Group 1 - The company has sold its position in Essential Properties Realty Trust, Inc. (EPRT) and reinvested the proceeds into Blue Owl Capital Inc. (OWL) [1] - Following the reinvestment, EPRT has experienced a decline [1] Group 2 - The company invests significant resources, including thousands of hours and over $100,000 annually, into researching profitable investment opportunities [2] - The investment strategy has garnered over 500 five-star reviews from satisfied members [2]

Group 1 - The investment approach has received over 500 five-star reviews from members who are experiencing benefits [1] - The company invests over $100,000 annually and dedicates thousands of hours to research profitable investment opportunities, particularly in real estate strategies [1] - REITs have been in a bear market for the past three years, indicating a challenging environment for real estate investment trusts [1] Group 2 - Jussi Askola, the President of Leonberg Capital, is recognized for his expertise in REIT investing and has authored award-winning academic papers on the subject [1] - The investing group High Yield Landlord offers features such as three portfolios (core, retirement, international), buy/sell alerts, and direct access to analysts for real-time transactions [1]

Portfolio Performance - The portfolio is 99.7% leased, demonstrating stability[15] - Same-store rent growth has averaged 1.4% over the last four quarters[15] - Only 5.4% of ABR is expiring through 2029, with a coverage ratio of 4.0x[15] - The portfolio has experienced an annualized rent loss of approximately 30 bps since inception in 2016[19] Balance Sheet and Liquidity - Pro forma Net Debt / Annualized Adjusted EBITDAre is 3.4x at 1Q'25-end, indicating low leverage[15] - The company has approximately $1.5 billion of pro forma liquidity[15] - The weighted average debt maturity is 3.9 years, with a weighted average interest rate of 4.1%[15] Investment Activity - Closed investments of approximately $227 million in 2Q'25 to date, with an expected cash yield of approximately 7.8%[15] - Approximately $29 million of dispositions closed in 2Q'25 to date at a 7.2% cash yield[15] - Approximately $237 million under PSA or LOI, with 2Q'25 expected cash yield of ~7.8%[15] Portfolio Composition - Top 10 tenants represent 17.3% of ABR, indicating diversification[15] - 93% of cash ABR comes from service-oriented and experience-based tenants[39]

I often talk with family & friends about the idea of owning REITs ( XLRE ) but they always scoff at the idea. Instead, most talk about owning physical rental properties, thinking this is the only way to generate cash flow.Contributing analyst to the iREIT+Hoya Capital investment group. The Dividend Collectuh is not a registered investment professional nor financial advisor and these articles should not be taken as financial advice. This is for educational purposes only and I encourage everyone to do their o ...

Core Insights - The Zacks REIT and Equity Trust - Retail industry is benefiting from strong consumer spending, limited new supply, and the importance of physical stores, particularly in top-tier locations [1][3] - The industry is experiencing a rebound due to renewed consumer interest in in-store shopping, despite challenges from e-commerce and high interest rates [2][6] Industry Overview - The industry includes REITs that manage various retail properties, with performance influenced by economic conditions, employment levels, and consumer spending trends [2] - The shift towards experiential retail and mixed-use developments is revitalizing urban areas and enhancing customer engagement [3] Market Dynamics - Resilient consumer spending and limited new construction are key drivers for retail REITs, with a focus on prime locations and experiential retail [3][4] - High construction costs and labor constraints are limiting new development, leading to increased competition for well-located properties [5] E-commerce Impact - E-commerce growth is pressuring brick-and-mortar retailers, reducing the need for physical store expansion and impacting retail space demand [6] - Macroeconomic policies, including tariffs and inflation, are straining retailers' margins and increasing the risk of store closures [6] Industry Performance - The Zacks REIT and Equity Trust - Retail industry has underperformed the broader Zacks Finance sector and the S&P 500 over the past year, with a 6.5% increase compared to 11.4% for the S&P 500 [11] - The industry is currently trading at a forward price-to-FFO ratio of 15.25X, below the S&P 500's P/E of 21.83X and the Finance sector's P/E of 16.21X [14] Company Highlights - Realty Income Corporation focuses on acquiring and managing freestanding commercial properties, with a stable cash flow supported by a diversified tenant base [19] - Kimco Realty is well-positioned with a portfolio of grocery-anchored shopping centers in prime locations, benefiting from high employment and spending power [21] - Essential Properties Realty Trust specializes in single-tenant properties leased to service-oriented businesses, providing stable rental cash flows [25]

Investment Ratings - Cold Storage REITs: Lineage Inc. (LINE, Buy) [5] - Industrial REITs: Prologis Inc. (PLD, Neutral) [16] - Industrial REITs: Terreno Realty Corp (TRNO, Buy) [31] - Self Storage REITs: Extra Space Storage Inc. (EXR, Buy) [44] - Self Storage REITs: Public Storage Inc. (PSA, Buy) [54] - Retail REITs: Brixmor Property Group (BRX, Buy) [63] - Retail REITs: Phillips Edison & Co (PECO, Buy) [74] Core Insights - The report highlights a mixed outlook across various REIT sectors, with some companies like LINE, TRNO, EXR, PSA, BRX, and PECO receiving "Buy" ratings, while PLD is rated "Neutral" [5][16][31][44][54][63][74] - Economic occupancy for LINE decreased by 290 basis points sequentially and 260 basis points year-over-year in Q1 2025, indicating potential challenges in maintaining occupancy levels [5] - Prologis Inc. is focusing on the implications of tariff policies on global supply chains, which may disrupt tenant activities and leasing demand [16] - Terreno Realty Corp is observing a shift in leasing dynamics post-tariff announcements, with domestic customers becoming more active compared to those operating across borders [31] - Extra Space Storage Inc. is prioritizing occupancy over rent in the current environment, reflecting a strategic shift in response to market conditions [44] - Public Storage Inc. is experiencing a significant impact from regional events, such as fires in Los Angeles, which account for 15% of its NOI [54] - Brixmor Property Group is seeing a steady increase in billed occupancy, which has risen by an average of 100 basis points over the last four years [63] Summary by Sections Cold Storage REITs - Lineage Inc. (LINE) reported a decline in economic occupancy and revenue per occupied pallet, with management expressing confidence in maintaining AFFO/share and EBITDA guidance for 2025 [5][6][7] Industrial REITs - Prologis Inc. (PLD) is navigating the complexities of global supply chains and tariff impacts, with expectations for occupancy and rent growth improvements in the second half of 2025 [16][20] - Terreno Realty Corp (TRNO) is adapting to changes in leasing activity and tenant retention amid tariff uncertainties, focusing on domestic customer engagement [31][36] Self Storage REITs - Extra Space Storage Inc. (EXR) is adjusting its strategy to prioritize occupancy over rent, with a focus on counter-cyclical demand drivers [44][46] - Public Storage Inc. (PSA) is managing its rent versus occupancy strategy while facing challenges from regional disruptions [54][56] Retail REITs - Brixmor Property Group (BRX) is experiencing a positive trend in occupancy and leasing spreads, with a focus on tenant credit and market dynamics [63][66] - Phillips Edison & Co (PECO) is observing volatility in the market due to tariff updates, impacting leasing velocity and transaction activity [74]

Core Insights - Essential Properties Realty Trust (EPRT) has been analyzed multiple times, with significant developments occurring over the past four years, particularly influenced by high inflation and interest rates [1]. Group 1: Company Characteristics - The company is of interest if it demonstrates growth in revenue, earnings, and free cash flow [1]. - EPRT is characterized by excellent growth prospects, making it an attractive investment option [1]. - Favorable valuations are a key criterion for considering EPRT as a potential investment [1]. Group 2: Investment Preferences - Preference is given to companies with steadily growing revenue and high free cash flow margins [1]. - Dividend stocks and those with generous share repurchase programs are favored for inclusion in an investment portfolio [1].

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.45, representing a 7% increase compared to Q1 2024 [23] - Total AFFO for the quarter was $85.7 million, up $14.6 million or 21% year-over-year [24] - General and administrative expenses increased to $11.5 million from $9.4 million in the same period last year [24] - The company declared a cash dividend of $0.295, resulting in an AFFO payout ratio of 66% [25] - The balance sheet showed income-producing gross assets reaching $6.3 billion at quarter-end [26] Business Line Data and Key Metrics Changes - The company invested $308 million through 21 transactions at a weighted average cash yield of 7.8% [13] - The weighted average lease term for the portfolio remained at 14 years, with only 5.4% of annual base rent expiring in the next five years [12] - The weighted average unit level coverage ratio was 3.5 times, indicating strong tenant profitability [12] Market Data and Key Metrics Changes - The investment pipeline supports an upper guidance range of $900 million to $1.1 billion for 2025 [11] - Same-store rent growth was reported at 1.5%, slightly up from the previous quarter [17] - The company’s carwash industry exposure was reduced to 13.9% of annual base rent, below the soft ceiling of 15% [20] Company Strategy and Development Direction - The company continues to focus on middle market sale leasebacks with growing operators in targeted industries [8] - The management expects investment cap rates in 2025 to be slightly lower than in 2024, but competition has been less than anticipated due to market volatility [10] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support growth [29] Management's Comments on Operating Environment and Future Outlook - The operating environment remains favorable despite a choppy capital markets backdrop [7] - Management reaffirmed the 2025 AFFO per share guidance range of $1.85 to $1.89, indicating over 7% growth at the midpoint [31] - The company is optimistic about its investment opportunities and the overall health of its portfolio [32] Other Important Information - The company sold 11 properties for $24.3 million in net proceeds during the quarter [20] - The company’s liquidity was bolstered by a $2.3 billion senior unsecured credit facility [30] Q&A Session Summary Question: Impact of ongoing tariff situation on tenant health - Management believes the impact will be minimal as 93% of their portfolio is service and experience-based [35] Question: Competition levels across target industries - Competition is more pronounced in larger transactions, while smaller transactions remain less competitive [37] Question: Factors for not raising acquisition guidance - Management indicated it is still early in the year and visibility on the pipeline is limited to 60-90 days [45] Question: Details on Dave and Buster's acquisition - The investment was based on a long-standing relationship and favorable terms due to reduced competition [49][50] Question: Current watch list and tenant dynamics - The watch list is down 50 basis points quarter-over-quarter, indicating stable tenant health [62] Question: Transaction environment and competition - The company is seeing less competition currently, but expects it to normalize as the market stabilizes [76] Question: Leverage and potential scenarios for increase - Management anticipates remaining conservative on leverage, with sufficient liquidity to support operations [90] Question: Trends in car wash tenant performance - Coverage and average unit volumes for car wash operators remained flat during the quarter [117] Question: Overall economic outlook and tenant resilience - The company believes its tenants are well-positioned to handle economic pressures, with strong rent coverage ratios [165]

Portfolio & Leasing - The portfolio is 99.7% leased, demonstrating stability[11] - Same-store rent growth has averaged 1.4% over the last four quarters, indicating consistent performance[11] - Only 5.8% of ABR is expiring through 2029, with a strong 3.8x coverage ratio, minimizing near-term risk[11] - Top 10 tenants represent just 17.6% of ABR, showcasing diversification[11, 26] - 93% of cash ABR comes from service-oriented and experience-based tenants[30] Financials & Capital - Proforma Net Debt / Annualized Adjusted EBITDAre is 3.1x at 4Q'24-end, indicating low leverage[11] - The company has ~$1.5 billion of pro forma liquidity, providing excellent financial flexibility[11] - Weighted average debt maturity is 4.2 years, and the weighted average interest rate is 4.1%, reflecting well-laddered, low-cost debt[11, 84] - The company raised ~$309 million of common equity in 1Q'25, including ~$288 million through an overnight forward offering[11] Investment Activity - The company closed investments of ~$329 million in 2025 to date at ~7.7% cash yield[11] - ~$247 million of investments are under PSA or LOI, with a 2Q'25 expected cash yield of ~7.8%[11] - ~$24 million of dispositions closed in 2025 to date at 7.0% cash yield, with ~$26 million under PSA at 7.1% yield, demonstrating accretive capital recycling[11]

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.45, representing a 7% increase compared to Q1 2024 [23] - Total AFFO for the quarter was $85.7 million, up $14.6 million or 21% year-over-year [24] - The company declared a cash dividend of $0.295, resulting in an AFFO payout ratio of 66% [25] - Pro forma net debt to annualized adjusted EBITDAre was 3.4 times at quarter-end [29] Business Line Data and Key Metrics Changes - The company invested $308 million through 21 transactions at a weighted average cash yield of 7.8% [13] - The weighted average lease term was 14 years, with only 5.4% of annual base rent expiring over the next five years [12] - The weighted average unit level coverage ratio was 3.5 times, indicating strong tenant profitability [12] Market Data and Key Metrics Changes - The company ended the quarter with investments in 2,138 properties leased to 423 tenants across 16 industries [11] - Same-store rent growth was 1.5%, slightly up from the previous quarter [17] - The carwash industry exposure was reduced to 13.9% of annual base rent, below the soft ceiling of 15% [20] Company Strategy and Development Direction - The company continues to focus on middle market sale leasebacks with growing operators in targeted industries [8] - The investment pipeline supports the upper half of the guidance range of $900 million to $1.1 billion for 2025 [11] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support growth [29] Management's Comments on Operating Environment and Future Outlook - The operating environment remains favorable despite a choppy capital markets backdrop [7] - The company expects modest cap rate compression in 2025, but competition has been less than anticipated due to market volatility [10] - Management reaffirmed the 2025 AFFO per share guidance range of $1.85 to $1.89, indicating over 7% growth at the midpoint [31] Other Important Information - The company issued over $300 million of equity and upsized its credit facility, resulting in liquidity of $1.5 billion [9] - The company sold 11 properties for $24.3 million in net proceeds during the quarter [20] - The company has a strong focus on tenant relationships, with 90% of investments being sale leaseback transactions [14] Q&A Session Summary Question: Impact of ongoing tariff situation on tenant health - Management believes the impact will be minimal as 93% of their portfolio is service and experience-based [35] Question: Competition levels across target industries - Competition is more pronounced in larger transactions, while smaller transactions remain less competitive [37] Question: Factors for not raising acquisition guidance - Management indicated it is still early in the year and visibility on the pipeline is limited to 60-90 days [45] Question: Details on Dave and Buster's acquisition - The investment was based on a long-standing relationship and favorable terms due to less competition [49][50] Question: Current watch list and evolving dynamics - The watch list is down 50 basis points quarter-over-quarter, indicating a stable credit environment [62] Question: Transaction environment and competition - Management noted that while competition has decreased, there is still active dialogue with new relationships [108] Question: Leverage and potential scenarios for increase - Management anticipates remaining conservative on leverage, with sufficient liquidity to avoid increasing leverage [90] Question: Trends in car wash tenants - Coverage and average unit volumes were flat across car wash operators [117] Question: Overall economic outlook and tenant base resilience - Management expressed confidence in the tenant base's ability to withstand economic pressures due to strong rent coverage [165]