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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Lazarus who wrote (60369)	2/9/2018 8:58:53 PM
From: Spekulatius	1 Recommendation Recommended By Lazarus Respond to of 78476

Higher interest rates, which lead to a revaluation of RE assets (higher cap rates ) area concern, but I am more concerned about retail RE getting hit. Some of the C & B mall Reits have shown pretty bad NOI ( rents minus operating expenses) numbers with negative same store numbers - WPG, CBL and DDR. DDR’s properties are not that different than KIM’s. KIM is a bit higher quality overall but not that different. The change in retail is secular and there is just no way it does not affect the landlords -lower quality properties suffer first and get hit hardest, but even higher quality retail (B-malls) seems to get affected now and at some point A malls will feel some pain too. FWIW, KIM trades at an almost 8% implied cap rate. This is probably a significant discount to NAV, but if it is a melting ice cube and with three leverage (7x EBITDA), the NAV can shrink very quickly. I think it safer to buy assets that keep their value, even at a lower valuation. I added today to my SEP, the NG MLP at a 7.5% yield. I like that their GP is going to exchange the IDR rights at a reasonable valuation for common units, reducing the cost of capital in the future, without affecting the distribution or increasing debt. It’s a win for the LP holder and in the long run for the GP too (which will hold most LP units anyways). SEP assets are top notch in the pipeline business, that much I do know. a 7.5% tax deferred yield with a IDR single digit distribution growth is nothing to sneeze at, IMO.