interior redevelopment, property repositioning projects and Smart Home installations. The programs will help the company capture the upside potential in rent growth, generate accretive returns and boost earnings from its existing asset base in 2022.MAA currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the ongoing-year FFO per share was revised marginally upward in the past week. The company’s shares have appreciated 9.8% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   Sun Communities, Inc.: The Southfield, MI-based REIT enjoys stake in or is engaged in the ownership or operation of manufactured housing communities, recreational vehicle (RV) resorts and marina properties located across 39 states, Canada, Puerto Rico and the UK.This REIT is poised to benefit from its growth efforts in manufactured housing, RV resorts and marinas. The continued demand for affordable housing is acting as a tailwind, while demand for RV vacations is picking up pace amid the resumption of normalcy.  Sun Communities currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for the current-year FFO per share has been revised 1.5% upward in two months’ time. The company’s shares have declined 3.2% over the past year.  Camden Property Trust: Based in Houston, TX, Camden Property Trust is engaged in the ownership, management, development, redevelopment, acquisition and construction of multi-family apartment communities. It is an S&P 500 company.Camden Property Trust is poised to benefit from the strong demand for multifamily rental housing. Demographic growth also continues to be strong in the young-adult age cohort, which has a higher propensity to rent. This age group is the main cohort for the formation of new households and most of them prefer to remain renters and enjoy locational advantages as well as flexibility that rental apartments offer.Also, there is pent-up demand from young adults living at home or with roommates. Moreover, young adults are making lifestyle decisions later, choosing to marry and have children later in life, delaying homeownership decisions.Camden Property Trust presently holds a Zacks Rank of 2. Over the past week, the Zacks Consensus Estimate for 2022 FFO per share has witnessed marginal upward revision to $6.50. The stock has also gained 11.1% over the past year. Note: Funds from operations (FFO) is a widely used metric to gauge the performance of REITs rather than net income as it indicates cash flow from their operations. FFO is obtained after adding depreciation and amortization to earnings and subtracting the gains on sales. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MidAmerica Apartment Communities, Inc. (MAA): Free Stock Analysis Report Sun Communities, Inc. (SUI): Free Stock Analysis Report Camden Property Trust (CPT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 2nd, 2022

Pensam Makes an $8.1 million Preferred Equity Investment in a Portoflio of Two Georgia Properties

Pensam , a diversified multifamily real estate investment firm, has made a preferred equity investment in a portfolio of two properties located in Newnan, Georgia, one of the fastest growing submarkets in the United States. The properties, Woodland Commons and 60 Jane Lane, were acquired by TriWest Multifamily, a premier... The post Pensam Makes an $8.1 million Preferred Equity Investment in a Portoflio of Two Georgia Properties appeared first on Real Estate Weekly. Pensam , a diversified multifamily real estate investment firm, has made a preferred equity investment in a portfolio of two properties located in Newnan, Georgia, one of the fastest growing submarkets in the United States. The properties, Woodland Commons and 60 Jane Lane, were acquired by TriWest Multifamily, a premier real estate investment and development firm focused on multifamily investments throughout the United States. 60 Jane Lane Both garden-style apartment communities contain 114 units, with Woodland Commons being built in 2002 and 60 Jane Lane in 1986. At closing TriWest assumed existing Freddie Mac financing, arranged asupplemental loan from Freddie Mac, brought in new equity and rounded out the capital stack withPensam’s preferred equity investment. Woodland Commons “These two properties represent an exciting opportunity for Pensam to invest with a strong sponsor, in arapidly growing submarket with a value-add plan that was easily supportable,” said Ray Cleeman, Principal, Head of Capital Markets and Lending. “This investment is a perfect example of how our flexiblePreferred Equity program can accommodate a wide range of investment goals. In this transaction we were able to provide capital to a sponsor assuming Agency loans and seeking to unlock incrementalliquidity in their assets as they build to a long-term improvement thesis.” Both properties will undergo significant, multimillion-dollar value-add capital programs with a focus ondriving rental premiums to current property rates. Improvements will include unit interior upgrades such as granite countertops, new cabinets, stainless steel appliances, vinyl wood plank flooring and updatedfixtures and backsplash. Additionally, the properties will benefit from upgrades to property amenities andexterior and common areas, as well as the addressing of some deferred maintenance. The post Pensam Makes an $8.1 million Preferred Equity Investment in a Portoflio of Two Georgia Properties appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyMay 29th, 2022

Here"s Why You Should Hold Equity Residential (EQR) Stock Now

Equity Residential (EQR) is well-poised to grow on portfolio rebalancing, improving demand and a healthy balance sheet. However, stiff competition and a flexible working environment are key concerns. Equity Residential EQR is well-positioned to grow on portfolio rebalancing in the urban and suburban markets, improving demand for apartment living and a healthy balance sheet. The company is one of the leading, fully integrated, publicly-traded multi-family real estate investment trusts (REITs) in the United States.Equity Residential’s diversified presence in the urban and suburban markets of Boston, New York, Washington, DC, Seattle, San Francisco and Southern California helped it survive the pandemic. While demand was lower in the urban markets, the suburban markets remained comparatively stable.EQR focuses on adding affluent renters to its roster, thereby successfully tapping the recent migration trends. It also engages in acquiring and developing properties in suburban locations of its established markets and has been adding select new markets like Atlanta, GA and Austin, TX, to its portfolio. Therefore, efforts to diversify its portfolio continued to support financials amid the pandemic.  The company is also concentrating on optimizing its technology and organizational capabilities to achieve innovation, rent growth and improve the efficiency of its operating platform. It finished deploying the centralized renewal process in the first quarter of 2022 and is now focused on centralizing the application process. These efforts are likely to provide EQR with a competitive edge over its peers.Moreover, it has taken steps toward repositioning its portfolio. It is getting rid of properties that are either old or are in jurisdictions with challenging regulatory environments or are over-concentrated in the submarkets. Equity Residential is replacing those properties by acquiring newer properties in the submarkets with higher affluent renters, favorable long-term demand drivers and manageable forward supply. These initiatives reflect strategic diversification and incremental development activities to make the most of the rising demand for rental apartment units.EQR has been consistent in paying dividends to its shareholders, which remains a huge attraction for REIT investors. In March 2022, the residential REIT announced increasing its annualized dividend by 3.7% to $2.50 per share. Considering its robust balance sheet position and a recovery in business, the company is likely to maintain its dividend payout in the forthcoming quarters.Analysts seem to be bullish on this Zacks Rank #3 (Hold) stock. The estimate revisions trend for 2022 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been increased marginally over the past month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.However, the continuation of the flexible working environment has resulted in lower renter demand for costlier and urban/infill markets, which is a pressing concern for EQR now. Several temporary regulatory laws imposed during the pandemic have curbed the company’s ability to evict tenants or charge late fees to those who have defaulted on rent payments.Also, stiff competition from other housing alternatives like rental apartments, condominiums and single-family homes restricts Equity Residential from raising rents, thereby stalling its growth pace to a certain extent.Shares of Equity Residential have declined 10.7% in the past three months compared with the industry’s fall of 9.7%.Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks in the REIT sector are American Campus Communities ACC, Independence Realty Trust IRT and BRT Apartments BRT.The Zacks Consensus Estimate for American Campus Communities’ 2022 FFO per share has moved 0.8% upward in the past two months to $2.47. ACC presently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Independence Realty Trust’s current-year FFO per share has moved roughly 1% northward in the past month to $1.05. IRT also carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for BRT Apartments’ ongoing year’s FFO per share has been raised 18.5% over the past month to $1.54. BRT carries a Zacks Rank #1 (Strong Buy), currently.Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022? Last year's 2021 Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buysAccess Zacks Top 10 Stocks for 2022 today >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Equity Residential (EQR): Free Stock Analysis Report American Campus Communities Inc (ACC): Free Stock Analysis Report BRT Apartments Corp. (BRT): Free Stock Analysis Report Independence Realty Trust, Inc. (IRT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 26th, 2022

Is it Wise to Retain SL Green (SLG) Stock in Your Portfolio?

SL Green (SLG) is set to benefit from the recovering office real-estate market. However, the rising supply of office properties and geographic concentration of assets act as pressing concerns. SL Green Realty Corp. SLG, a prominent player in the office real estate market in New York, is set to bank on the return-to-office scenario. Its portfolio comprised 72 buildings totaling 34.7 million square feet at the end of first-quarter 2022.The company’s dominance in Manhattan has allowed it to enjoy a decent occupancy at its premier office properties over the years. A well-diversified tenant base has also hedged its risk associated with dependency on tenants from a single industry. Long-term leases with tenants with a strong credit profile will support SLG’s ability to generate stable rental revenues in the forthcoming quarters.On the leasing front, during first-quarter 2022, the company signed 37 office leases encompassing 820,989 square feet of space. Robust leasing activity and a gradual return of the workforce to offices are likely to boost SL Green’s occupancy and rental revenues. Also, the company’s operating expense savings initiatives will aid its net operating income (NOI) growth in the near future.SL Green has been following an opportunistic investment policy to enhance its overall portfolio quality. It has undertaken divestment of its mature and non-core assets to utilize the proceeds to fund development projects and share buybacks. In February 2022, the company divested its ownership interest in 707 Eleventh Avenue for a gross sale price of $95 million.SL Green also enjoys a robust balance-sheet position and holds abundant financial flexibility. As of Mar 31, 2022, it had cash and cash equivalents of $223.6 million. A steady fixed charge coverage ratio over the previous quarters reflects a decent cash flow availability for repaying near-term debt and other fixed charges. The company's chances of default are lowered as it holds a number of creditworthy tenants on its roster.SLG is known for consistently raising its dividend rates. It last announced a dividend rate hike of 2.5% in December 2021. Along with such hikes, it aims to increase shareholder value through share buybacks, thereby boosting investors’ confidence in the stock. From the beginning of 2022 through Apr 20, SL Green repurchased 2 million shares of its common stock.However, SL Green faces intense competition from developers, owners and operators of office properties and other commercial real estate, including sublease space available from its tenants. This curtails it from drawing higher rents from both old and new tenants, thereby challenging it to backfill tenant move-outs and vacancies.Although dispositions are a strategic fit for the long term, dilution in earnings is a lingering concern for the near term. Property dispositions and planned sales are likely to adversely impact the core portfolio GAAP NOI.The company carries out the majority of its operations in midtown Manhattan, NY. It also has several retail properties and multifamily residential assets in New York City. As a result, the company’s performance is largely dependent on the economic situation prevailing in the city.Further, analysts seem to have a bearish stance on the stock. The recent trends in estimate revisions for 2022 funds from operations (FFO) per share are unfavorable for the company, with estimates having moved downward over the past month. Shares of SLG have lost 24.1% compared with the industry’s decline of 6.9% in the past three months.At present, SLG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks from the REIT sector are Prologis PLD, Extra Storage Space EXR and OUTFRONT Media OUT.The Zacks Consensus Estimate for Prologis’ 2022 FFO per share has moved 1.4% upward in the past month to $5.15. PLD presently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for Extra Storage Space’s ongoing year’s FFO per share has been raised 1.1% over the past month to $8.01. EXR carries a Zacks Rank #2, currently.The Zacks Consensus Estimate for OUTFRONT Media’s current-year FFO per share has moved 7.7% northward in the past month to $2.09. OUT also carries a Zacks Rank of 2 at present.Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prologis, Inc. (PLD): Free Stock Analysis Report SL Green Realty Corporation (SLG): Free Stock Analysis Report Extra Space Storage Inc (EXR): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 25th, 2022

Saga Partners 1Q22 Commentary: Carvana And Redfin

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps Redfin.com show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into Redfin.com in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

"Traditional" Vs "Disruptive" Portfolio Construction & Why It Matters So Much!

"Traditional" Vs "Disruptive" Portfolio Construction & Why It Matters So Much! Authored by Peter Tchir via Academy Securities, Most of the time, Wall Street tends to focus on big institutional flows. For years that was probably okay, but that led to horrible decisions during the pandemic. Retail flows were a crucial driver of markets, and we are at an inflection point where retail will be a big determinant of what happens next! This expands on the “non virtuous” cycle work we first presented in Bad to the Bone. It will also clarify some thoughts on crypto as a leading indicator of stocks that we touched on in Friday morning’s email. Sorry, Not Sorry This portfolio construction analysis: Will be overly simplified. Will annoy you at times. Will make you smile at times (hopefully). Will, after further consideration, help you understand some market dynamics that are at play and could trigger the next big move (and why I’m concerned that is to the downside). “Traditional” vs “Disruptive” Portfolio Construction Let’s use “traditional” to mean the sort of investor that existed well before COVID. Maybe an investor that would have been the “norm” for individual investors, circa 2017. Let’s then imagine a class of investor that is “disruptive” by nature and was doing well pre-COVID, but flourished during COVID. I did warn you that it would be simplistic and some parts would likely anger you, but let’s just run with this as the two main ways that retail is constructing portfolios and once you think about it, probably does cover the vast majority of retail investors. The Traditional Investors’ “Conundrum” TINA forced even conservative investors into more risk than they would traditionally take. The fear of not having enough money for their potential lifespan forced them into equities. Equities were no longer the pariah of conservative investors and they remained significant components well into retirement. That worked great, but there really was no alternative. I expect this group is already “de-risking.” They can decrease risk for similar expected returns. The S&P 500 expected dividend yield is up to about 1.6%, though the recent increase from 1.4% in March and 1.3% at the end of December is by stocks dropping in price (the S&P 500 is down 15.6%) rather than by dividend growth. At the same time, the 10-year Treasury yield has risen from 1.5% to almost 3%. You can plow money into corporate credit to pick up additional current income and even the money market funds are back to paying some interest. Fear of rising rates has caused big bond fund ETF outflows. The Muni market, mostly reflective of retail, has been a seemingly never-ending series of BWIC after BWIC (bid wanted in competition). But, if you felt you needed to own dividend stocks to get income and those stocks are down hard and their yields now pale in comparison to Treasuries, do you start de-risking? The “will I have enough” comes down to total return and carry. For whatever reason, and I’m not sure of the reason, the “will I have enough” investors seem to focus on yield more than anything and seem far more willing to take bond losses on a mark to market basis than they do on stocks. Ok, I cannot fully blame them, but there is this strange detachment from total return vs income, at least when I get more involved in that space. I would not be surprised if these investors, while generally de-risking, weren’t adding some “hot sauce” to their portfolios. Taking some flyers on disruptive stocks and other assets that they “missed” during the crisis, but can now buy at “bargain” prices (or at least much cheaper than their peak prices). While it will be gradual, I think this “de-risking” is occurring and will continue to occur as “traditional” investors go back to their roots and take on more “traditional” portfolios containing fewer equities and more bonds. The Disruptive Investors’ Problem #1 - Crypto While traditional investors face a conundrum, the disruptive investors face a real problem. Bitcoin is at its lowest levels since December 2020. Anyone who added bitcoin during that timeframe is now underwater. Making the situation more perilous (and why I’m currently so bearish crypto) is that: Adoption and interest are waning. When the average person sees something go up 10% a week and their media streams are filled with people calling for ever-increasing price targets, an asset class gets a lot of attention. When something stumbles and continues to stumble, even after a very successful run, the “told you so” crowd gets a lot more airtime. In December we wrote that TINA, BOGO, and FOMO’s Engines Are Stuttering. That thesis continues to play out and is worth a read. We had a strong “use case”– Russia invading Ukraine. Currency restrictions. Sanctions. But, after a brief post invasion pop, crypto has renewed its descent. That likely discourages new investors. When “stable” coins become “unstable.” This is the extent of my current knowledge, but here is my best take. Stable coins act as an “intermediate” step where people transacting in the crypto universe can remain in the crypto space without taking the market volatility of the cryptocurrencies. Terra (Luna), usually referred to as UST, was a $20 billion market cap algo based stable coin. I will be honest, I’m not sure what an algo based stable coin is, and I’m not about to find out, because it apparently went “poof.” Tether, known as USDT (notice how Q Macro Strategy Peter Tchir “Traditional” vs “Disruptive” Portfolio Construction & Why It Matters So Much! May 15, 2022 3 everything about crypto is meant to sound or look like a currency - great marketing), is worth $80 billion and is “supposedly” backed by some sort of assets. That at least I understand. I can relate to something being backed by something. There have been repeated questions about what is actually backing it, but those have been met by repeated assertions that it is in fact backed by assets. Tether (which was trading below $1) has rebounded since Thursday. I don’t know, but if you’ve gotten to this point and haven’t invested in crypto but are thinking about starting now, I’d love an explanation (btw, “stable coins” is another brilliant marketing moniker – there really is a trend here). I’m digging deeper into this whole area, but I don’t see how it is anything but a red flag. China is trying to crack down on crypto use. One way is enforcement and the other way (no idea how they’d do it but always in the back of my mind) is the fact that you don’t have to worry about money outside of the system if you figure out a way to drive it to zero. I’m told its impossible, but I’ll leave it as low probability rather than impossible. The U.S. and Western Europe will impose regulations. Mostly for tax purposes, but increasingly to ensure that less can occur outside the system. I strongly believe that the NSA helped track some well publicized ransomware payments and helped get that returned. One, it tells me what a big, powerful entity can do if they focus on the space (assuming my “guess” is correct) which makes me think back to the China point. Two, ransomware as a “use” case may be dropping. I’m extremely bearish crypto here. I understand that the “maxis” (bitcoin maximalists, who loath crypto other than bitcoin) point to many of the problems listed above as a reason to view bitcoin as a “flight to safety” play in crypto, but I don’t buy into it. This is not the time, nor the place, but all you have to do is scroll through Twitter and you will find people with 100s of thousands of followers who say things just blatantly and factually incorrect. I’m not arguing about those who say it is going to $1 million, or those who tout that it is an inflation hedge, or those who say it is going to zero (and pound their chests on every drop, despite being wrong for the past few years), just people who state things as “facts” that are not in fact, facts. How many people are being “influenced” by the influencers? I think a high number and that scares me for the longer-term viability of the product (given everything else mentioned), but more importantly, leads me to believe the price drop could be larger than many expect. I didn’t even delve into the “alt” coins or NFTs, which are bigger disasters waiting to happen (if it hasn’t already happened). That was the “play” money part of their portfolio and that for many is gone (along with interest in penny stocks). The Disruptive Investors’ Problem #2 – Disruptive Stocks I’m not even going to include the cannabis related stocks because it makes the chart too complex, is piling on, and isn’t 100% related to my thesis, but probably could be. ARKK, at one point in early 2021, had outperformed the S&P 500 (SPY) by 194%! And the S&P’s gains were not shabby! It had even blown away the returns of the Nasdaq 100 (QQQ). Now, in a “stunning” reversal, its returns since the start of 2018 are now lower than either of those! As mentioned before, I do think more people are betting on a rebound (ARKK and TQQQ - 3x leveraged QQQ - have been getting extreme inflows), but some part of the disruptive investor must be nervous that they aren’t diversified at all? The Disruptive Investors’ Problem #3 – Cash Equivalents? Maybe I am wrong in what these investors considered “safe” assets. Ways to park their money. Maybe, they didn’t view giant tech as a cash holding/easy to access and was certain to go higher. I may be wrong on that, but we have seen some of those companies turn over recently. What if I’m right? What if the “disruptive investor” suddenly realizes that their portfolio should look a lot more like the traditional investor’s portfolio? I think it might be difficult to distinguish between capitulation and a rebalancing from “disruptive” to “traditional,” but I’d argue that we have been seeing signs of that and it is unlikely to be over. The End of “Gambling” Nation? David Portnoy, the president of Barstool Sports (@stoolpresidente on Twitter) has gone from calling markets and competing with Cramer for social media’s most vocal stock “analyst” to mostly focusing on one-bite pizza reviews and sports, which he does extremely well! DKNG down from $70 to $12, PENN down from $135 to $31, HOOD down from $70 to $11, and COIN down from $350 to $68 (though it almost broke $40 on Friday) all benefitted from this “gambling” mentality we saw during COVID. Maybe HOOD and COIN were experiencing “investing,” but I don’t think it is a leap of faith to consider at least some of it “gambling” or at least having the mentality of a “gambler” rather than an investor (you cannot convince me otherwise on weekly options on single stocks). These are all tied together and all represent a dramatic shift in “disruptive” behavior. TQQQ I am going to come back to TQQQ for a moment. It closed on Friday with a market cap of about $13 billion with 414 million shares outstanding. On April first, it had 321 million shares outstanding, so people have added about 100 million shares to this ETF in the last 6 weeks. TQQQ has dropped from $58 to $32 during that time. People are adding almost every day. There is very little capitulation (actually no capitulation). SQQQ - the 3x inverse - has fewer shares now than it did in January despite rallying from $29 to $52 over that time period. The aforementioned ARKK has by far the most shares outstanding in its history (though a much smaller total market cap). But I digress, so back to TQQQ. TQQQ had a market cap of $13 billion on Friday. QQQ closed at $302 (TQQQ doesn’t actually buy QQQ, but let’s pretend it does, since that simplifies the math). On Monday, TQQQ has to be set up to deliver 3x the daily percentage change in the Nasdaq 100 (QQQ is our proxy). So, let’s assume that TQQQ borrows $26 billion to buy $39 billion of QQQ (129 million shares). That means that whatever happens on Monday, TQQQ will have made or lost 3x the daily percentage change. For example, if QQQ went up 3% on Monday, it would close at $311.06 (using $302 as starting price). The shares held by TQQQ would be worth $40.17 billion, which after they repaid the loan would be worth $14.17 billion (or 9% higher than the $13 billion TQQQ started the day at). But this is where it gets interesting! As we went into Monday’s close, QQQ would need to be prepared to match 3 times the daily percentage change. Even at the elevated price of QQQ, TQQQ would need to hold 136.6 million shares going into Tuesday (instead of the 129 million shares it already had). So, TQQQ would have a buy order in at the close on 7.5 million shares of QQQ or $2.3 billion! The daily rebalancing of a 3x leveraged fund creates additional buys on up days and additional sells on down days! It tends to make moves even bigger than they would be otherwise. Think about that, a fund that is “only” $13 billion needing to buy as much as $2.3 billion if we get a 3% move (which seems the norm) and there were no inflows! This is the exact sort of mechanism that caused the inverse VIX ETFs to explode, though by their nature they actually had much higher leverage because of the way the underlying share count was calculated, but that should be a sobering reminder. The reverse also happens and TQQQ will have to sell into the close on down days, but so far, that has been largely offset by fund inflows! What if the fund inflows stop? My Fear My biggest fear is a shift from “disruptive” portfolios to “traditional” portfolios. The riskiest portion has been hard for many (NFT, Alt Coins, etc.) The “core” investment, other disruptive stocks, bitcoin, etc., has been hit hard. The companies they are working for may have gone from upping pay to suddenly being focused on costs, making salary less certain going forward. The thing that they viewed as the “piggy” bank is suddenly under pressure as well. These things occurring force a large unwind. Unfortunately, some of the “safe” stocks have come to represent huge portions of the indices, which would quickly spread losses. Could we have TQQQ “go poof” like the VIX ETNs? No, the leverage isn’t there. Could we have a limit down day as outflows combine with rebalancing and other selling to hit broad markets? I do not see why not. Could this happen if crypto rebounds? I doubt it, in fact, I think crypto would need to be the catalyst for more of the moves we have seen, but if crypto goes down and stays down (given its poor liquidity), we see a very ugly day in risk assets. Bottom Line I think we could see the Fed soften its stance now that Powell is being confirmed. That would help risk assets, but I’m far more concerned that Thursday’s crypto led selling pressure was only a taste of what is to come. I don’t know the timing, but puts for the next month seem worth it. I will also be watching to see if there is any “profit” taking on the recent bounces in the crypto and disruptive stocks. On Treasuries, we will get TIC data on Monday that shows what China, the Saudis, and other countries did with their Treasury holdings in March (I suspect that they reduced their exposure and that will explain some of the relative performance of Treasuries versus the debt of other countries). I don’t see liquidity improving in the coming weeks as we are at best halfway through people rethinking about risk and reward and adjusting their portfolios accordingly (hedge funds, large asset managers, traditional, and disruptive investors included). Maybe this was all just a crazy way to think about markets, how they are intertwined, and what is happening, but it explains a lot and highlights some serious and plausible risks! As much as I think tone at the Fed will change, I’m more nervous than bullish (again) – ugh! Tyler Durden Sun, 05/15/2022 - 12:15.....»»

Category: smallbizSource: nytMay 15th, 2022

ExchangeRight Fully Subscribes $91 Million, 24-Property Net-Leased Portfolio

ExchangeRight, one of the nation’s leaders in diversified real estate investments and strategies, has fully subscribed its $91 million Net-Leased Portfolio 51 DST offering of 24 properties across 13 states. The portfolio is structured to generate investor distributions starting at an annualized rate of 6.11 percent. The properties span 324,353... The post ExchangeRight Fully Subscribes $91 Million, 24-Property Net-Leased Portfolio appeared first on Real Estate Weekly. ExchangeRight, one of the nation’s leaders in diversified real estate investments and strategies, has fully subscribed its $91 million Net-Leased Portfolio 51 DST offering of 24 properties across 13 states. The portfolio is structured to generate investor distributions starting at an annualized rate of 6.11 percent. The properties span 324,353 square feet of retail space and are 100 percent occupied and feature such necessity-based tenants as Bank of America, Citizens Bank, Dollar General, Dollar Tree, Family Dollar, Fresenius Medical Care, Hy-Vee, O’Reilly’s, Sherwin-Williams, Tractor Supply Company, Verizon Wireless, Walgreens and WellMed. The total offering price was $91,180,000 and launched with a 5-year, fixed-rate interest-only financing at 3.56 percent. “Offerings like this are the foundation of our continued success,” said Joshua Ungerecht, a managing partner at ExchangeRight. “We are pleased to continue serving the needs of investors, representatives and advisors with our strategy of acquiring and managing diversified portfolios of properties net-leased to recession-resilient tenants. We are honored to have the opportunity to help investors with their cash flow, tax deferral and wealth protection needs, and to provide attractive exit options through our aggregation strategy.” ExchangeRight and its affiliates’ vertically integrated platform features more than $4.9 billion in assets under management, diversified across more than 1,100 properties, over 20 million square feet and throughout 46 states. More than 6,800 investors have trusted ExchangeRight to manage their capital. All of the company’s current and past offerings have met or exceeded targeted cash flow distributions to investors since the company’s founding. The past performance of ExchangeRight and its previous offerings does not guarantee future results. The post ExchangeRight Fully Subscribes $91 Million, 24-Property Net-Leased Portfolio appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyMay 5th, 2022

MFA Financial, Inc. Announces First Quarter 2022 Financial Results

NEW YORK, May 4, 2022 /PRNewswire/ -- MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the first quarter ended March 31, 2022. First Quarter 2022 financial results update: MFA generated a GAAP loss for the first quarter of $(91.1) million, or ($0.86) per common share1.  Distributable Earnings, a non-GAAP financial measure, which adjusts GAAP earnings by removing unrealized gains and losses, primarily on residential mortgage investments, associated financing liabilities and hedges that are accounted for at fair value through earnings, as well as certain non-cash expenses and securitization-related transaction costs, was $66.0 million, or $0.62 per common share. GAAP book value at March 31, 2022 was $17.84 per common share, while Economic book value, a non-GAAP financial measure of MFA's financial position that adjusts GAAP book value by the amount of unrealized market value changes in residential whole loans and securitized debt held at carrying value for GAAP reporting, was $18.81 per common share at quarter-end. Rapid increases in interest rates, combined with wider spreads, resulted in losses on our residential whole loans that are measured at fair value through earnings of $288.4 million.  This was partially offset by net gains of $158.2 million on derivatives used for risk management purposes and on securitized debt measured at fair value through earnings. Net interest income for the first quarter was $63.1 million.  Interest income from residential whole loans increased 10% over the immediately prior quarter to $99.5 million.  This increase was largely offset by a $9.0 million decline in interest income from residential mortgage securities, as the prior quarter included the impact of the early repayment of an MSR bond.  Interest expense was $7.6 million higher than the immediately prior quarter, consistent with the rising rate environment, which impacted both repurchase agreement funding and securitization execution.  For the first quarter, the overall net interest spread generated by all of our interest-bearing assets, including the carrying cost associated with swaps used for economic hedging purposes, was 1.96%. During the quarter, we completed two securitizations of Non-QM loans totaling $569.9 million, with a weighted average coupon of bonds sold of 4.05%, providing longer term, non-recourse, non-mark-to-market financing and $142.2 million of additional liquidity.  Subsequent to quarter end, we completed two securitizations of Business Purpose loans, totaling $509.5 million, including our first securitization of approximately $250.0 million of Rehabilitation loans.  Loan acquisition activity of $1.2 billion, resulted in net portfolio growth for the quarter of approximately $330 million.  During the quarter we acquired, or committed to acquire, approximately $615 million of Non-QM loans.  At Lima One, funded originations of Business Purpose loans were more than $525 million (over $660 million maximum loan amount inclusive of undrawn amounts), reflecting record volumes for the third consecutive quarter.  In addition, draws funded during the quarter on Rehabilitation loans were $63.1 million. On April 29, 2022, MFA paid a regular cash dividend for the first quarter of $0.11 per share of common stock (based on the number of shares held by stockholders at the record date (March 22, 2022) and before giving effect to the 1-for-4 reverse stock split effected on April 4, 2022).  1 Except as otherwise noted, for all periods presented all per share amounts and common shares outstanding have been adjusted to reflect the Company's 1-for-4 reverse stock split which was effected following the close of business on April 4, 2022. Commenting on the first quarter 2022, Craig Knutson, MFA's CEO and President said, "The first quarter of 2022 was an extremely challenging period for fixed income investors, and exceptionally so for mortgage investors, including MFA.  The magnitude of rate sell-off, particularly in the short end of the yield curve, was the most dramatic witnessed in over 30 years, eclipsing even the rate increases in early 1994.  We proactively addressed this challenge by taking steps to further hedge our exposure to interest rate risk, as well as bolster our cash position.  Specifically, we added $1.5 billion in interest rate swaps and completed additional securitizations.  While higher absolute rates and materially wider spreads on securitized mortgage assets pressured mortgage loan pricing, the additional risk management measures taken did mitigate the impact of the rate environment and resulted in a moderate book value decline for MFA.   Further, we continued to take advantage of the strong housing market, with another record quarter for loan originations at Lima One and reductions in our REO portfolio.  Additionally, we executed two Non-QM securitizations in March and two Business Purpose loan securitizations in April.  While these executions were wider than those achieved in 2021, we demonstrated that the securitization market remains a viable durable financing source, and these transactions generated added liquidity and freed up additional balance sheet capacity.  Mr. Knutson added "During the quarter our cash position increased by more than $100 million and was approximately $410 million at quarter-end.  Overall leverage increased, mainly due to declines in asset values and additional securitized debt, but remains relatively low at 3.1 times debt to equity. Excluding securitized debt, our recourse leverage is 1.9 times debt to equity.   Our net interest income for the first quarter was $63.1 million, down from $70.1 million in Q4 2021, but our Q4 interest income was bolstered by the pay-off of an MSR bond that produced an approximately $8.2 million gain.  We reported a GAAP loss of ($0.86) per common share in the first quarter, as earnings were negatively impacted by market value decreases in our loan portfolio held at fair value.  Our GAAP book value decreased $1.28 or 6.7% to $17.84 per share, and our Economic book value declined $1.77 or 8.6% to $18.81 per share. The latter measure was impacted by declines in prices of loans held at carrying value."  Mr. Knutson continued, "We have introduced a new non-GAAP metric, Distributable Earnings, to provide a measure of earnings that primarily eliminates non-cash, unrealized gains and losses that impact our GAAP earnings.  For the first quarter of 2022, MFA's Distributable Earnings were $66 million or $0.62 per common share.  Finally, we repurchased 3.2 million shares of our common stock at an average price of $17.15 during the first quarter, and an additional 2.8 million shares subsequent to quarter end as of April 29 at an average price of $14.48.  These share repurchases are accretive to both earnings and book value." Q1 2022 Portfolio Activity MFA's residential mortgage investment portfolio increased by approximately $330 million during the first quarter. Loan acquisitions were $1.2 billion, including $617.4 million of Non-QM loans and $589.4 million of funded originations (including draws on Rehabilitation loans) of Business Purpose loans. At March 31, 2022, our investments in residential whole loans totaled $8.3 billion. Of this amount, $6.8 billion are Purchased Performing Loans, $496.9 million are Purchased Credit Deteriorated Loans and $1.0 billion are Purchased Non-performing Loans. During the quarter, we recognized approximately $99.5 million of Interest Income on residential whole loans in our consolidated statements of operations, representing a yield of 4.94%.  Purchased Performing Loans generated a yield of 4.18%, Purchased Credit Deteriorated Loans generated a yield of 6.79% and Purchased Non-performing Loans generated a yield of 9.82%.  Additional acquisitions of Purchased Performing Loans drove a sequential quarterly increase in interest income from our residential whole loan portfolio of approximately $9.2 million. Overall delinquency rates across our residential whole loan portfolio were lower than the prior quarter, particularly on Business Purpose loans which saw declines in absolute dollar amounts of delinquencies as well as when measured as a percentage of the unpaid principal balance. In addition, the amount of Purchased Credit Deteriorated Loans that were 90 or more days delinquent, measured as a percentage of the unpaid principal balance, remained unchanged during the quarter and was 18.3% at March 31, 2022. The percentage amount of Purchased Non-performing Loans that were 90 or more days delinquent increased to 43.0% at March 31, 2022 from 42.4% at December 31, 2021, but declined in absolute dollar terms by approximately 6.5%. Lima One had a third consecutive quarter of record origination volumes, funding more than $526 million of business purpose loans with a maximum loan amount of $660 million, and generating approximately $14.5 million of origination, servicing, and other fee income. For the first quarter, a reversal of the provision for credit losses of $3.5 million was recorded on residential whole loans held at carrying value, primarily reflecting continued run-off of the carrying value portfolio and adjustments to certain macro-economic and loan prepayment speed assumptions used in our credit loss forecasts. The total allowance for credit losses recorded on residential whole loans held at carrying value at March 31, 2022 was $35.5 million. Early in the first quarter we increased our position in interest rate swaps to a notional amount of $2.4 billion and have maintained this position despite executing over $1 billion of securitizations in March and April of 2022.  At March 31, 2022, these swaps had a weighted average fixed pay interest rate of 1.29% and a weighted average variable receive interest rate of 0.29%. After including the impact of these swaps and other derivatives that have been entered into for economic hedging purposes, as well as the effect of securitized and other fixed rate debt, we estimate that the net effective duration of our investment portfolio at March 31, 2022 was 1.09. Our Purchased Non-performing Loans and certain of our Purchased Performing Loans are measured at fair value as a result of the election of the fair value option at acquisition, with changes in the fair value and other non-interest related income from these loans recorded in Other income, net each period. For the first quarter, net losses of $288.4 million were recorded, primarily reflecting unrealized fair value changes in the underlying loans. These losses were partially offset by $94.1 million of gains on derivatives used for risk management purposes (which include positions in swaps and short TBAs), as well as $64.1 million of mark-to-market gains on securitized debt held at fair value through earnings. We also continued to take advantage of a strong housing market to reduce our REO portfolio, selling 135 properties in the first quarter for aggregate proceeds of $41.5 million and generating $8.7 million of gains. Our REO portfolio was $145.6 million at March 31, 2022, a 34% decrease since March 31, 2021. At the end of the first quarter, MFA held approximately $250 million of Securities, at fair value, including $154 million of MSR-related assets and $96 million of CRT securities. General and Administrative and other expenses For the three months ended March 31, 2022, MFA's costs for compensation and benefits and other general and administrative expenses were $28.3 million.  Expenses this quarter include $12.2 million compensation and other general and administrative expenses recorded at Lima One. Stock Repurchase Program On March 11, 2022, the Company's Board authorized a stock repurchase program under which the Company may repurchase up to $250 million of its common stock through the end of 2023.  Including the purchases made through April 29, 2022, there is approximately $209.7 million of remaining capacity under the authorization as of such date. The following table presents MFA's asset allocation as of March 31, 2022, and the first quarter 2022 yield on average interest-earning assets, average cost of funds and net interest rate spread for the various asset types. Table 1 - Asset Allocation At March 31, 2022 Purchased Performing Loans (1) Purchased Credit Deteriorated Loans (2) Purchased Non-Performing Loans Securities, at fair value Real Estate Owned Other, net (3) Total (Dollars in Millions) Fair Value/Carrying Value $   6,777 $       497 $      988 $      250 $      146 $       1,049 $   9,707 Payable for Unsettled Purchases (29) — — — — (300) (329) Financing Agreements with Non-mark-to-market Collateral Provisions (668) (118) (203) — (12) — (1,001) Financing Agreements with Mark-to-market Collateral Provisions (2,528) (105) (136) (159) (13) — (2,941) Less Securitized Debt (2,353) (184) (301) — (21) — (2,859) Less Convertible Senior Notes — — — — — (228) (228) Net Equity Allocated $   1,199 $         90 $      348 $        91 $      100 $          521 $   2,349 Debt/Net Equity Ratio (4)          4.7   x           4.5   x          1.8   x          1.7   x          0.5   x          3.1   x For the Quarter Ended March 31, 2022 Yield on Average Interest Earning Assets (5) 4.18 % 6.79 % 9.82 % 10.13 % N/A  4.86 % Less Average Cost of  Funds (6) (2.74) (2.88) (3.09) (1.72) (2.91) (2.90) Net Interest Rate Spread 1.44 % 3.91 % 6.73 % 8.41 % (2.91) % 1.96 %   (1) Includes $3.6 billion of Non-QM loans, $885.2 million of Rehabilitation loans, $1.2 billion of Single-family rental loans, $98.2 million of Seasoned performing loans, and $1.0 billion of Agency eligible investor loans.  At March 31, 2022, the total fair value of these loans is estimated to be approximately $6.7 billion.  (2) At March 31, 2022, the total fair value of these loans is estimated to be approximately $566.3 million.  (3) Includes $410.9 million of cash and cash equivalents, $144.6 million of restricted cash, and $70.8 million of capital contributions made to loan origination partners, as well as other assets and other liabilities.     (4) Total Debt/Net Equity ratio represents the sum of borrowings under our financing agreements noted above as a multiple of net equity allocated.    (5) Yields reported on our interest earning assets are calculated based on the interest income recorded and the average amortized cost for the quarter of the respective asset.  At March 31, 2022, the amortized cost of our securities, at fair value, was $209.4 million.  In addition, the yield for residential whole loans at carrying value was 4.91%, net of three basis points of servicing fee expense incurred during the quarter.  For GAAP reporting purposes, such expenses are included in Loan servicing and other related operating expenses in our statement of operations. (6) Average cost of funds includes interest on financing agreements, Convertible Senior Notes and securitized debt. Cost of funding also includes the impact of the net carrying cost (the amount by which swap interest expense paid exceeds swap interest income received) on our Swaps. While we have not elected hedge accounting treatment for Swaps and accordingly the net carrying cost is not presented in interest expense in our consolidated statement of operations, we believe it is appropriate to allocate the net carrying cost to the cost of funding to reflect the economic impact of our interest rate swap agreements (or Swaps) on the funding costs shown in the table above.  For the quarter ended March 31, 2022, this increased the overall funding cost by 35 basis points for our Residential whole loans, 33 basis points for our Purchased Performing Loans, 56 basis points for our Purchased Credit Deteriorated Loans, and 39 basis points for our Purchased Non-Performing Loans.        The following table presents the activity for our residential mortgage asset portfolio for the three months ended March 31, 2022: Table 2 - Investment Portfolio Activity Q1 2022 (In Millions) December 31, 2021 Runoff (1) Acquisitions (2)  Other (3) March 31, 2022 Change Residential whole loans and REO $                      8,069 $         (582) $         1,207 $        (287) $                      8,407 $          338 Securities, at fair value 257 (1) — (6) 250 (7) Totals $                      8,326 $         (583) $         1,207 $        (293) $                      8,657 $          331   (1) Primarily includes principal repayments and sales of REO. (2) Includes draws on previously originated Rehabilitation loans.  (3) Primarily includes changes in fair value and changes in the allowance for credit losses.     The following tables present information on our investments in residential whole loans.      Residential Whole Loans at March 31, 2022 and December 31, 2021: Table 3 - Portfolio composition Held at Carrying Value Held at Fair Value Total (Dollars in Thousands) March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 Purchased Performing Loans:      Non-QM loans $  1,265,731 $ 1,448,162 $  2,391,632 $ 2,013,369 $  3,657,363 $ 3,461,531      Rehabilitation loans 154,508 217,315 735,849 517,530 890,357 734,845      Single-family rental loans 283,090 331,808 870,407 619,415 1,153,497 951,223      Seasoned performing loans 98,269 102,041 — — 98,269 102,041      Agency eligible investor loans — — 991,633 1,082,765 991,633 1,082,765 Total Purchased Performing Loans $  1,801,598 $ 2,099,326 $  4,989,521 $ 4,233,079 $  6,791,119 $ 6,332,405 Purchased Credit Deteriorated Loans $     518,450 $    547,772 $               — $              — $     518,450 $    547,772 Allowance for Credit Losses $      (35,457) $     (39,447) $               — $              — $      (35,457) $     (39,447) Purchased Non-Performing Loans $               — $              — $     987,794 $ 1,072,270 $     987,794 $ 1,072,270 Total Residential Whole Loans $  2,284,591 $ 2,607,651 $  5,977,315 $ 5,305,349 $  8,261,906 $ 7,913,000 Number of loans 8,506 9,361 16,706 14,734 25,212 24,095   Table 4 - Yields and average balances For the Three-Month Period Ended (Dollars in Thousands) March 31, 2022 December 31, 2021 March 31, 2021 Interest Average Balance Average Yield  Interest Average Balance Average Yield Interest Average Balance Average Yield Purchased Performing Loans:      Non-QM loans $  32,952 $  3,658,912 3.60% $ 28,902 $ 3,002,644 3.85% $  22,189 $  2,315,890 3.83%      Rehabilitation loans 14,861 814,055 7.30% 9,214 652,663 5.65% 6,668 540,549 4.93%      Single-family rental loans 13,325 1,024,731 5.20% 10,684 828,183 5.16% 7,081 447,585 6.33%      Seasoned performing loans 1,010 100,032 4.04% 1,423 106,065 5.37% 1,991 132,897 5.99%      Agency eligible investor loans 7,583 1,075,013 2.82% 8,046 1,065,062 3.02% — — — % Total Purchased Performing Loans 69,731 6,672,743 4.18% 58,269 5,654,617 4.12% 37,929 3,436,921 4.41%.....»»

Category: earningsSource: benzingaMay 4th, 2022

UDR to Report Q1 Earnings: What"s in the Cards for the Stock?

UDR is expected to deliver solid Q1 results by capitalizing on its diversified portfolio and technological initiatives. UDR Inc. UDR is slated to report first-quarter 2022 earnings on Apr 26 after market close. Results are likely to reflect growth in revenues and funds from operations (FFO) per share from the respective year-ago reported figures.In the last reported quarter, the FFO as adjusted per share of this Denver, CO-based residential real estate investment trust (REIT) came in line with the Zacks Consensus Estimate. There was an increase in revenues from rental income, fueling the quarter’s top line. Decent operating trends, strong pricing power and accretive transactions were also witnessed.In the last four quarters, UDR’s earnings met the Zacks Consensus Estimate on three occasions while missing the mark in the remaining one, the average negative surprise being 0.52%.United Dominion Realty Trust, Inc. Price and EPS Surprise United Dominion Realty Trust, Inc. price-eps-surprise | United Dominion Realty Trust, Inc. QuoteLet’s see how things have shaped up before this announcement.Factors to ConsiderFor the U.S. apartment market, the first quarter — typically a slow leasing period in other years — appears to be a solid one this year, with impressive demand for rental units, due to the pandemic that disrupted seasonal behavior.Per a report from the real estate technology and analytics firm, RealPage, the U.S. apartment market witnessed robust demand, with net demand for market-rate apartments aggregating a whopping 712,899 units nationally in the year ending the first quarter of 2022. This not only marks an 8% increase from the previous high a quarter earlier but also is 76% higher than the pre-pandemic-era highest established back in 2000. There is strong demand from young adults who are gaining from tight labor market conditions and record wage growth.As a result of the high demand, the apartment occupancy inched up 0.1 percentage point to 97.6% instead of seasonal cooling in the first quarter. Rent growth reached another all-time high, with the new lease effective asking rents increasing 15.2% year over year through March.UDR is likely to have gained from this improving trend with a geographically diverse portfolio and a superior product-mix of A/B quality properties in the urban and suburban markets. UDR’s portfolio comprises properties throughout the United States, including the coastal and Sunbelt locations. This strategy of maintaining a diversified portfolio across various geographies and price points limits volatility and concentration risks and helps UDR generate steady operating cash flows.UDR enjoys a decent balance sheet position and banks on technological moves and process enhancements to fuel growth. UDR focuses on enhancing cost control through its Next Generation Operating Platform. Such efforts to find efficiencies throughout its operating platform are likely to have boosted workforce productivity and residents’ experiences during the first quarter. The adoption of technology is also anticipated to have bolstered UDR’s margin during the period under review.The Zacks Consensus Estimate for quarterly revenues is currently pegged at $353.8 million, indicating an 18% year-over-year rise.In its fourth-quarter earnings release, UDR projected its first-quarter 2022 FFO as adjusted per share in the range of 53-55 cents.Before the first-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has remained unchanged at 55 cents in the past month. However, this suggests year-over-year growth of 17.02%.However, significant exposure to the challenged urban residential assets where the flexible working environment is still denting demand might have hurt UDR’s rental rates and occupancy levels. An oversupply in its urban markets and pandemic-related regulatory challenges also add to its woes.Here Is What Our Quantitative Model Predicts:Our proven model does not conclusively predict a surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. However, that’s not the case here.Earnings ESP: UDR has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: UDR currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks That Warrant a LookHere are three stocks from the residential REIT sector — AvalonBay Communities, Inc. AVB, Camden Property Trust CPT and American Homes 4 Rent AMH — that you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter:AvalonBay Communities, slated to release first-quarter earnings on Apr 27, has an Earnings ESP of +0.46% and a Zacks Rank of 3 at present.Camden Property Trust, scheduled to report quarterly figures on Apr 28, has an Earnings ESP of +1.25 % and a Zacks Rank of 2 currently.American Homes 4 Rent, slated to report quarterly numbers on May 5, has an Earnings ESP of +0.76% and carries a Zacks Rank of 3.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report United Dominion Realty Trust, Inc. (UDR): Free Stock Analysis Report Camden Property Trust (CPT): Free Stock Analysis Report American Homes 4 Rent (AMH): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksApr 21st, 2022

Rogers Communications Reports First Quarter 2022 Results

 Focus on execution and economic growth delivers solid operational improvements in Wireless, Cable, and Media Wireless service revenue and adjusted EBITDA growth of 7% Postpaid mobile phone net adds of 66,000, up 44,000 from last year; improved Q1 postpaid mobile phone churn by 12 basis points to 0.71% Mobile phone ARPU1 of $57.25 up 3% Strong Cable financial results driven by improved execution; revenue up 2% and adjusted EBITDA up 13% Media revenue growth of 10% reflects continued recovery of sports Increasing full-year 2022 total service revenue, adjusted EBITDA, and free cash flow guidance2 pre-Shaw transaction, driven by better execution and economic growth Total service revenue growth range now expected at 6% to 8%, compared to previous 4% to 6% Adjusted EBITDA growth range now expected at 8% to 10%, compared to previous 6% to 8% Free cash flow between $1.9 and $2.1 billion expected, compared to previous $1.8 to $2.0 billion Shaw transaction remains on track to close in Q2 2022; completed long-term financing in March TORONTO, April 20, 2022 (GLOBE NEWSWIRE) -- Rogers Communications Inc. today announced its unaudited financial and operating results for the first quarter ended March 31, 2022. Consolidated Financial Highlights   Three months ended March 31   (In millions of Canadian dollars, except per share amounts, unaudited)   2022     2021   % Chg             Total revenue           3,619             3,488           4   Total service revenue           3,196             3,021           6   Adjusted EBITDA 1           1,539             1,391           11   Net income           392             361           9   Adjusted net income 1           462             394           17             Diluted earnings per share           $0.77             $0.70           10   Adjusted diluted earnings per share 1           $0.91             $0.77           18             Cash provided by operating activities           813             679           20   Free cash flow 1           515             394           31   "Rogers delivered strong first quarter results across all our businesses, driven by better execution and the continued improvement in Canada's economy," said Tony Staffieri, President and CEO. "We are very confident about the opportunities ahead, driven by the exceptional quality of our assets and the dedicated efforts of the Rogers team. As a result, we are increasing Rogers' 2022 service revenue, adjusted EBITDA, and free cash flow guidance to reflect our improved outlook, ahead of further growth associated with the Shaw transaction." "In March, the CRTC approved the transfer of the broadcast distribution undertaking licences held by Shaw to Rogers. This approval is an important milestone and brings us one step closer to completing our transformational transaction, which we expect to close in Q2. Teams from both Rogers and Shaw continue to work constructively with the Competition Bureau and ISED Canada to ensure they have the information they need to assess the significant benefits the combined company will bring to Canadians and the Canadian economy." ______________________________ 1 Mobile phone ARPU is a supplementary financial measure. Adjusted EBITDA is a total of segments measure. Free cash flow is a capital management measure. Adjusted diluted earnings per share is a non-GAAP ratio. Adjusted net income is a non-GAAP financial measure and is a component of adjusted diluted earnings per share. See "Non-GAAP and Other Financial Measures" in our Q1 2022 Management's Discussion and Analysis (MD&A), available at www.sedar.com, and this earnings release for more information about each of these measures. These are not standardized financial measures under International Financial Reporting Standards (IFRS) and might not be comparable to similar financial measures disclosed by other companies.2 See "Financial Guidance". Operating Environment and Strategic Highlights The Canadian economy is recovering and beginning to grow as immigration levels increase and COVID-19 restrictions have increasingly been relaxed or removed, including travel and capacity restrictions, masking mandates, and vaccine mandates. Travel volumes have increased in recent months, resulting in higher roaming revenue, and sporting events can now be filled to venue capacity, which will result in greater attendance and game day revenue as we welcome fans back to Rogers Centre. While the general recovery is encouraging, COVID-19 remains a risk and we will continue to stay focused on keeping our employees safe and our customers connected. We remain confident we have the right team, a strong balance sheet, and the world-class networks that will allow us to get through the pandemic having maintained our long-term focus on growth and doing the right thing for our customers. Our four focus areas guide our work and decision-making as we further improve our operational execution and make well-timed investments to grow our core businesses and deliver increased shareholder value. Below are some highlights for the quarter. Successfully complete the Shaw acquisition and integration Received approval from the Canadian Radio-television and Telecommunications Commission (CRTC) for the transfer of Shaw Communications Inc.'s (Shaw) broadcasting services, achieving a significant regulatory milestone on the journey to closing the transformational transaction with Shaw (Transaction). Issued a combined $13.3 billion of Cdn$-equivalent senior notes at a weighted average cost of borrowing of 4.21% and a weighted average term to maturity of 13.9 years for net proceeds of $13.1 billion, successfully refinancing the committed credit facility we arranged to support the Transaction in March 2021. Issued US$750 million of subordinated notes due 2082 with an initial coupon of 5.25% for the first five years in February 2022. Invest in our networks to deliver world-class connectivity to Canadian consumers and businesses Awarded Best In Test in umlaut's first Canadian fixed broadband report in January, winning fastest upload and download speeds and scoring more than 60% higher than our nearest competitor in average download speeds amongst national Internet service providers. Recognized in January as Canada's most consistent national wireless and broadband provider, with the fastest Internet in Ontario, New Brunswick, and Newfoundland and Labrador, by Ookla, the global leader in fixed broadband and mobile network testing applications. Launched the first commercial 5G standalone network in Canada, bringing network slicing capabilities and lower latency, expanding Rogers 5G footprint, and supporting future enterprise and consumer applications. Successfully completed 8 gigabits per second symmetrical upload and download tests in both lab and customer trials on our fibre-powered network, the fastest published Internet speed in Canada among major Internet service providers. Announced six new cellular towers, and upgrades of two existing towers, bringing critical connectivity along Highway 4 in British Columbia and helping to bridge the digital divide. Announced we will invest almost $200 million to upgrade our network in New Brunswick with 100% pure fibre, delivering the latest Internet technology and an ultimate entertainment experience. Expanded Canada's largest and most reliable 5G network to 18 new communities as part of the partnership with the Eastern Ontario Regional Network, alongside the Government of Canada and the Province of Ontario. Announced Canada's first 5G Wireless Private Network in a mining operation at Detour Lake Mine. Invest in our customer experience to deliver timely, high-quality customer service consistently to our customers Announced a five-year strategic alliance with Microsoft that will leverage Azure's public cloud capabilities to enhance customers' digital experiences, power hybrid work, and drive 5G innovation across the country. Announced a suite of Smart Cities and Smart Buildings Internet of Things solutions to deliver on the growing needs of businesses and municipalities for sustainable, secure, and operationally efficient infrastructure. Partnered with Corus Entertainment to bring STACKTV to Ignite TV™ and Ignite™ SmartStream™ customers, a first for a Canadian telecommunications provider. Expanded Rogers Pro On-the-Go™ to Kelowna and Montreal. Pro On-the-Go is now available to Rogers customers in communities in British Columbia, Alberta, Manitoba, Ontario, Quebec, and Nova Scotia. Improve execution and deliver strong financial performance across all lines of business Generated total service revenue of $3,196 million, up 6%, and adjusted EBITDA of $1,539 million, up 11%, and net income of $392 million, up 9%, reflecting improvements across our business. Attracted 66,000 net postpaid mobile phone subscribers, up from 22,000 last year, with churn of 0.71%. Generated free cash flow of $515 million, up 31%, and cash provided by operating activities of $813 million, up 20%. Financial Guidance We are adjusting our consolidated guidance ranges for full-year 2022 total service revenue, adjusted EBITDA, and free cash flow from the original ranges provided on January 27, 2022. The revised guidance ranges are presented below. The upward adjustments primarily reflect improved execution and the continued Canadian economic growth.   2021   2022 Original   2022 Revised (In millions of dollars, except percentages) Actual   Guidance Ranges 1   Guidance Ranges 1                     Total service revenue         12,533   Increase of 4% to increase of 6%   Increase of 6% to increase of 8% Adjusted EBITDA         5,887   Increase of 6% to increase of 8%   Increase of 8% to increase of 10% Capital expenditures 2         2,788           2,800 to 3,000           2,800 to 3,000 Free cash flow         1,671           1,800 to 2,000           1,900 to 2,100 1 Guidance ranges presented as percentages reflect percentage increases over full-year 2021 results.2 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences or additions to right-of-use assets. The above table outlines guidance ranges for selected full-year 2022 consolidated financial metrics without giving effect to the Transaction (see "Shaw Transaction"), the associated financing, or any other associated transactions or expenses. Guidance ranges will be reassessed once the Transaction has closed. Our guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with "About Forward-Looking Information" in this earnings release, including the material assumptions underlying it, and in our 2021 Annual MD&A and the related disclosure and information about various economic, competitive, legal, and regulatory assumptions, factors, and risks that may cause our actual future financial and operating results to differ from what we currently expect. Quarterly Financial Highlights RevenueTotal revenue and total service revenue increased by 4% and 6%, respectively, this quarter, driven by revenue growth in our Wireless and Media businesses. Wireless service revenue increased by 7% this quarter, mainly as a result of higher roaming revenue associated with significantly increased travel as COVID-19-related global travel restrictions were less strict than last year, and a larger postpaid mobile phone subscriber base. Wireless equipment revenue decreased by 10%, as a result of fewer device upgrades by existing subscribers and fewer of our new subscribers purchasing devices. Cable service revenue increased by 1% this quarter, primarily as a result of service pricing changes this quarter and the increases in our Internet and Video subscriber bases, partially offset by declines in our Home Phone and Smart Home Monitoring subscriber bases. Media revenue increased by 10% this quarter, primarily as a result of higher sports-related revenue, partially offset by lower Today's Shopping Choice™ revenue. Adjusted EBITDA and marginsConsolidated adjusted EBITDA increased 11% this quarter and our adjusted EBITDA margin increased by 260 basis points primarily due to increases in Wireless and Cable adjusted EBITDA. Wireless adjusted EBITDA increased by 7%, primarily as a result of the flow-through of revenue growth. This gave rise to an adjusted EBITDA service margin of 63.0%. Cable adjusted EBITDA increased by 13%, primarily as a result of cost efficiencies, including lower content and people related costs. This gave rise to an adjusted EBITDA margin of 53.2%. Media adjusted EBITDA decreased by $7 million this quarter, primarily due to higher programming, production, and other operating costs as a result of increased activities as COVID-19 restrictions eased, and the timing of player salaries pertaining to Toronto Blue Jays™ player trades, partially offset by higher revenue as discussed above. Net income and adjusted net incomeNet income and adjusted net income increased this quarter by 9% and 17%, respectively, primarily as a result of higher adjusted EBITDA. Cash flow and available liquidityThis quarter, we generated cash flow from operating activities of $813 million, up 20%, as a result of higher adjusted EBITDA with the impact of lower income taxes paid largely offset by a higher investment in net operating assets. We also generated free cash flow of $515 million, up 31%, primarily as a result of higher adjusted EBITDA and lower cash income taxes. This quarter, we issued $13.3 billion senior notes (US$7.05 billion and $4.25 billion) with a weighted average interest rate and term to maturity of 4.21% and 13.9 years, respectively. We also issued US$750 million subordinated notes due 2082 with a coupon of 5.25% for the first five years. See "Managing our Liquidity and Financial Resources" in our Q1 2022 MD&A for more information. Our debt leverage ratio3 was 3.3 as at March 31, 2022, down from 3.4 as at December 31, 2021. As at March 31, 2022, we had $3.9 billion of available liquidity3 (December 31, 2021 - $4.2 billion), including $0.8 billion in cash and cash equivalents and a combined $3.1 billion available under our bank credit facilities. We also held $13.1 billion in restricted cash and cash equivalents that will be used to partially fund the cash consideration of the Transaction (see "Managing our Liquidity and Financial Resources" in our Q1 2022 MD&A). We also returned $252 million in dividends to shareholders this quarter and we declared a $0.50 per share dividend on April 19, 2022. ______________________________ 3 Debt leverage ratio and available liquidity are capital management measures. See "Non-GAAP and Other Financial Measures" and "Financial Condition" in our Q1 2022 MD&A for more information about these measures, available at www.sedar.com. Shaw Transaction On March 15, 2021, we announced an agreement with Shaw to acquire all of Shaw's issued and outstanding Class A Participating Shares and Class B Non-Voting Participating Shares for a price of $40.50 per share in cash, with the exception of the shares held by the Shaw Family Living Trust, the controlling shareholder of Shaw, and related persons (Shaw Family Shareholders). The Shaw Family Shareholders will receive 60% of the consideration for their shares in the form of RCI Class B Non-Voting common shares on the basis of the volume-weighted average trading price for such shares for the ten trading days ended March 12, 2021, and the balance in cash. The Transaction is valued at approximately $26 billion, including the assumption of approximately $6 billion of Shaw debt. The Transaction will be implemented through a court-approved plan of arrangement under the Business Corporations Act (Alberta). The Transaction is subject to other customary closing conditions, including receipt of applicable approvals and expiry of certain waiting periods under the Competition Act (Canada) and the Radiocommunication Act (Canada) (collectively, Key Regulatory Approvals). Subject to receipt of all required approvals and satisfaction of other conditions prior to closing, the Transaction is expected to close in the second quarter of 2022. Rogers has extended the outside date for closing the Transaction from March 15, 2022 to June 13, 2022 in accordance with the terms of the arrangement agreement. In connection with the Transaction, we entered into a binding commitment letter for a committed credit facility with a syndicate of banks in an original amount up to $19 billion. During the second quarter of 2021, we entered into a $6 billion non-revolving credit facility (Shaw term loan facility), which reduced the amount available under the committed credit facility to $13 billion. This quarter, we issued US$7.05 billion and $4.25 billion senior notes, which reduced the amount available under the committed credit facility to nil and the facility was terminated. The arrangement agreement between Rogers and Shaw requires us to maintain sufficient liquidity to ensure we are able to fund the Transaction upon closing and, as a result of the termination of the committed credit facility, we have restricted $13,131 million in funds, which are recognized as "restricted cash and cash equivalents" on our first quarter interim condensed consolidated statement of financial position. These funds have been invested in short-term, highly liquid investments such as bank term deposits and Canadian federal and provincial government bonds and are readily convertible to cash. These notes (except the $1.25 billion senior notes due 2025) also contain a "special mandatory redemption" clause, which requires them to be redeemed at 101% of face value if the Transaction cannot be consummated by December 31, 2022. See "Managing our Liquidity and Financial Resources" in our Q1 2022 MD&A for more information on the committed facility and our restricted cash and cash equivalents balance. We also expect that RCI will either assume Shaw's senior notes or provide a guarantee of Shaw's payment obligations under those senior notes upon closing the Transaction and, in either case, Rogers Communications Canada Inc. (RCCI) will guarantee Shaw's payment obligations under those senior notes. On March 24, 2022, the CRTC approved our acquisition of Shaw's broadcasting services, subject to a number of conditions and modifications that are detailed in "Regulatory Developments". The CRTC approval only relates to the broadcasting elements of the Transaction. The Transaction continues to be reviewed by the Competition Bureau and Innovation, Science and Economic Development Canada (ISED Canada). About Rogers Rogers is a leading Canadian technology and media company that provides world-class communications services and entertainment to consumers and businesses on our award-winning networks. Our founder, Ted Rogers, purchased his first radio station, CHFI, in 1960. Today, we are dedicated to providing industry-leading wireless, cable, sports, and media to millions of customers across Canada. Our shares are publicly traded on the Toronto Stock Exchange (TSX:RCI) and on the New York Stock Exchange (NYSE:RCI). Investment community contact Media contact     Paul Carpino Chloe Luciani-Girouard 647.435.6470 647.241.3946 paul.carpino@rci.rogers.com chloe.luciani@rci.rogers.com Quarterly Investment Community Teleconference Our first quarter 2022 results teleconference with the investment community will be held on: April 20, 2022 8:00 a.m. Eastern Time webcast available at investors.rogers.com media are welcome to participate on a listen-only basis A rebroadcast will be available at investors.rogers.com for at least two weeks following the teleconference. Additionally, investors should note that from time to time, Rogers' management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Rogers' website at investors.rogers.com. For More Information You can find more information relating to us on our website (investors.rogers.com), on SEDAR (sedar.com), and on EDGAR (sec.gov), or you can e-mail us at investor.relations@rci.rogers.com. Information on or connected to these and any other websites referenced in this earnings release is not part of, or incorporated into, this earnings release. You can also go to investors.rogers.com for information about our governance practices, environmental, social, and governance (ESG) reporting, a glossary of communications and media industry terms, and additional information about our business. About this Earnings Release This earnings release contains important information about our business and our performance for the three months ended March 31, 2022, as well as forward-looking information about future periods. This earnings release should be read in conjunction with our First Quarter 2022 Interim Condensed Consolidated Financial Statements (First Quarter 2022 Interim Financial Statements) and notes thereto, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB); our 2021 Annual MD&A; our 2021 Annual Audited Consolidated Financial Statements and notes thereto, which have been prepared in accordance with IFRS as issued by the IASB; and our other recent filings with Canadian and US securities regulatory authorities, including our Annual Information Form, which are available on SEDAR at sedar.com or EDGAR at sec.gov, respectively. Effective January 1, 2022, we have changed the way in which we report certain subscriber metrics in both our Wireless and Cable segments. Commencing this quarter, we will begin presenting postpaid mobile phone subscribers, prepaid mobile phone subscribers, and mobile phone ARPU in our Wireless segment. We will also no longer report blended average billings per unit (ABPU). In Cable, we will begin presenting retail Internet, Video (formerly Television), Smart Home Monitoring, and Home Phone subscribers. These changes are a result of shifts in the ways in which we manage our business, including the significant adoption of our wireless device financing program, and to better align with industry practices. See "Results of our Reportable Segments" and "Key Performance Indicators" for more information. We have retrospectively amended our 2021 comparative segment results to account for this redefinition. For more information about Rogers, including product and service offerings, competitive market and industry trends, our overarching strategy, key performance drivers, and objectives, see "Understanding Our Business", "Our Strategy, Key Performance Drivers, and Strategic Highlights", and "Capability to Deliver Results" in our 2021 Annual MD&A. We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and its subsidiaries. RCI refers to the legal entity Rogers Communications Inc., not including its subsidiaries. Rogers also holds interests in various investments and ventures. All dollar amounts in this earnings release are in Canadian dollars unless otherwise stated and are unaudited. All percentage changes are calculated using the rounded numbers as they appear in the tables. This earnings release is current as at April 19, 2022 and was approved by RCI's Board of Directors (the Board) on that date. This earnings release includes forward-looking statements and assumptions. See "About Forward-Looking Information" for more information. We are publicly traded on the Toronto Stock Exchange (TSX:RCI) and on the New York Stock Exchange (NYSE:RCI). In this earnings release, this quarter, the quarter, or first quarter refer to the three months ended March 31, 2022, unless the context indicates otherwise. All results commentary is compared to the equivalent period in 2021 or as at December 31, 2021, as applicable, unless otherwise indicated. References to COVID-19 are to the pandemic from the outbreak of this virus and to its associated impacts in the jurisdictions in which we operate and globally, as applicable. ™Rogers and related marks are trademarks of Rogers Communications Inc. or an affiliate, used under licence. All other brand names, logos, and marks are trademarks and/or copyright of their respective owners. ©2022 Rogers Communications Reportable segmentsWe report our results of operations in three reportable segments. Each segment and the nature of its business is as follows: Segment Principal activities Wireless Wireless telecommunications operations for Canadian consumers and businesses. Cable Cable telecommunications operations, including Internet, television and other video (Video), telephony (Home Phone), and smart home monitoring services for Canadian consumers and businesses, and network connectivity through our fibre network and data centre assets to support a range of voice, data, networking, hosting, and cloud-based services for the business, public sector, and carrier wholesale markets. Media A diversified portfolio of media properties, including sports media and entertainment, television and radio broadcasting, specialty channels, multi-platform shopping, and digital media. Wireless and Cable are operated by our wholly owned subsidiary, RCCI, and certain of our other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary, Rogers Media Inc., and its subsidiaries. Summary of Consolidated Financial Results   Three months ended March 31     (In millions of dollars, except margins and per share amounts)   2022       2021       % Chg                               Revenue                         Wireless           2,140               2,074               3     Cable           1,036               1,020               2     Media           482               440               10     Corporate items and intercompany eliminations           (39 )             (46 )             (15 )   Revenue           3,619               3,488               4     Total service revenue 1           3,196               3,021               6             Adjusted EBITDA       Wireless           1,085               1,013               7     Cable           551               487               13     Media           (66 )             (59 )             12     Corporate items and intercompany eliminations           (31 )             (50 )             (38 )   Adjusted EBITDA           1,539               1,391               11     Adjusted EBITDA margin 2   42.5   %   39.9   %   2.6   pts         Net income           392               361               9     Basic earnings per share           $0.78               $0.71               10     Diluted earnings per share           $0.77               $0.70               10             Adjusted net income           462               394               17     Adjusted basic earnings per share 2           $0.91               $0.78               17     Adjusted diluted earnings per share           $0.91               $0.77      .....»»

Category: earningsSource: benzingaApr 20th, 2022

REITs As An Alternative To The Red Hot Real Estate Market

Real estate ownership has been on the upswing since stringent lockdown and quarantine regulations fizzled out last summer, with potential property buyers having excess savings and cash available to purchase a new home or perhaps an investment property. Across most nations, the real estate market has been driven by soaring demand, with real estate prices […] Real estate ownership has been on the upswing since stringent lockdown and quarantine regulations fizzled out last summer, with potential property buyers having excess savings and cash available to purchase a new home or perhaps an investment property. Across most nations, the real estate market has been driven by soaring demand, with real estate prices in some major metropolitans increasing two or threefold since the start of the pandemic in 2020. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Real Estate in North America The real estate market in North America is now different, as property buyers in the United States have found themselves in a red hot market, with property values soaring and interest rates putting more pressure on the market as well. In Canada, the scene is almost no different, as major metros such as Toronto and Vancouver see prices for the most basic purchases increase by double-digit percentages. Looking at how these two nations performed showed that real estate in Toronto has increased by an average of 7.8% annually, making property management even more difficult for some small-time buyers and investors. Back here in the United States, some cities such as Manhattan, NY have seen the average apartment price rise by 5.7% according to recent statistics. The 5% increase experienced in New York is almost completely overshadowed by the 32.6% for places such as Phoenix, AZ, among others. It’s clear that buying property in the coming year will look even less possible for the low to middle-income class, yet, it’s not clear how the market will perform in the coming year, as demand remains relatively high, with interstate migration allowing people to leave the city behind to work remotely from cheaper cities and states. While the roaring market has yet kept many investors at bay, looking at the overall performance of the market, the picture looks somewhat different concerning some real estate stocks and share prices. As it’s now becoming more difficult for some people to step into homeownership, some are looking towards purchasing real estate shares and stocks which can perhaps offer them the same type of return as owning a real estate property or rental. While this is not completely the same, as rental income can be a lot more lucrative than the stock market, a host of real estate companies that are publicly traded have seen to deliver some promising investment returns for those investors who have seen the real estate market push them to the side. Now as a different measure for investment, and perhaps putting their savings to a different use other than the realty market, a combination of smart investment choices can create new meaning for those who are willing to add real estate shares with the aid of Real Estate Investment Trusts (REITs). Why Opt For Real Estate Investment Trusts? While it is possible to jump right into the stock or real estate market with the aid of a hedge fund manager or real estate broker, REITs have become a way for many first-time investors and buyers to gain profits from real estate shares. REITs are designed to create meaningful profit returns for investors and shareholders and pay them in the form of dividends. Companies that are trading or operating under the REITs umbrella rent out property or real estate to tenants and share the profits among the shareholders. Top REITs for first-time investors Public Storage (NYSE:PSA) One of the largest self-storage companies in the U.S. Public Storage has more than 2,000 self-storage facilities scattered across the country and has garnered more than $3 billion in revenue. PSA currently sits at a market cap of $71.61 billion, with share prices just over $400 per share. Dividend payouts are quite generous, with yields currently standing at 2.2%. Public Storage has remained rock solid in its growth throughout the last couple of months. Equinix (NASDAQ:EQIX) EQIX common stock is not relatively cheap, as a recent 52-week high saw share prices surpass $839.77, but annual dividend yields are currently standing at $10.64 per share. Equinix itself works on digital infrastructures and offers data centers and services to various markets around the world. In 2019, the company reported more than $5.5 billion in revenue. Currently, the company has more than 240 data centers scattered across five continents and available in 27 different countries. Extra Space Storage Inc (NYSE:EXR) Analysis has recently placed EXR as a strong buy REIT opportunity for many investors as share prices have remained relatively low zig-zagging between $200 and $220 per share. Currently, EXR offers a dividend yield of 2.81%, and the company is set to expand its storage facilities in the coming year as well. These and other modifications to company operations could mean positive growth for share prices, as the market capitalization currently stands at more than $28.63 billion. There is a bit more positive sentiment directed towards EXR as shares have experienced well-positioned growth throughout the years. American Tower Corporation (NYSE:AMT) AMT has been raising its dividend each year, and currently, its investment yield is more than 2.3%. The company which owns multiple properties and structures around the world leases most of its options to telecom companies. Share prices are generously low at the moment, trading just above the $250 mark. Trading sessions have presented some strong moves, both and down, but investors remain positive on the prospects of AMT as the company provides ample opportunity for growth as demand for telecommunications increases. Digital Realty Trust Inc (NYSE:DLR) For something a bit more flexible, and affordable DLR currently offers a $1.22 per share for the first quarter of 2022 after a 5% increase issued in March 2022. Although payout earnings are relatively low, Digital Realty Trust focuses on different sectors such as Artificial Intelligence, Cloud networks for property management software, mobile, and other financial services. Although the company is not solely committed to one industry, in this case, property or real estate, it can still become a lucrative addition for a REIT to any investor's portfolio. Bluerock Residential Growth REIT, Inc. (NYSEAMERICAN:BRG) Oftentimes overlooked, BRG has a market cap currently just under $1 billion, with share prices starting from as low as $26 per share. BRG is considered one of the more saver options for first-time investors, as it allows a bit more room to invest and trade with a low-priced stock Its dividend yield currently stands at 2.45%, and the company reported net revenue in December 2021 of more than $61 million. The company has recently moved into a merger and acquisition with Black Stone Real Estate in a $3.6 billion deal that was finalized at the end of 2021. Enthusiasts and other intraday investors are hoping that this deal could increase share prices for the coming years, as this gives them better trading security. NexPoint Residential Trust Inc (NYSE:NXRT) Our final REIT on this list is NXRT, a common stock that trades below $100, with current share prices for April averaging around $86 per share. NexPoint is mainly known for acquiring middle-income family homes in sought-after locations and prime real estate areas. The company manages various properties across the United States, but in recent times have become a lot more popular on the stock market as it offers lucrative investment growth for both novice and veteran investors. With a market cap of more than $2.28 billion and a dividend yield of 1.76%, NXRT offers both low and medium-tier risk. Final Thoughts The red hot real estate market has made it quite difficult for the average first-time buyer to get their piece of property in their local market. While it looks as if the year ahead will continue to bring more challenges, and rising real estate prices, investors are now considering new alternatives that can offer them better returns and a broader investment opportunity. Updated on Apr 20, 2022, 11:20 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkApr 20th, 2022

How to build wealth from real estate investing, according to 7 couples and individuals who have done it

Insider compiled a list of stories about couples and individuals who have used real estate as a tool to build long-term wealth. Houses in rowCalvin Lee/Getty With patience and the right strategies, real estate investing can be a path to financial freedom. Several people who have used real estate to build wealth told us how they got started. We compiled a list of our best stories about investors who earn passive income from real estate. With patience and time, real estate investing can yield significant passive income.   "A lot of people want to time the market, but it's time in the market," property investor and early retiree Michael Zuber told Insider. "That's how you get wealthy. The longer you hold an asset, the wealthier you will become. It is amazing what happens to a portfolio after you've owned it for 10 years." Insider spoke to individuals, including Zuber, who have used real estate as a tool to build long-term wealth. Insider has verified the following investors' claims about income and property ownership with documentation they provided. Here's how they did it.Todd Baldwin invested in his first property at age 23 and hasn't looked back. He earns over $1 million a year and is on track to hit a net worth of $20 million before age 35.Seattle-based real estate investor Todd Baldwin.Courtesy of Todd BaldwinSeattle-based real estate investor Todd Baldwin bought his first property at age 23. It was a $506,000, six-bedroom home and he made it work financially by "house hacking," or essentially having rent-paying roommates, which allowed him to live for free in his own home. Since he was living for "free," collecting rental income, and earning a six-figure salary from his day job, he was able to save more money and continue buying rental properties. By age 25, Baldwin's net worth crossed $1 million, mostly thanks to rental income, he said. At 28, he became a multi-millionaire and felt comfortable leaving his 9-to-5 to double down on real estate.The 29-year-old believes that real estate is a path to wealth. "I'm not going to say it's easy but it's pretty straight-forward," he said. "If you just buy real estate and you hang onto it for 20 years, you're going to sell it for a lot more than what you paid for it."Karina Mejia bought her first home at age 22 and now owns five properties in Boston, where she lives, and Augusta, Georgia. In 2021, she earned $43,000 in rental income.Boston-based real estate agent and investor Karina Mejia.Courtesy of Karina MejiaBoston-based realtor and real estate investor Karina Mejia lived at home after graduating and worked three jobs to save up for a down payment.If you have the ability to live with family at the start of your career, it doesn't have to be as big of a sacrifice as it may seem, said Mejia, who financed her first home with an FHA loan and put about $20,000 down. "You don't have to think that you're giving up your freedom. It's just a smart financial thing to do for the first year or a couple of months as you're getting started and paying down your loans."Today, she owns two properties in Boston and three in Augusta, Georgia. She lives for free in one of her properties in Boston by renting out part of the house. Real estate investors Michael and Olivia Zuber own over 100 units and earn over $100,000 a month in rental income. Their real estate portfolio allowed them to retire comfortably in their 40s. Michael and Olivia Zuber invest in properties in Fresno, California.Courtesy of Michael and Olivia ZuberAfter losing thousands of dollars in a previous life of day-trading, Michael and Olivia Zuber turned to real estate investing. It started as a way for them to get back on track financially and rebuild their nest egg, but turned into a path to financial freedom. The Bay Area-based couple saved up enough to purchase their first property, a $107,000 single-family home, by cutting back on things like eating out, entertainment, and vacations in order to save for their first rental property. For years, they worked full-time and lived on half of their income in order to save more and buy more real estate. By 2015, they were earning enough in rental income that Olivia could quit her 9-to-5. Michael followed suit in 2018 and left his software job.Peter Keane-Rivera bought his first property in Seattle at age 25 despite owing $45,000 in student debt. Today, he owns nine units between his two properties and grosses $102,840 in rental income a year.Seattle-based real estate investor Peter Keane-Rivera.Courtesy of Peter Keane-RiveraPeter Keane-Rivera invested in his first property, a $355,000 three-bed, two-bath house, at age 25. He came up with money for the down payment from an early investment in bitcoin and savings he accumulated while working.His mortgage payment, plus private mortgage insurance, came out to about $2,000 a month. To offset that cost, he "house hacked" and found two roommates to fill the other rooms. Keane-Rivera moved into the smallest room in his house and rented out the other two for $725 and $900 a month, he said. That dropped his monthly housing payment to $375, or about half of what he was paying as a renter.Now, he owns two properties and has nine tenants. His rental income more than covers his mortgages and he lives for free in one of his homes. His goal is to quit his day job within the next two years and focus on real-estate investing full time. A high-school dropout who goes by Matt "The Lumberjack Landlord" bought his first property in 2001 and nearly didn't survive the housing crash of 2008. Today, he owns over 100 units and grosses six figures per month in rental income.New Hampshire-based real estate investor Matt "The Lumberjack Landlord" and his family.Courtesy of Matt and Ashley"If there was a mistake to be made, I did a pretty good job finding it," said 44-year-old real-estate investor Matt, who prefers to go by "The Lumberjack Landlord" for privacy reasons.He started buying properties in the early 2000s, and his first investments produced more headaches than income, he said. Then he faced an even greater challenge surviving the housing crash of 2008.It took about seven years until he started to earn enough in rental income to cover his own housing costs — and it was year 15 of investing when his real-estate earnings became roughly equivalent to his salary from his software job. After two decades of following his buy-and-hold real-estate investing strategy, he now owns 106 units across 36 buildings in New Hampshire.Former truck driver Dion McNeeley didn't have any money to his name and lived paycheck-to-paycheck for years. Over time, he built a 16-unit real estate portfolio in Washington and became financially independent from the rental income he earns.  Dion McNeeley owns 16 units across seven properties in Washington.Courtesy of Dion McNeeley"I made it to 40 without ever having $1,000 in the bank," said former marine, cop, and truck driver Dion McNeeley. "My plan was to retire on two pensions, and neither one of them worked out."McNeeley turned to real estate and started saving up for an investment property in 2011. At the time, he was making $17 an hour working at a commercial truck driving school. After two years of working overtime, he managed to save up $20,000 to buy an investment property in 2013. He continued buying about one property every other year until his income started to "snowball," he said. After nine years of real estate investing, the 51-year-old owns seven properties and 16 units in Washington state, profits six-figures in rental income a year, and considers himself financially free.Seattle-based real estate investor and wholesaler Ludomir Wanot built his portfolio with less than $10,000 upfront by buying with his brother and using an FHA loan. Today, he profits more than $500,000 in 2021.Seattle-based real estate investor and co-founder of Evergreen Housing Network Ludomir Wanot.Courtesy of Ludomir Wanot"From a very young age, I knew that money could give me options, and I wanted more options in my life," said Ludomir Wanot, who was raised by a single mother who struggled financially. "So I started thinking about how to earn more money." When he was in high school, "I found online that 90% of all millionaires became so through owning real estate." From that point on, he decided that real estate would one day be his path to wealth.He bought his first investment property with his brother in 2016 when he was 24. They found a single-family, fixer-upper on Craigslist, negotiated the seller down to $138,000, and financed it with an FHA loan. They put down a little less than $10,000 and split the upfront costs, meaning they each paid less than $5,000.Wanot, now 30, earns most of his money from wholesaling, but profits about $50,000 each year in rents from his portfolio of 13 units located throughout central and western Washington.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderApr 14th, 2022