Big Acquisition Drives Growth At 'Triple-Net' REIT


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Amid prospects for higher interest rates, triple-net real estate investment trusts with low cost structures are getting more attention.

Spirit Realty Capital ( SRC ) invests in single-tenant commercial real estate facilities. At the end of 2013, the company had a retail-concentrated portfolio of 2,186 properties in 48 states.

Spirit Realty has low cost of property ownership with its triple-net lease focus.

Simply put, it means the tenant pays the landlord a base rent plus some or all of the property expenses like taxes, insurance and maintenance. Because the tenant is covering additional costs, the rent charged in a triple-net lease is generally lower than a standard lease agreement.

Formerly known as Spirit Finance, the company restructured and started trading on the New York Stock Exchange in September 2012.

Big revenue growth in each of the past two quarters is a result of its $7.4 billion merger with Cole Credit Property Trust II in 2013, which nearly doubled the size of its portfolio. Fourth-quarter sales, reported in late February, soared 99% from the year-ago period to $139.2 million.

Last month, Spirit declared a first-quarter dividend of 67 cents a share, giving it a juicy annualized yield of about 6%. The dividend was paid on April 15.

Spirit will report Q1 results on May 8 after the close. Analysts polled by Thomson Reuters expect funds from operations of 3 cents a share, compared with a loss of 6 cents a share in the year-ago quarter. Sales are forecast to rise 92% to $137.2 million.

The stock is currently working on a long cup-with-handle base with a buy point of 11.53.

Other triple-net REIT players includeRealty Income ( O ),National Retail Properties ( NNN ),American Realty Capital Properties ( ARCP ) andW.P. Carey ( WPC ).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Investing Ideas
Referenced Stocks: SRC , O , NNN , ARCP , WPC

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