Realty Income (O), National Retail Properties (NNN), and W.P. Carey (WPC) are all veteran Triple-Net REITs that have paid AND increased dividends for a combined 50 years in a row! Now these pros know how to shoot free throws and win games...
Over the past few years, several; non-traded REITs have begun to transform the Triple-Net industry bringing in a whole new world of talent.
By raising money in a more unique "blind pool" format, non-listed REITs have been able to raise substantial equity -- albeit with illiquid shares -- used to aggregate billion of dollars in free-standing net leased assets.One such player, American Realty Capital Properties (ARCP), has grown from an unknown 2-tenant REIT (listed on NASDAQ on September 7, 2011) with only 63 properties into a dominating $2.6 billion (market cap) REIT with over 800 individual properties. Even more amazing, ARCP beefed up in just 25 months by acquiring an affiliated non-traded REIT, American Realty Capital Trust III (ARCT3), for around $2.3 billion. A few weeks ago ARCP made a hostile takeover offer to acquire Cole Credit Property Trust III (CCPT3) in a $7.4 deal (in assets) that would've made ARCP the largest Triple-Net REIT in the nation. CCPT3, also schooled in the non-listed REIT playground, ignored ARCP's offer and the Phoenix-based REIT is now moving down the road to become a publicly-listed REIT (under the ticker COLE) in June or July (of 2013). Pick a Winner and Watch the Dividends Roll The options for investing in Triple-Net REITs are getting better and better. When selecting a Triple-Net REIT it's important to consider the company's industry, its current competitive position within that industry, and the "economic moat" around the company; that is, a sustainable competitive advantage that helps preserve long-term pricing power and profitability. Remember, as Ben Graham believed, "a stock does not become a sound investment merely because it can be bought at close to its asset value." An intelligent investor must find a "margin of safety" that can minimize portfolio risk and most importantly, PROTECT YOUR PRINCIPAL AT ALL COSTS. While it is impossible to eliminate all investment risk, Graham's methods greatly minimize such risk by filtering out the more speculative securities from the outset. Don't forget: the wider the margin of safety, the lower the risk and the greater potential for gain. That's a winning strategy and also the reason that I'm attracted to Triple-Net REITs and the dividends that make me sleep well at night! At the time of publication the author had no position in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Follow @swan_investor This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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