TRADE ALERT - International Portfolio July 2024 (New Investment)
Dear Landlords,
I want to extend a warm welcome to all our new members! We recommend that you start by reading our Welcome Letter by clicking here. It explains why we invest in real estate through REITs and how to get started.
As a reminder, our most recent "Portfolio Review" was shared with the members of High Yield Landlord on July 3rd, 2024, and you can read it by clicking here.
You can also access our three portfolios via Google Sheets by clicking here.
New members can start researching positions marked as Strong Buy and Buy while taking into account the corresponding risk ratings.
If you have any questions or need assistance, please let us know.
==============================
TRADE ALERT - International Portfolio July 2024 (New Investment)
Summary: We bought 1,600 shares of Patria Investments (PAX) for our International Portfolio.
-------------------------------------------------------------------
Over the years, I have often discussed alternative asset management companies because they are my second biggest investment right after REITs.
I like to invest in what I know best and I used to work in this field before becoming a REIT analyst. Moreover, these businesses can be truly exceptional because they essentially allow you to participate in the returns of an investment without having to put any of your money. You provide investment services in exchange for fees, and if you can convince others to invest with you, then it can be a very rewarding business.
It is a capital-light, high margin, and the fees are very sticky since these are typically illiquid private assets and the funds have long or even infinite terms.
The biggest company in this space is Blackstone (BX) and its historic performance is a good example of how rewarding these businesses can be:
And here comes the interesting thing for REIT investors.
Blackstone's single biggest business is the management of its public non-listed REIT (BREIT), which today has $70 billion of assets under management. It is a great business for Blackstone because it did not have to invest any of its own capital and yet, it gets to participate in the returns of this massive real estate portfolio by earning fees in exchange for its management.
Even better, this capital is permanent, meaning that there is no finite term to it, and Blackstone is set to grow it further over time, resulting in rising fee income. The long-term outlook is bright because institutional investors are expected to significantly expand their investments to alternatives, including REITs, over the coming decade, resulting in trillions of additional capital to manage, and well-established companies like Blackstone are likely to capture the lion's share of this growth.
This brings me to today's investment opportunity.
Patria Investments (PAX) was already known as the "Blackstone of Latin America" because it is the leader in the region and Blackstone used to own a stake in Patria and closely collaborated with them.
But now Patria is also set to replicate Blackstone's REIT business model in Latin America. It first acquired a REIT asset manager in 2022. Then a year later, it closed a deal with the biggest bank in Colombia to start a REIT business together. And just recently, it acquired another major REIT asset manager in Brazil:
Keep reading with a 7-day free trial
Subscribe to High Yield Landlord to keep reading this post and get 7 days of free access to the full post archives.