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Interesting Income Investment


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I saw on out ad bar a company whose CIO and founder I know personally.  In looking at their offering it looks like a great income alternative having higher income than public alternatives, along with quarterly liquidity and tax advantages not available from the public alternatives.  They offer both a triple net and residential real estate rental products.  Here is link for those who are interested:

 

http://www.broadstone.com/investment-opportunities/

 

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In looking at their offering it looks like a great income alternative having higher income than public alternatives, along with quarterly liquidity and tax advantages not available from the public alternatives.

 

Can you expand on the liquidity and tax advantages? I don't follow how private REITs can be better than public REITs.

 

Assuming Broadstone can mark property values pretty accurately, it seems that there are probably public REITs trading at greater discounts.

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The  interest has quarterly liquidity and passes through depreciation expenses thorough to holders to shelter part of the distribution from income taxes.

 

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But public REITs also pay quarterly distributions and shelter income with depreciation.

 

For this REIT part of your distribution is tax-free to you as an individual.  My understanding is distributions you get from REITs you have to pay taxes on.

 

 

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In looking at their offering it looks like a great income alternative having higher income than public alternatives, along with quarterly liquidity and tax advantages not available from the public alternatives.

 

Can you expand on the liquidity and tax advantages? I don't follow how private REITs can be better than public REITs.

 

Assuming Broadstone can mark property values pretty accurately, it seems that there are probably public REITs trading at greater discounts.

 

I looked at the publics (NNN players like LXP and O) but they all trade at lower yields with no depreciation tax sheltering associated with the distributions at the personal level.  If you can find a public NNN with a yield higher than 6.8 percent I would like to know about it. Thx.

 

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In looking at their offering it looks like a great income alternative having higher income than public alternatives, along with quarterly liquidity and tax advantages not available from the public alternatives.

 

Can you expand on the liquidity and tax advantages? I don't follow how private REITs can be better than public REITs.

 

Assuming Broadstone can mark property values pretty accurately, it seems that there are probably public REITs trading at greater discounts.

 

I looked at the publics (NNN players like LXP and O) but they all trade at lower yields with no depreciation tax sheltering associated with the distributions at the personal level.  If you can find a public NNN with a yield higher than 6.8 percent I would like to know about it. Thx.

 

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In order to find that you have to go team up with Nick Scorsch (who is not without controversy) and company at American Realty Capital Properties. ARCP is much cheaper than O and NNN. I think frommi and bmichaud are long and would know more about it than I.

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Also SIR owns a bunch of very attractive triple net lease Hawaii assets and yields over 6%. It is portnoy/RMR managed but Commonwealth owns 44% of it. Since commonwealth is about to get a new board, SIR is likely to fall out of portnoy hands. GOV yields over 6% but is is completely portnoy controlled so I wouldn't go there unless you think that will change

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  • 4 weeks later...

I just attended the annual meeting for BNL and does look like cheaper than than the publics with the ability to make more accretive acquisitions.  Now it is yielding 7% and has has and additional 5% increase in NAV over the past 6 years.  It also includes depreciation deductions for individuals of about 40 to 60% of the distribution and pays no tax and the LLC level.  They actually had a shareholder poll on going public vs. staying private and staying private won.  They offer quarterly liquidity which they have always been able to honor.  I dug into costs and there expense ratio (G&A, Op Exp/MVIC) is close to 0.9% on par with O (at 0.8%) and below LXP and ARCP at 1.4% and 1.8% respectively despite being much smaller at about $800m MVIC.  TIAA/CREFs direct real estate fund also has an expense ratio of 0.9%.  In talking with the CIO, he has seems to feel the pipeline of opportunities is still very large.  They appear to have developed a niche below the large pubic players.

 

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ARCP trades at 7.6% dividend yield.  I've been thinking about a Long ARCP and short O and NNN trade for a while now.  NNN is trading at 4.67% and O is trading at 5.09%. 

 

It's a positive carry trade and you're betting that the spread will tighten over time. 

 

In looking at their offering it looks like a great income alternative having higher income than public alternatives, along with quarterly liquidity and tax advantages not available from the public alternatives.

 

Can you expand on the liquidity and tax advantages? I don't follow how private REITs can be better than public REITs.

 

Assuming Broadstone can mark property values pretty accurately, it seems that there are probably public REITs trading at greater discounts.

 

I looked at the publics (NNN players like LXP and O) but they all trade at lower yields with no depreciation tax sheltering associated with the distributions at the personal level.  If you can find a public NNN with a yield higher than 6.8 percent I would like to know about it. Thx.

 

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