Yesterday fellow Seeking Alpha writer, Rubicon, wrote an excellent article and he specifically put the hammer down on the RMR family of REITs known as Select Income REIT (NYSE:SIR), Government Properties Income Trust (NYSE:GOV), Senior Housing Properties Trust (NYSE:SNH), and Hospitality Properties Trust (NYSE:HPT).
I’m grateful to Rubicon for calling out these REITs known for their “fool’s gold” attributes and specifically providing documented research that suggests that “the glitter of high dividend yield” is not correlated to performance. As the author points out,
…an investor would be better off investing in strong management that can create positive returns over the long term.
I am currently working on a broader piece now that is aimed at not just the RMR REITs but the entire externally-managed REIT universe. Hopefully, I’ll have this article finished soon.
At the end of Rubicon’s article, the author suggested that “if the higher yield is necessary to hit certain bogeys, one might want to look within the preferred stock space”.
This leads me to my topic for this article, Forget the Fool’s Gold, Invest In The Preferred REIT Sector
A REIT Preferred Primer
As a subscriber to Forbes Real Estate Investor, I have created a preferred stock portfolio which has been designed to give readers/investors access to a “best ideas” portfolio of preferred stocks. As well, I showcase new REIT preferred stocks and portfolio trade ideas on a monthly basis, and with my new premium service new issues and trade ideas will be happening more frequently.
I have noticed that the attention to the preferred portfolio and questions regarding REIT preferred stocks generally has been increasing. In response, I have decided to revisit the thesis for REIT preferreds, how they fit in an investor’s portfolio and the analytical methods used to determine value.
REIT preferred stock offers investors multiple benefits, chief among them are:
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