With this REIT moving in the right direction, will its stock rebound?
TWhile retail trade has suffered particularly over the past year, demand for industrial real estate has increased. In this clip from Motley Fool Live, recorded on December 9, Marc Rapport, Motley Fool contributors Matt Frankel and Jason Hall discuss REIT showing promise and moving in the right direction despite declining stock prices.
Marc Report: At the moment I have been thinking a lot about Global net lease, LNG (NYSE: LNG). It is also a REIT, a Real Estate Investment Trust. They are small. They are not among the greats. But they’ve dropped 20% since I bought them this summer. I think they are in a better position than they seem. They are a mix of office and industrial. These are the good, the bad and the ugly in terms of a pandemic. It is an office, industrial and commercial. Their industrialist seems to be doing quite well. Of course, the office struggled and the retail industry struggled. They are more than 50% in the industrial sector and it works well. They have 312 properties. About 60% is in the United States, rest [is] mainly in UK They just bought a Walmart (NYSE: WMT) in UK Their yield, I’m probably guilty of chasing after yield, but I’m in the tender stage of my working life where income matters as much as growth. I want to support the income portion of my portfolio. They report, to date, nearly 11%, which seems dangerously high to me. Their payout rate is over 100% right now. No, it fell. I am sorry. I’m looking here now. It just fell to 91% in the third quarter. Not bad. Their FFO per share increased. I think they are promising. As for the share price itself, they have rallied. They fell to around 13.5 on the first of the month. They came back over 15 years old.
Matt Frankel: The payout rate is a bit high for convenience. But I will say that industrial is a type of real estate that is extremely popular at the moment. There are many key markets where the manufacturer is practically 100% occupied. Supply is not sufficient to meet demand. There are tenants on waiting lists for more space. E-commerce has just exploded over the past year with COVID. I saw that they also announced a Walmart Learning Center. Walmart is increasingly becoming a big tenant for them. Industrial is just a great game right now and it’s a way to get some return. Like I said, the distribution ratio is a bit high for comfort, but not a red flag per se.
Report: Yeah, I would just like to ask what their ticker is. It’s GNL, Global Net Lease, who is really talking about exactly what they are doing.
Jason Hall: I just wanted to show this really quickly because I think it really emphasizes the important here and that’s the trend. Regarding the cash payout ratio, because with REITs, the regular payout ratio based on their GAAP earnings can be misleading. On a cash dividend payout ratio, here’s the gist. It is a trend in the right direction. I think that’s the important thing that I really wanted to stress.
Report: Thanks for pointing that out. I appreciate it. Their top 10 tenants are big names, for example, FedEx (NYSE: FDX) and their biggest tenant of offices, ING (NYSE: ING).
Frankel: Impressive. You can’t go wrong with industrial real estate right now, unless they are a really terrible operator, which they are not.
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Jason Hall has no position in the stocks mentioned. Marc Rapport is the owner of Global Net Lease. Matthew Frankel, CFP® owns FedEx. The Motley Fool owns and recommends FedEx. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.