TRADE ALERT - Core Portfolio June 2025 (Capital Recycling)

EPR Properties (EPR) has had a great run lately.

Data by YCharts

It is crazy to think that we got to buy shares as low as $17 per share during the pandemic, and it now trades at a more than 3x higher share price.

It is yet another reminder of how insanely inefficient the REIT market can be at times.

Data by YCharts

But even as its share price surged, I have become increasingly concerned about two things:

• 1) I fear that the trade war could land us in a recession, and EPR has historically experienced significant volatility during times of economic weakness, whether it is warranted or not. Its business is quite resilient to recessions, but the market sees EPR as a cyclical play since its tenants rely on discretionary spending and some of them are heavily leveraged.

• 2) AI has recently made enormous advances in video generation, and I fear this could lead to significant disruption to the movie sector over the long run. In the short term, it could benefit theaters as it leads to more movie releases, but over the long run, it may greatly reduce production costs, making direct-to-digital more economically feasible. At the same time, it could also grow the trend of more personalized entertainment, further driving people away from theaters. I find it hard to assess the risk, and for this reason, I feel uncomfortable having so much invested in EPR, especially as AMC is also on shaky legs.

For these reasons, I have decided to cut my position in half.

Following the recent upside, our position was getting very big at 9% of our portfolio, so even after cutting it in half, it still remains an average-sized position.

I continue to think that EPR remains undervalued, but it is not cheap enough to warrant such a large position, especially as it faces growing risks.

What are we buying with the proceeds of this disposition?

We are immediately redeploying the proceeds into Rayonier (RYN), which is a timberland REIT.

I became increasingly interested in timberland after I recently found out that it could be a hidden winner of the AI revolution. At the same time, our sister service, High Yield Investor, discovered this opportunity and initiated a position in it.

Our sister service rarely invests in real estate, as it typically focuses on traditional dividend stocks, preferred shares, and bonds. However, it made an exception for Rayonier, given the strength of the investment thesis.

If you are interested in trying our sister service, note this is your last chance to lock in a permanent 50% discount by using the link below. Starting tomorrow, Seeking Alpha will no longer allow us to offer discounted rates.

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I invest roughly half of my portfolio in real estate opportunities featured at High Yield Landlord, and the other half in undervalued stocks and bonds highlighted by our sister service, High Yield Investor. Since its launch, High Yield Investor’s portfolio has delivered an average annual return of 18.8% through the end of last year, significantly outperforming the broader market while also generating strong dividend income. If you are looking for high-yield opportunities beyond real estate, it is definitely worth a look.

Below, we first explain why timberland could be a hidden winner of the AI revolution, followed by the investment thesis from our sister service.

Timberland: Hidden Winner of the AI Revolution