Opinions
Derek Warren
Automotive Properties Real Estate Investment Trust
APR.UN-T
HOLD
Sep 11, 2015
Stock price when the opinion was issued
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This is his preferred REIT right now. They specialize in owning the real estate of car dealerships. They are triple net leases, meaning that they don’t pay anything, the dealership pays the taxes, maintenance and utilities. This REIT collects rent from the dealership. They’re financing these out 5+ years, and this is yielding almost 9% right now.
(A Top Pick Jan 13/16. Up 30%.) This company buys the land under auto dealerships and then leases it back to them. These are triple net leases, meaning that the dealership pays for everything, taxes and maintenance. There is a 1.5% escalator clause for every year. The company has made 2 acquisitions since last year. It is paying just under 7.5%, so a good income generating investment.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. They invest in income-producing automotive dealerships. If there is an increase in demand for cars, the dealerships will pay rent and more dealerships will open up. DEmand for cars has only slightly increased, and it is more a supply constraint right now. Will continue to do well with auto dealerships having sufficient cash for rent. Unlock Premium - Try 5i Free
Basically car dealerships. They don’t own the dealerships, but lease to the companies that own them. This is new, so he is giving them a little bit of time to season. He will give it a couple of quarters. If you own, it is a new IPO, so you shouldn’t be selling it.