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TheStreet Open House

REIT Has Excel-lent Chance of Raising Dividends

Stocks in this article: EXLEXL.PBKIMROIC

The new Excel Trust has over three decades of shopping center investment experience as evidenced by the tenured senior management team including founder Sabin, President and COO Spencer Plumb --16 years; CFO and Treasurer Jim Nakagawa -- 19 years; CIO and SVP Mark Burton and SVP and General Counsel Eric Ottesen -- 18 years.

Excel-lent Results

Excel Trust reported that its 2012 adjusted funds from operations for the quarter was $8.5 million, or 20 cents per diluted share and for the year of $28.6 million, or 78 cents per diluted share (5% increase year over year). During 2012 the company acquired $440 million in properties and surpassed the year with $1 billion in total assets owned.

In a recent press release Excel Chairman and CEO Gary Sabin commented:

"2012 was transformational for Excel Trust in several respects. By acquiring $440 million in quality properties, our asset base surpassed $1.1 billion and our portfolio now exceeds 5.5 million square feet. We lowered our cost of debt by improving our credit facility and anticipate beginning discussions with the rating agencies in order to position the Company to access the unsecured debt markets. These are important milestones for the Company and we are well on our way to accomplishing the goals we set at the time of our IPO a little over two and half years ago."

Excel's Board of Directors recently declared a first quarter 2013 cash dividend of 17 cents per share compared to a cash dividend of 16.25 cents per share for the previous quarter, to be paid on April 15 to shareholders of record as of March 29. Excel Trust's common shares are trading at $13.65 and the current dividend yield is 4.98%.



Another option is to consider Excel Trust 8.125% Series (EXL.PB) stock cumulative and payable quarterly at the rate of 8.125% per annum of its liquidation preference, which is equivalent to $2.03125 per annum per share.

The Excel-lent Target

Excel has a unique investment strategy of acquiring off-market transactions at higher going-in yields (cap rates) with strong net operating income upside. Excel Trust looks like an excel-lent REIT to own. Since mid-November shares have increased by more than 20% while the company returned more than 23% during the same period. The company has a current market capitalization of $639 million and shares are trading at $13.65. My target price is $14.00.



At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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