Meetings With 10+ REIT Management Teams (Part 1/3)
Last week, I attended REIT Week in NYC, which is the biggest annual REIT conference in the world.
The conference brings together the management teams of most major REITs, and it gives investors the opportunity to participate in roundtable discussions, ask questions, take notes, and get a better sense of how these companies are navigating today’s market environment.
In addition to these roundtable discussions, I also had one-to-one meetings for exclusive interviews with a few additional REITs, including Agree Realty, VICI Properties, and BSR REIT. I will share those interviews separately soon.
I participated in the roundtables of the following REITs and had the opportunity to listen to their management teams, ask questions, and gather new insights:
NNN REIT
Prologis
First Industrial
Invitation Homes
Rexford Industrial
Rayonier
AH Realty Trust
Realty Income
EPR Properties
W.P. Carey
Kimco Realty
EastGroup Properties
Crown Castle
Since there is a lot to cover, I decided to divide my takeaways into three separate articles.
In Part 1, I will cover:
NNN REIT
Prologis
First Industrial
Invitation Homes
Rexford Industrial
In Part 2, I will cover:
Rayonier
AH Realty Trust
Realty Income
EPR Properties
In Part 3, I will cover:
W.P. Carey
Kimco Realty
EastGroup Properties
Crown Castle
Below, I share the main takeaways from the first group of meetings.
Instead of repeating generalities about these companies, I will focus on the unique insights that I gained from the management discussions and what they mean for our investment theses at High Yield Landlord.
NNN REIT (NNN)
NNN REIT’s growth may not be quite as fast as that of some of its closest peers, but it is arguably more consistent and predictable. The company does not need to close large volumes of acquisitions to grow FFO per share by 3% to 4% annually, and perhaps closer to 5% in a good year.
Most of this growth comes from retained cash flow being reinvested, combined with contractual rent escalators. Importantly, their lease escalators are typically closer to 2% annually, compared to closer to 1% for many net lease REITs that focus more heavily on investment-grade tenants.
NNN is not simply chasing investment-grade credit. Instead, it focuses on high-quality real estate in good locations that is fungible and can be easily converted to other uses if needed. By working with non-investment-grade tenants, it can often get higher cap rates, better lease terms, and stronger landlord protections.
The company has now grown its dividend for 36 years in a row, which says a lot about the discipline of the business model, the conservatism of the balance sheet, and the quality of management. Management strongly implied that dividend growth is central to the company’s identity, noting that if the streak does not turn into 37 years by next year, there would be new faces representing the company at REIT Week.
