Co-authored by Treading Softly
How I lead my life is not about instant gratification but about building for the future. It’s about purchasing high-quality items that will withstand the test of time. Just like investing in real estate and mortgage revenue bonds. These are the gems that are set to shine over the next decade, and I am not letting go of these prized possessions anytime soon.
Realty Income – Yield 5.7%
Realty Income Corporation (O) has been thriving post-COVID, increasing its scale and expanding its real estate holdings. The company is making the most of elevated cap rates in the market, boosting its acquisition guidance from $7 billion to $9 billion. With the recent $9.3 billion acquisition of Spirit Realty (SRC), O is set to be a prime player in the real estate market for the foreseeable future.
O’s rapid expansion is coupled with sustaining an A- credit rating, which enables it to take advantage of the relatively cheap real estate pricing and make strategic acquisitions. The company has maintained its earnings per share growth, with AFFO/share growing at an average pace of around 5%/year.
O is currently trading at only 12x normalized FFO, significantly lower than the average REIT. It’s like buying filet mignon at chuck steak prices, a premium deal for top-notch quality.
GHI – Yield 9.2%
Greystone Housing Impact Investors LP (GHI) is a partnership that invests in residential real estate using two distinct strategies. GHI’s core business in “mortgage revenue bonds” (MRBs) is interest rate sensitive, but its “Vantage” joint venture has been flourishing, developing and selling apartment complexes, providing a promising side income.
This diversification and dual strategy set GHI apart, ensuring that at least one of its segments is performing well and safeguarding investor income. With GHI’s focus on affordable housing and its successful development strategy, it is poised to continue granting attractive returns.
Final Thoughts
Both Realty Income and GHI offer stability and growth, providing investors with a solid income base and supplementary returns. As I continue to invest in these substantial companies, I am paving the way for a future filled with financial security and prosperity. It’s like having an endless supply of dollars pouring into your account, ensuring a retirement filled with ease and enjoyment.
This is the beauty of my Income Method. This is the art of income investing.
