One of the safest investments ever!
Today I would like to introduce a real-estate-investment-trust (REIT). Reits is a special type of company form, as it enjoys tax advantages and has no more than 55% borrowed capital. This makes it more difficult to get into debt. Berkshire Hethaway has a 10% stake in this company. Store Capital own about 2500 properties. The IPO of the company was in 2014, with the original foundation dating back to the 80s.
The name "Store" is composed of "Single Tenant Operational Real Estate". This means that the company has many different single tenants and employs just 97 people. They thus form the pontoon to Realty Income Corporation.
What is their secret?
1. the properties
Store Capital works conceptually with the "Sale & Lease-Back" procedure. Imagine you have a property in the USA and sell it to Store Capital and conclude a lease agreement for the sold property.
Airlines work similarly when selling their aircraft.
2. the administration
With the "Triple-Net-Lease" procedure, Store Capital transfers administrative tasks to the tenant. The tasks for the tenant are taxes, insurance and maintenance of the property.
For the acquisition of the real estate Store Capital needs the borrowed capital, which has a fixed interest rate. This makes the costs manageable in the long term. At the same time Store Capital increases the rents as a kind of graduated rent and can thus increase its cash flow in the long term, compared to the expenses. As a listed REIT, raising capital is easy as Store Capital simply has to issue new shares. In 2014 there were 78 million shares and in 2020 there are already around 250 million shares.
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None of the tenants have more than 3% of the property portfolio, which guarantees a good diversification.
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Individual sectors could be problematic, as restaurants, cinemas and health clubs have been badly affected by the COVID 19 pandemic.
I personally am very confident about the share. I don't expect any major price gains, but with a dividend of 5% per annum and constant cash flow growth (apart from the slump due to the pandemic) I consider Store Capital a good basis investment for my own portfolio.
That seems like a pretty safe investment, it's worth it for everyone to do their own research and consider investing in it, thank you very much for sharing this valuable information that can help many, there are people who by getting opportunities like this keep it to themselves.