A Deep Dive Into: $ADC Agree Realty Corporation

Who are they and what do they do?

Agree Realty Corporation is a publicly traded real estate investment trust that engages in the acquisition and development of properties net-leased to industry leading retail tenants.

So, you may be asking what is a net lease and who are these industry leading retail tenants? Let’s cover the first portion of the question. A commercial net lease is where the tenant pays for their rental space plus one or more additional expenses.

The Portfolio

Agree Realty owns 1,839 retail properties totaling 39 million sqft in all 48 continental US states. Agree’s tenants are well diversified across a wide range of sectors including grocery stores, home improvement, tire & auto serivces, convivence stores, dollar stores, general merchidise, auto parts, farm and rural supply, consumer electronics, and more!

Agree’s tenants are also financially stable with 68% being investment grade companies.

Agree continues to add to it’s portfolio by increasing its investments. They have invested over 7 billion dollars since 2010!

Show Me The Money

Agree Realty has proven it can increase revenues year over year with $187M in 2019, $248M in 2020, and $339M in 2021. That’s an average growth rate of 34.6% on the top line revenue during that time period.

However, earnings are also increasing going from $80M in 2019 to over $122M in 2021.

The Dividend

Agree Realty currently pays a dividend of $0.24 per share, distributed monthly or $2.88 annually. This represents a yield of 3.88% based on current market valuations of $74.66 a share. ADC’s payout ratio is 72.31%

Agree Realty has paid over 131 consecutive common dividends with a 6+% 10-year CAGR growth Rate!

A Deep Dive Into: $STAG STAG Industrial, Inc.

Who are they and what do they do?

STAG Industrial, Inc is a real estate investment trust, which focuses on acquisition, ownership, and operation of single tenant, industrial properties throughout the United States.

The company was founded by Benjamin S. Butcher on July 21, 2010 and is headquarted in Boston, MA.

The Portfolio

STAG Industrial owns 494 buildings, totaling 99.1M square feet across 39 states. Its portfolio includes warehouses, fulfillment centers, storage units and other properties.

There top 10 tenants include Amazon Inc, XPO Logistics, Eastern Metal Supply, Trimas Corporation, American Tire Distributors, Penguin Random House LLC, Westrock Company, DS Smith North America, Hachette Book Group, Inc, and FedEx Inc.

There tenants are also financially stable with 55% of tenants being publicly rated, 86% having revenues above $100M, and 61% having revenues above $1B.

STAG also has an impressive acquisition pipeline with 1,250+ properties passing the initial triage for investment consideration in 2020, 224 of those transactions were underwritten, 39 transactions closed. Therefore, 3% of transactions considered were acquired and 17% of transactions underwritten were acquired.

Show Me The Money

STAG has proven it can growth revenue year over year. In 2019 STAG brought in a whopping $405.95M. In 2020? $483.41M, a 19% increase in revenue.

It’s not just revenue that’s increasing either. In 2019 Earnings were reported of $49.28M, but in 2020 earnings were reported as $202.15M, a 310% increase!!

The Dividend

STAG is classified as a REIT, and therefore is required to payout 90% of its revenue.

STAG currently pays a dividend of $0.1208 per share, distributed monthly or $1.44 annually. This represents a yield of 3.70% based on current market valuations of $40.07 a share. STAG’s payout ratio is 77.42%

STAG begin paying a dividend in 2011 and has raised its dividend every year since. The company’s dividend has grew on average 4.2% per year.

Is it Safe?

Stags tenant base is spread across 45+ different industries. It’s biggest tenant is Amazon which only accounts for 4% of Revenue. It’s top 10 tenants combined account for 12.5% of revenue showing just how diversified this company is.

On top of that 40% of STAG’s business is e-commerce driven and is expected to grow.

A REIT is required by law to payout 90% of its revenue. With STAG having a payout ratio of 77.42% not only is it safe but we could also see another dividend increase coming soon!

A Deep Dive Into: $EPR EPR Properties

EPR Properties announced this week that it would resume its monthly dividend of $0.25 per share. Before the pandemic, this was one of my largest holdings and accounted for the majority of my dividend income but after the pandemic is it still worth buying?

Who are they and what do they do?

EPR properties operates as a real estate investment trust. The firm engages in the development, finance and leasing of theatres, entertainment retail and family entertainment centers. It operates through the following segments: Entertainment and Education.

The entertainment segment includes investments in megaplex theatres, entertainment retail centers, family entertainment centers and other retail parcels.

The education segment comprises of investments in public charter schools.

The company was founded by Peter C. Brown on August 22, 1997 and it headquartered in Kansas City, MO.

Lets see those properties

EPR properties has a total of 354 properties in their portfolio across multiple market segments including 177 theatres, 55 eat and play attractions, 13 ski resorts, 18 attractions, 6 experimental lodging resorts, 1 casino, 3 cultural attractions, and 7 fitness and wellness locations.

EPR properties biggest customer in the theatre space is AMC, but also has other theatres in its portfolio such as Cinemark and Regal Cinemas.

The Eat & Play attractions include Top Golf, Pinestripe Bowling, and Andretti Indoor Carting, among others.

In the attractions category we have not 1 but 2 six Flags locations and Premier Parks located in Pacific Park, CA.

Experimental Lodging includes The Spring Resort and Spa in Colorado, along with Camelback resort in PA and Margaritaville Hotel in Nashville, TN.

Cultural locations include City Museum in St. Louis and the Titanic Museum in Pigeon Forge, TN; along with other zoos and aquariums.

They have a lot to show, but money talks

EPR’s revenue is largely tied to the success of theatres, with it accounting for 47% of its revenue. Therefore, this company’s financial success heavily relies on peoples ability to go out and have some fun. The pandemic proved this with the company’s revenue coming in at 414 Million for the year, down from 651 Million in 2019, a 57% drop. However, before this the company was consistently growing revenues year over year with 514 million in 2017, 563 million in 2018, and 649 million in 2019 being an average growth rate of 12.3% per year.

The dividend

EPR Properties has been paying dividends since 2011, with 2020 being the first interruption. That’s 9 consecutive years of paying a dividend, and each year the dividend was raised. Between 2019, and 2020 the dividend grew at 1.8% before ultimately being suspended. The dividend has been reinstated as of July 2021, however at a much lower yield of 4.6%.

Long term the dividend hasn’t effected growth as EPR price per share had been growing steadily until 2020.

Lets talk sustainability

EPR is classified as a REIT and therefore it must comply with the 90% rule. That is they must pay out 90% of their revenue to shareholders in the form of dividends. As of now the payout ratio is 80% as they ease there way back into paying a dividend.

Assuming that the COVID-19 pandemic continues to improve across the US and streaming doesn’t continue to take a chunk of out of theatre revenue then EPR could continue to pay a dividend for years to come.

However, at the time of writing this the US is seeing a surge in delta variant COVID cases and there is a new streaming service every other day with Disney+, Discovery+, and a slew of others moving their content to their services.

EPR Properties has revenue coming from other attractions as stated before but it accounts for a minimal percentage of their revenue.

On top of this EPR currently has a total debt load of 3.8 billion, and only around 500 million in cash on hand. Debt can be expected in real estate, but 3.8 billion is a big number.

For now, I’m holding off on re-entering this company until the company can prove it can continue to grow revenues and become less reliant on theatres.

A Deep Dive into: $ABR Arbor Realty Trust

A lot of you may have seen me posting on twitter about $ABR this week. This is a dividend stock that I have in my portfolio and one that I am excited about. Why? Well because with Arbor realty trust you get the best of both worlds, capital appreciation and dividends. So, with that being said lets take a deep dive into Arbor Realty Trust!

Who are they and what do they do?

Arbor Realty Trust is a real estate investment trust, which engages in the provision of loan origination and servicing for multifamily, seniors housing, healthcare, and diverse commercial real estate assets. It operates through the structured business and agency business segments. The structured business segment offers loan origination and investment services, while the agency business segment offers agency loan origination and servicing.

The company was founded in June 2003 and is headquartered in Uniondale, NY. The company has paid dividends consecutively, every year since 2005.

Real Estate? What kind of real estate?

Arbor Realty Trust’s real estate is well diversified in asset classes, along with locations. Their portfolio consist of office, healthcare, multifamily, land, student housing, hotel, and self storage facilities. This portfolio is spread across 8+ different states within the United States.

Lets talk Money.

Arbor Realty Trust has had consistent revenue growth since the company’s conception in 2003. From, 2019 to 2020, revenue grew from $349,386,000 to $434,133,000, a 24% increase year over year. In Q1 of 2021, the company reported revenue of $79,200,00, with $35.3 million coming from the agency segment and $43.9 million coming from the structured business segment. Bottom line for us dividend investors? More revenue = More cash to payout

Did someone say dividend?

Arbor realty trust has paid dividends since 2005, that 16 CONSECUTIVE YEARS! On top of that they have grew their dividend every year since 2012, that’s 8 CONSECUTIVE YEARS!

From 2019 to 2020, the dividend grew by 7.8%, you can afford those kind of raises when your growing revenues 24% year over year. That’s not the only percentage that starts with a 7 though. $ABR is currently yielding 7.5%, with a dividend of $0.34 per share.

Now, I know what you’re thinking, with that kind of yield the long term growth must be terrible. Well, sorry to burst your bubble but over the past 5 years ABR is up 154.60%. Yes, 154.60% while paying dividends at a 7.5% yield.

Yeah, but is it sustainable?

ABR is classified as a REIT or real estate investment trust. Why is that important? REIT’s are required to payout 90% of their earnings to shareholders. ABR’s payout ratio is currently sitting at 88%, can you smell a dividend hike coming?

Also, as previously mentioned revenues for this company to continue to grow and real estate isn’t going anywhere. ABR is in the business of loan origination so the fluctuations of the asset values doesn’t necessarily have an effect on their business.

So, with rising revenue combined with the 90% rule, we could continue to see a growing dividend for a while to come.

In case you still have concerns on whether or not the dividend is sustainable lets take a look at how the payout ratio compares to other popular REITS.

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