New REITs to Consider
By: Tim McPartland,
Large office REIT Paramount Group(ticker:PGRE) has priced their IPO shares at $17.50/share and today they are trading at $18.34/share. At the risk of looking foolish (when/if the shares zoom higher) we have absolutely no interest in these shares. Paramount Group owns higher end office properties in just 3 markets, NYC, Washington DC and San Francisco. There will be a 2.2% yield on the IPO price. Obviously this is a quality issue, but as an income investor one has to count on capital gains if buying this issue. We have looked at the registration document for the offering and it is massive. We likely will not wade further through it as it would take hours to get it digested and we don’t have that time for an issue we likely have no interest in. You can access the registration statement here if you have some free time to read.
Also Store Capital (ticker:STOR) came to market yesterday in an offering that was priced at $18.50 and is now trading at $19.70. Store Capital is an owner of 850 single tenant buildings leased on a triple net lease basis. They are similar to Realty Income (ticker:O), but on a much smaller scale. Their properties are in 46 states–so broad geographical diversification. They are forecasting a minimum quarterly distribution of 25 cents/share–a yield of just over 5% on the current price. This is just the type of REIT we like–we can understand the business as it is straightforward–own a building and lease it out on a triple net lease basis. You can check their website here to get the understandable details of the business. This is an issue we are considering buying as it has all the components we like to see–understandable, good income and strong management.
Additionally there are a number of new issues in the REIT arena yet to come and we will watch for additional issues.
Thanks to longtime reader Larry for pointing out new issues.