I will be celebrating my birthday in May.
More specifically, on the 10th. That’s only four months away!
Putting plans in motion now is essential if I want to throw an impressive birthday bash. Just like preparing well in advance for investments pays off.
This past weekend, I had to drop off my car at the Porsche shop. To my delight, the dealership offered me a loaner—none other than a 2023 Porsche Taycan in arctic blue, which has now made its way onto my wish list. For the uninitiated, I have a soft spot for high-quality cars. While most vehicles don’t appreciate in value, I’ve found that certain top-notch cars, acquired sensibly, tend to do just that.
My eyes are set on a reward from Mr. Market on or before May 10th. Wondering how? Keep reading…
An Analysis Worth its Weight in Gold
I’m known to be a real estate investment trust, or REIT, analyst. Over time, I have managed to grow my nest egg by making shrewd investments in stocks when they are trading at discounted prices.
Seems simple, right? But it all starts with identifying quality. Just like my love for the Taycan, to comprehend quality, I dig deep…
Earnings history, Dividend history, Dividend safety, Balance Sheet, Management, Growth prospects—all of these attributes are crucial when evaluating stocks. And if any of these factors fall short, I steer clear. Why settle for a Volkswagen when you can have a Porsche?
Now, if quality is the baseline, then the subsequent step is the price. What I desire is a Porsche for the price of a Volkswagen. How does one achieve that? It’s all revealed in the following picks…
My Top 3 Strongest Convictions
What else is significant about May? The Federal Reserve is scheduled to convene again on January 30th and will conclude with a policy statement on January 31st.
As of January 10th, the possibility of the FOMC leaving the short-term federal funds rate unchanged at a target range of 5.25% to 5.50%, according to CME Group’s FedWatch Tool, has been pegged at 95% by interest rate traders.
We anticipate the Fed might begin to lower rates at the May meeting, or perhaps even as early as March. It’s already evident from the market reaction to the word “pause” that significant shifts can occur. Needless to say, it looks promising. But is it really? Let’s delve into the details…
Scouring through the 2-year chart offers a broad-brush exercise, with the Vanguard Real Estate ETF (VNQ) serving as the benchmark. However, it’s imperative to remember that one cannot paint all REITs with the same brush. In my view, the top-tier REITs boasting robust balance sheets will outperform their peers in the coming months and quarters. When rates do fall, the decline won’t be abrupt, and many of the lower-quality REITs will likely continue to face hurdles. I’m betting on the so-called blue chips, and that’s precisely what I’m adding to my portfolio.
So, without further ado, let’s celebrate my birthday with these investments!
Lightning in a Bottle – Four Corners Property Trust, Inc. (FCPT)
FCPT had its origins as a subsidiary of Darden Restaurants back in 2015. It was established with the goal of acquiring, owning, and leasing restaurants and other food-related properties on a net basis.
Late in 2015, FCPT was spun off and obtained a 100% equity interest in 418 restaurants operated by Darden, predominantly under the Olive Garden and LongHorn Steakhouse banners.
Now functioning as an independent net lease REIT, FCPT specializes in the acquisition and management of restaurants, along with a sprinkling of other retail properties, primarily consisting of automotive service and medical retail.
Based on the latest update, FCPT’s portfolio comprised 1,106 commercial properties operating under 148 brands across 47 states. Of note, some of the prominent brands FCPT’s properties are associated with include Olive Garden, LongHorn Steakhouse, Chili’s, Red Lobster, Outback Steakhouse, Arby’s, Burger King, as well as non-restaurant brands such as Caliber Collision, WellNow Urgent Care, NAPA auto parts, and Aspen Dental.
Olive Garden stands tall as FCPT’s largest tenant, accounting for 37.0% of their annualized base rent (“ABR”). Both LongHorn and Chili’s follow closely as the second and third largest tenants, contributing 10.4% and 7.9% of FCPT’s ABR, respectively.
FCPT closed the third quarter with a portfolio that boasted 99.8% occupancy, 4.8x tenant EBITDAR coverage, and an average remaining lease term of 8 years.
While primarily recognized for its restaurant properties, this net lease REIT has recently been venturing into other e-commerce resistant industries such as the automotive sector and medical retail.
