Agree Realty is growing faster than Realty Income and has way less debt, don't just chase yield and look at the long term.
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@ben922 I didn’t sell $ADC for a higher yield on $O.
You said $ADC is growing faster, I don’t see that numbers (for now)… in fact $O had a 16% YoY growth in revenue and $ADC a 13%. And the CAGR for the last 3 years is 20% for Agree and 25% for Realty.
That being said, of course $ADC will probably grow faster from now on, as it is way smaller and does not need to invest so much to grow at the same path. The problem for $O is that to keep growing at this path it has to diversify and also buy other REITs wich makes their portfolio less attractive.
My main reason to sell one and keep the other, is that both REITS are ok, and I wanted to focus in just 1. At this point $O was a bigger position in my portfolio, it has a similar (but lower) AFFO per share, and it is a bigger well known company with a prestine track record that is diversifying into new markets. It does have more debt, but their debt is correct and has a better credit rating (not that $ADC has a bad one).
Honestly, I don’t think $ADC is a bad pick, and you’re probably right on the growth side. I belive both of them are going to benefit from lower interest rates on the near future, but markets tend to give a premium to known players and $O is the king of the REITS and the monthly dividend, so I’m betting here that when interest rates lower, there will be an important inflow of money into $O coming from people that just had their money in treasury bonds and stuff like that, that want correct safe yields. I’m 32, I mainly chase share appreciation, and $O is discounted to its historical average, so I see upside on the short medium term.
Maybe I’m wrong and it has just been repriced to a lower valuation due to portfolio deterioration, but I tend to think that it has more to do with the high interest rates environment.
All that being said, I would switch to $ADC if $O gets back to its historical valuations, as I do belive the growth profile for them is better. It’s just for now, I see more upside for Realty.
You said $ADC is growing faster, I don’t see that numbers (for now)… in fact $O had a 16% YoY growth in revenue and $ADC a 13%. And the CAGR for the last 3 years is 20% for Agree and 25% for Realty.
That being said, of course $ADC will probably grow faster from now on, as it is way smaller and does not need to invest so much to grow at the same path. The problem for $O is that to keep growing at this path it has to diversify and also buy other REITs wich makes their portfolio less attractive.
My main reason to sell one and keep the other, is that both REITS are ok, and I wanted to focus in just 1. At this point $O was a bigger position in my portfolio, it has a similar (but lower) AFFO per share, and it is a bigger well known company with a prestine track record that is diversifying into new markets. It does have more debt, but their debt is correct and has a better credit rating (not that $ADC has a bad one).
Honestly, I don’t think $ADC is a bad pick, and you’re probably right on the growth side. I belive both of them are going to benefit from lower interest rates on the near future, but markets tend to give a premium to known players and $O is the king of the REITS and the monthly dividend, so I’m betting here that when interest rates lower, there will be an important inflow of money into $O coming from people that just had their money in treasury bonds and stuff like that, that want correct safe yields. I’m 32, I mainly chase share appreciation, and $O is discounted to its historical average, so I see upside on the short medium term.
Maybe I’m wrong and it has just been repriced to a lower valuation due to portfolio deterioration, but I tend to think that it has more to do with the high interest rates environment.
All that being said, I would switch to $ADC if $O gets back to its historical valuations, as I do belive the growth profile for them is better. It’s just for now, I see more upside for Realty.
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