TRADE ALERT - Retirement Portfolio June 2025 (New Investment)

Late last year, we sold our position in Regency Centers (REG) at nearly $75 per share and made the following note:

"Great REIT, but at these levels, there is little upside left and the yield is too low at just 3.7%. The goal of the Retirement Portfolio is to maximize safe income and we can do that better than that, especially in today's market. Retail is a hot asset class right, but as Warren Buffett has famously said: you should aim to "buy from the fearful and sell to the greedy". We think that there are better opportunities in other property sectors so we sold our entire position. We more than doubled our money on this investment."

Even then, we were sad to let go of it.

Grocery-anchored service-oriented strip centers are performing very well today. They enjoy high occupancy rates and steady rent growth, and this is unlikely to change anytime soon.

There has been very little new supply built over the past decade, and given how expensive it has become to build new properties, rents would need to rise by an estimated 65% on average for new development projects to become economically feasible:

Therefore, these REITs are likely to keep enjoying steady 3-5% same property NOI growth for years to come. Best of all, these necessity-based properties offer great inflation protection and are recession-resistant.

The problem is the valuation.

REG has come down a bit since we sold it, but it is still not in our buy range.

However, one of its close peers has recently caught our attention…