3 Retail REITs That Are Winning In The New Landscape

As we’ve said before, retail is a minefield. Those firms that haven’t gotten a handle on omnichannel and online sales are being hurt while more successful retailers are gaining a serious advantage. This minefield has been playing out in the owners of retail real estate as well. There are plenty of retail REITs that are suffering right along with their tenants.

However, just like there’s a few J.C. Penny’s (NYSE:JCP) for every successful Amazon (NASDAQ:AMZN), there are some retail REITs that are getting things right as well.

Featuring shopping plazas in upper-middle to upper-class neighborhoods, quality tenant mixes and more destination shopping, as well as focusing on food/services, several retail REITs are getting it right and are thriving in the new market environment. And with omnichannel retailing growing fast, these REITs have the goods to keep on growing while several of their rivals fail, deal with empty storefronts and lower rents.

But which retail REITs are winning the war? Here are three top-notch retail property owners that continue to make the right moves.

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Retail REITs That Are Winning: KIMCO Realty (KIM)

Dividend Yield: 6.4%

It’s not every day that you can score a 6%-plus yield from a top-notch stock, but that’s exactly the case with KIMCO Realty (NYSE:KIM). KIM is one of the nation’s largest owners of retail real estate and is unfairly being lumped in with other, poorer-quality retail REITs.

For starters, KIMCO doesn’t troubled shopping malls. It owns so-called open-air shopping plazas, power centers, and other similar style assets. These retail assets generally house more necessity style businesses such as hair salons, restaurants, and grocery stores. In the wake of the retail apocalypse, these sorts of locations continue to thrive. According to KIM, its occupancy rate clocked in at over 95% throughout 2018.

Secondly, the quality and location of KIM’s assets has improved dramatically over the years. Seeing the writing on the wall, KIMCO started to sell its less-desirable assets long before the retail problems begun to hit. As a result, this now-pruned portfolio is located in more affluent areas of the country. This “signature series” of properties feature more restaurants and shops that cater to higher-end customers. Plenty of Amazon-proof retailers dot these locations. Ironically, Amazon’s Whole Foods Market is one of KIM’s largest tenants.

Because of the different approach to retail, KIM is actually thriving. Renewal rental rates surged 10% last quarter — the 20th consecutive quarter of increases. This all do to KIMCO’s portfolio quality.

And now investors can score that quality with one of the stocks largest yields ever.

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National Retail Properties (NNN)

Dividend Yield: 3.8%

The holy grails of REITs are so-called triple-net leased properties. In these properties, the responsibility of taxes, maintenance and other fees associated with renting the property are pushed onto the tenants. Without these extra costs, landlords are able to sit back and collect a much bigger rent check as none of that money needs to go towards these expenses. Operating in this space is National Retail Properties (NYSE:NNN).

The beauty for NNN is the bulk of its 2,900-plus portfolio are convenience stores, restaurants, and auto service stores. Top tenants include LA Fitness gyms, 7-Eleven, and Taco Bell franchises. What do these tenants have in common? They’re pretty much internet-proof and immune to the effects of online retailing. Like previously mentioned KIMCO, there’s no sign of the retail great dying here. National Retail Properties features an enviable occupancy rate of 99%. That fact that NNN has focused on higher income and prime areas of the country haven’t hurt on this fact either.

What triple-net leases and a high occupancy rate do is send plenty of cash back to investors as big dividends. National Retail Properties is considered a dividend aristocrat and has increased its payout every year for the past 29 years. This includes its last increase of 5.26% over the summer. And with its focus on freestanding and triple-net leased properties, those increases should keep coming for the REITs investors.

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Urstadt Biddle (UBA)

Dividend Yield: 5.3%

When it comes to REITs, there’s a good chance that you’ve never heard of Urstadt Biddle (NYSE:UBA). But that could be a great thing. Like both KIM and NNN, UBA owns a portfolio of grocery/drugstore-anchored open air and freestanding real estate. But its footprint is smaller — much, much, much smaller. Urstadt owns only about 70 different properties. The key is where UBA owns them.

The REIT’s shopping plazas are located in a few of the most prime areas of the country: wealthy New York, New Hampshire and Connecticut suburbs just north of New York City. These regions feature some of the best consumer demographics, incomes and huge barriers to entry thanks to lack of available space and zoning laws. UBA has been operating in these areas since the 1960s and has a stronghold on some of the best turf around. So, if retailers want to tap these wealthy consumers — and they do — they have to give UBA a call.

Because of this foothold in a prime operating area, Urstadt Biddle features a high occupancy rate as well as high rent growth. That has done two things for UBA. One, it features a very conservative balance sheet with low debt. Secondly, it has made the REIT into a dividend champion. The firm’s latest 2.1% increase to its payout represents the 196th consecutive quarterly dividend. Urstadt Biddle currently yields 4.74%.

All in all, UBA is getting retail real estate right and represents a great REIT to buy to play the sector.

At the time of writing, Aaron Levitt held no position in any of the

Post Q3, which multi-category consumer durables stock should you choose?

Highlights:
-  Whirlpool is our preferred pick
-  Consumer durables industry is growing at a brisk pace
-  Product portfolio updation and volumes will be crucial to top-line growth

-  Margins depend on capacity utilisation rates, product mix and cost management measures 

-------------------------------------------------

Considering the secular demand pattern for consumer durables, revenue visibility appears promising. Easier availability of finance, improved electrification coverage, higher disposable incomes and growing urbanisation have buoyed demand. However, from a company-specific perspective, delayed product launches and lack of innovation could be the major roadblocks to growth.

In this industry, margins largely depend on product mix, utilisation rates at manufacturing facilities and cost management initiatives. Stiff competition from other brands can make it difficult to pass on increasing costs (towards overheads, advertisements, dealer margins, raw materials) to buyers.

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We prefer Whirlpool over IFB Industries, notwithstanding the former's steep valuations. Considering the sharp rally in Whirlpool's stock price over the past fortnight, we advise buying on dips.

In Q3, Whirlpool and IFB reported robust top-line growth, primarily on the back of festive demand. Volatility in currency and commodity prices impacted margins.

Whirlpool

Network augmentation

- The company is expanding its trade channels, particularly in tier 2/3 cities and semi-urban India

- Through its joint venture with Elica (Whirlpool holds 49 percent), the company can leverage Elica's wide distribution reach pan-India

Manufacturing capacities increasing

- The capacity of direct cool refrigerators will increase from 0.6 million units to 2.7 million units by mid-2019

- Expansion of fully automatic washing machines at the Puducherry plant is underway

Changes in product portfolio

- In addition to existing segments, new products will be launched (such as dishwashers, water purifiers and air purifiers)
- In case of washing machines and refrigerators, the impetus is being laid on premium variants

- Volume growth will be prioritised through dealer incentives

Traction seen in exports

- In the laundry appliances space, markets in South Africa and Morocco have seen good momentum

- Across other home appliance segments, markets in Philippines, Sri Lanka, Bangladesh and Nepal have been on an uptrend as well

Margin drivers

- The company is raising prices across most product categories in Q4 FY19 to offset costs
- Intermediaries across trade channels are being consolidated

- Ramp-up of utilisation levels at factories (for refrigerators and washing machines in particular) is being undertaken

Premium valuations to sustain

- The company has robust fundamentals and can fund expansion plans through internal accruals
- A diverse product range keeps demand seasonality at bay
- The stock has witnessed a steep upmove in the last 15 days and currently trades at 33 times its FY21 projected earnings

- Price corrections may provide entry opportunities

What about IFB?

IFB is likely to encounter some short to medium-term challenges on account of the following:-

- Margins in the home appliances division (80-90 percent of the annual top-line) not showing signs of improvement in recent times
- The market penetration of dishwashers is considerably low in India
- Dependence on imported components is still pretty high in some product categories (such as air conditioners). Commercial manufacturing of ACs in India will begin in January 2020

- The company's foray into refrigerators has been delayed

Though the prospects of a meaningful re-rating cannot be ruled out, we are relatively less bullish on IFB as of now.

Follow @krishnakarwa152

For more research articles, visit our Moneycontrol Research page

Disclaimer: Moneycontrol Research analysts do not hold positions in the companies discussed here First Published on Mar 7, 2019 03:52 pm

Realpage Inc (RP) Chairman President & CEO Stephen T Winn Sold $8.8 million of Shares

Chairman President & CEO of Realpage Inc (NASDAQ:RP) Stephen T Winn sold 150,000 shares of RP on 03/06/2019 at an average price of $58.55 a share. The total sale was $8.8 million.

RealPage Inc is a provider of demand software and software-enabled services for the rental housing and vacation rental industries. Its solutions include marketing, pricing, leasing, accounting, purchasing, and other property operation capabilities. RealPage Inc has a market cap of $5.46 billion; its shares were traded at around $58.34 with a P/E ratio of 153.58 and P/S ratio of 6.09. RealPage Inc had annual average EBITDA growth of 9.20% over the past ten years.

CEO Recent Trades:

Chairman President & CEO, 10% Owner Stephen T Winn sold 150,000 shares of RP stock on 03/06/2019 at the average price of $58.55. The price of the stock has decreased by 0.36% since.

Directors and Officers Recent Trades:

10% Owner Capital, Ltd. Seren sold 150,000 shares of RP stock on 03/06/2019 at the average price of $58.55. The price of the stock has decreased by 0.36% since.

For the complete insider trading history of RP, click here

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How to avoid costly Medicare mistakes when retiring past age 65

If you've already turned 65 and are getting close to saying goodbye to full-time work, make sure Medicare is on your must-tend-to checklist.

While it's common for people working past that age to stick with a company-sponsored health plan and delay enrolling in Medicare, impending retirement means you should be planning ahead to avoid a coverage gap or costly missed deadlines.

"It's important to do everything you need to do before you set your retirement date," said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans. "I'd start planning at least a few months before then to make sure all your ducks are in a row."

WHL | Getty Images

Most people sign up for Medicare when first eligible at age 65 either because they no longer are working or don't have qualifying coverage through a job. For a small but growing contingent of older Americans who continue to work past that age, however, having workplace coverage means having options.

Regardless of when you sign up, Part A (hospital coverage) costs nothing as long as you have at least a 10-year work history. Part B, which covers outpatient care and medical equipment, has a standard monthly premium of $135.50 for 2019. Part D prescription coverage also comes with monthly premiums averaging $32.50. For both Parts B and D premiums, higher-income enrollees pay more.

For those in the age-65-and-older crowd who work for a large company and get qualifying health-care coverage through their job (the rules are different for small firms), it can sometimes make sense to delay signing up for the Medicare parts that come with a cost.

"They tend to enroll in just Part A because it's free and then delay Part B and Part D because they'd have to pay premiums," said Danielle Roberts, co-founder of insurance firm Boomer Benefits in Fort Worth, Texas.

show chapters How American health care got so expensive    12:55 PM ET Wed, 13 Feb 2019 | 14:58

Nevertheless, once you're planning to retire from that job, you need to be aware of various deadlines and rules to avoid shelling out more for premiums than necessary.

As long as your employer-sponsored health care is considered qualifying coverage (called "creditable"), you can avoid paying a penalty for having delayed Part B signup — although you must enroll within eight months of stopping work.

Ideally, however, you should coordinate the end of your work-sponsored coverage with your Medicare effective date so you don't find yourself without insurance.

If you were to be subject to the late-enrollment penalty for Part B, it would be 10 percent per year that you should have been signed up but were not. The amount would be life-lasting and tacked on to your premium.

Be aware that when you retire, if for some reason you end up continuing your workplace health plan under COBRA — a law that allows you to continue the coverage for a set time if you pay the full premiums — Medicare doesn't consider that coverage creditable. Same goes for insurance through your ex-employer after you retire.

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For Part D prescription coverage, the late-enrollment penalty is 1 percent for every month that you could have been signed up. People with qualifying coverage through an employer plan don't face that life-lasting penalty as long as they secure coverage within two months of their other plan ending.

However, once you do enroll, you'll get a form from the insurance company that needs to be filled out and returned to confirm you were permitted to delay enrollment, Roberts said.

"If you miss that letter and fail to send it back, you'll get charged the penalty," Roberts said. "We've seen where someone misses it because they get so much mail and accidentally throw it out.

"It can take months to appeal that late penalty."

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Meanwhile, if you want to sign up for an Advantage Plan, you also get two months from when your workplace coverage ends to do so without having to wait until the fall general enrollment window.

If you go this route, your Parts A and B coverage — and typically Part D — will be delivered through the insurer offering the plan. The cost of an Advantage Plan (on top of your Part B premium) depends on the level of coverage you choose and availability of options in your area.

For other Medicare recipients, however, an Advantage Plan isn't a good fit. Those folks often pair a so-called Medigap policy with their Parts A, B and D coverage (you cannot have both Medigap and an Advantage Plan). Those policies provide help with things such as deductibles, copays and coinsurance.

If you plan to go this route: Once you sign up for Part B, you're given six months to get a Medigap policy without the insurer being allowed to nose through your health history. After that window, you could face that underwriting process and possibly be charged more for coverage or rejected altogether.

Tesla Just Paid Off a $920 Million Bond With Cash

Electric-car company Tesla (NASDAQ:TSLA) reportedly just paid off a $920 million convertible bond in cash, according to CNBC. The payment highlights the company's improving financials recently. Tesla is aiming to achieve sustainable profitability and get to the point when it can fund both its current operations and business expansion with regular cash from operations.

In the first half of 2018, Tesla's negative free cash flow and shrinking cash position was a major concern, prompting one prominent analyst covering the stock to predict the automaker would need to raise more cash through debt or equity before the end of last year. But the automaker's fortunes promptly reversed as Tesla became meaningfully profitable in the second half of 2018 and added to its cash reserves.

Model 3. Image source: Tesla.

Reducing debt

With its $920 million bond obligation due on March 1, Tesla had no choice but to pay in cash. In order for Tesla to convert senior unsecured notes to stock, shares would have had to trade at around $360 leading up to the due date. But shares have trended between about $290 and $320 over the past month.

Fortunately, Tesla had plenty of cash to pay this $920 million convertible bond. The company's cash position increased by $1.45 billion in the second half of 2018, to $3.7 billion, despite paying off a $230 million convertible bond during the fourth quarter.

"We have sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019," Tesla said in the letter.

Money's still tight

Of course, Tesla's ability to easily pay off a $920 million bond doesn't mean the electric-car maker has totally escaped cash-flow risk. Building cars is a capital-intensive business, requiring $2.24 billion in capital expenditures last year. In addition, management expects capital expenditures to be $2.5 billion in 2019, which will be allocated to the company's battery factory in China, its Model Y and semi-truck programs, and ongoing expansion of its Supercharger and service networks.

Further, Tesla's recent workforce reduction and the company's decision this week to close many of its retail stores and shift sales online show how the automaker continues to butt heads with the cutthroat realities of auto manufacturing.

For Tesla to thrive in 2019 and beyond, the company will need to exercise a high level of financial discipline in both its regular operations and with its capital expenditures.

Combining the company's $920 million bond payment in March and management's forecast to report a loss in its first quarter, Tesla's cash position will likely be squeezed during this period. But Tesla expects to be profitable during the rest of the year.

Beyond Q1, investors should watch to see if Tesla's balance sheet can improve throughout the rest of the year.