Never Bet Against Warren Buffett
Berkshire Hathaway has “doubled-down” on its original 2017 purchase of 18.6 million shares of Arizona-based net lease REIT STORE Capital, picking up an additional 5.8 million shares.
If you need any further proof that Berkshire Hathaway CEO Warren Buffett is the wisest man in America, click on this link, to see his move deeper into the net lease space.
Proclaiming net lease investments as “the new gold standard for income oriented investors,” the Forbes article reports that Berkshire Hathaway has “doubled-down” on its original 2017 purchase of 18.6 million shares of Arizona-based net lease REIT STORE Capital, picking up an additional 5.8 million shares.
According to Forbes, which cited NAREIT numbers, “A decade ago, this REIT sector had a combined market capitalization of less than $5 billion, and today it has mushroomed almost 10x, to a market capitalization of over $44 billion.”
Granted, the year of COVID hasn’t been kind to STORE Capital, with its stock of restaurants and movie chains. But this year hasn’t been kind to any REIT. Besides which, “rent collection has continued to improve as STORE collected 70 percent of rent in April, 67 percent in May, 76 percent in June and 85 percent in July (average 73 percent in Q2-20).” The REIT has also maintained its 35-cent-per-share dividend.
Says Forbes: “Berkshire Hathaway’s confidence in the company is evidenced by the 31 percent growth (based on the number of new shares), up 1.15 percent after hours. Berkshire Hathaway’s total STORE investment now stands at approximately 9.6 percent.”
The move underscores the relative safety—even in this environment—of net lease investments compared to the risk of stock volatility. As the magazine notes, “The net lease sector . . . has become an increasingly dominant investment category, thanks in part to the long-term lease contracts that generate durable sources of rental income.”
In related news, the magazine also reports two new net-lease REIT entrants into the public space. Dallas-based NetStreit came with an IPO of $225 million, while Broadstone Net Lease, based in Rochester, NY, raised $100 million, which carries the promise of an additional $400 million.
Times remain tough, and no one is immune. Investors with the insight to follow the winners will always come out on top.