National Retail Properties Carving Out A Base
These aren't the best of days for investing in retail space. The National Association of Realtors says about 10% of retail square footage is vacant and has forecast a vacancy rate of 15% for offices and 9% for industrial buildings through the end of the year.
ButNational Retail Properties ( NNN ), a real estate investment trust, has managed to consistently grow its revenue and dividend over the years.
The Orlando, Fla.-based REIT's strategy is to buy properties with long-term leases with established national and regional tenants.
It owns 1,838 stores in 47 states with 20.2 million square feet of leasable area. It says that 98% of its stores are leased to more than 350 tenants with 36 retail categories. Convenience stores make up nearly 20% of its portfolio, followed by full-service restaurants and automotive services businesses.
Its assets total $4.6 billion.
It has acquired $1.8 billion in new properties in the past two years. In Q2, it acquired 209 properties, investing $438 million at an initial cash yield of 7.7%. The largest transaction was the purchase of 139 SunTrust Bank branches in the Southeast.
The company pays an annualized dividend of $1.62 for a 4.6% yield. It boasts that it has increased its dividends in each of the last 24 years.
Low interest rates have been an opportunity to get cheap cash through both debt and equity. Moody's raised the rating on its debt earlier this month.
National's Relative Price Strength Rating is only 31, which means 69% of stocks outperformed it over the past year. But over the past 24 weeks, it does seem to be carving out a base. It has an Accumulation/Distribution of B-, which means it's under mild institutional accumulation.
It's recently risen from a low of 30.06 to just below 35. It's popped above its 200-day moving average line for the first time in 13 weeks.