What Are Real Estate Investment Trusts Preferred Stock? How To Make Money With Real Estate Investment Trusts Preferred Securities (Real Estate Investment Trusts Preferred Stock)

When investors seek to take advantage of publicly listed real estate opportunities, they often favor traditional REIT common stock to gain exposure. This makes sense — from Oct. 1, 2008 through Sept. 30, 2018, US REIT common stock has provided attractive returns coupled with income generation, potential diversification benefits and a potential hedge against inflation. However, we believe US REIT preferred stock may offer a unique opportunity for investors to access real estate like returns with even higher income (and lower volatility) versus traditional REIT common stock. A real estate investment trust (REIT) is a company that owns (and typically operates) income producing real estate or real estate related assets.

Preferred stock is class of ownership in a corporation that has a higher claim on its assets and earnings than common stock.

Understanding US REIT preferred securities

REIT preferred stock is a type of hybrid security with both equity- and bond-like characteristics. Within the capital structure of REIT companies, preferred stocks have a senior claim to earnings and dividends versus common stock but are generally junior to corporate bonds. The dividends paid on REIT preferred stock are often considerably higher than REIT common stock and shares are generally issued at a par value (often $25). While REIT preferred shareholders have no voting rights, they can often benefit from investing when issues are trading at discounts to par. REIT preferred stock is generally callable after five years from the date of issuance, at which point management reserves the right to redeem the shares at par. This five-year non-call period provides the potential not only for income, but also capital appreciation. The five-year non-call period also gives investors a more certain return opportunity over the time period, which may be an additional benefit.

Why do companies issue REIT preferred stock?

So why do REIT companies issue preferred stock at all given the options of simply issuing common equity or traditional corporate debt? First, when REIT companies issue preferred stock (versus traditional corporate debt) they are often given more favorable treatment by rating agencies. This allows companies to showcase lower leverage levels to prospective investors and analysts. Second, REIT preferred stock provides companies with a unique source of capital. While these shares are generally callable after five years at par, company management reserves the right to keep the shares outstanding in perpetuity. A broad array of REIT companies offer preferred stock, including those that operate in sectors focused on residential, office, retail, industrial, self-storage, data centers, infrastructure, healthcare and lodging. While the universe of US REIT preferred stock is relatively small by number of issuers and total capitalization, the benefits to investors have historically been quite compelling.

A comparison: US REIT preferred stock versus US REIT common stock

Over the last ten years – since the global financial crisis in October 2008 to the present – REIT preferred stock has outperformed REIT common stock with roughly half the volatility. The higher level of income generated by the preferred shares, coupled with the potential for capital appreciation for discounted securities, has allowed this segment of the capital structure to generate excess returns.

Over the past ten years, US REIT preferred stock has outperformed US REIT common stock

Over the last ten years, ZARZAR LAND has also observed that US REIT preferred stock has tended to outperform REIT common stock during periods of rising interest rates. We believe that the higher level of yield spreads versus the 10-year Treasury and other preferred sectors have allowed these securities to insulate themselves more to periods of rising interest rates.

US REIT preferred stock has tended to outperform REIT common stock during periods of rising rates

Given the yields of US REIT preferred stock today (which generally span from 5% to 8%), investors have the right to question the sustainability of these distributions. Unlike financial preferreds, which have experienced certain periods of double-digit levels of payment defaults, since 2000 the US REIT preferred universe has never seen a year with more than a 1% level of missed payments. In the past 18 years, the average annual default rate for US REIT preferred stock has been a modest 0.25%, reflecting the stable and predictable cashflows generated by real estate-related companies over the period. And in the last four calendar years there have been no defaults in the broader US REIT preferred universe at all. We also believe that convertible REIT preferred securities may create even better tracking relative to REIT common stock and may provide more robust protection against rising interest rates than non-REIT preferred stock.

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How Billionaire Investors Protect Their Wealth & Fortune

Above: How Billionaire Investors Protect Their Wealth & Fortune.

It can take a lifetime to build a fortune like Warren Buffett or Ray Dalio. But, as all billionaires know, there is always risk present in the stock market, and even though a catastrophic geopolitical or financial event is very unlikely, it is important to be prepared for anything.

The World’s Biggest Real Estate Bubbles In 2019

Courtesy of: Visual Capitalist

Above: The World’s Biggest Real Estate Bubbles In 2019.

The World’s Biggest Real Estate Bubbles In 2019

With the current stock market bull run reaching nearly 10 years in length, it’s understandable that many investors are nervous about the end of the party coming sooner than later. However, as UBS notes in its latest report, there is also growing concern about another prominent bubble that has been in the works since the aftermath of the financial crisis.

Large amounts of easy money have fueled real estate bubbles in the world’s major cities, and the Swiss investment bank UBS now sees the property markets in six global cities as being at risk.

The Biggest Real Estate Bubbles In The World.
The Biggest Real Estate Bubbles In The World.

Hong Kong tops the “Real Estate Bubble” index this year. Any city with a score over 1.5 is considered at “Bubble Risk”, and right now those include two cities from Canada (Vancouver and Toronto), one from Asia (Hong Kong), and three from Europe (Amsterdam, London, and Munich in Germany). It is also very important to note that there are four cities that score just under the 1.5 real estate bubble threshold: Stockholm, Paris, San Francisco in California, and Frankfurt in Germany.

Above: The Most Expensive Real Estate In The United States: San Francisco Or New York?

Whether it is a real estate housing bubble or not, many real estate investors agree that San Francisco’s housing situation is still a crisis. In the San Francisco Bay Area, approximately 60% of all rental units are in rental controlled buildings, and the median single family house price is an incredible $1.7 million United States Dollars.

About ZARZAR LAND

ZARZAR LAND was founded on December 1998 with the simple mission of giving interested investors with limited finances and/or expertise access to quality real estate investment opportunities. ZARZAR LAND is an innovative and prestigious land group that works closely with various government agencies and institutions. Discover more at:

http://www.zarzarland.com

Stocks That Pay Monthly Dividends To Investors

What income investor doesn’t enjoy the frequent monthly payouts and reliable cash flow that can come from owning monthly dividend stocks, trusts, and other investments such as real estate investment trusts? The ability to offset predictable expenses such as mortgage payments and utility bills every month with income from monthly dividends provides the ultimate convenience, timeliness, and peace of mind for many investors.

Apple Hospitality REIT (Real Estate Investment Trust)

Apple Hospitality REIT (APLE) is one of the hotel industry’s largest owners of select service and extended stay hotels. Apple Hospitality invests in only two brands, Hilton (HLT) and Marriott (MAR), and is one of the top five owners of Hilton and Marriott hotels nationwide. This real estate investment trust (REIT) owns 241 hotels in 34 states and focuses on top business traveler markets such as Los Angeles, San Diego, Atlanta, Nashville, and Dallas Texas.

Apple Hospitality was formed through the mergers of several non-traded real estate investment trusts (REIT). Since becoming publicly traded in 2015, Apple Hospitality has generated consistent income growth and a steady monthly dividend of 10 cents per share ($1.20 annualized). Funds from operations (FFO, an important measure of REIT profitability) per share totaled 89 cents through the first six months of 2018, easily covering the 60 cents paid out in monthly dividends.

Which Cities Hold Africa’s Wealth?

Africa’s Evolving Economy

The economy in Africa is on the rise, and financial hubs are beginning to slowly emerge. While Africa has traditionally played a minor role in the world market and global economy, the continent is coming into its own as a hub for financial services and entrepreneurship. Africa’s growing elite has added approximately 19,000 new millionaires over the past decade, with total private wealth totaling approximately $2.3 trillion United States Dollars. An easy way for investors to invest in Africa’s growth is by purchasing the iShares MSCI South Africa ETF (exchange traded fund) through a stock broker such as Charles Schwab or TD Ameritrade.

Courtesy of: Visual Capitalist

The iShares MSCI South Africa ETF (exchange traded fund) is listed on the New York Stock Exchange with the symbol “EZA” and gives investors exposure to large and mid-sized companies that are located in South Africa. The iShares MSCI South Africa ETF (exchange traded fund) seeks to track the investment results of an index composed of South African companies that can benefit from Africa’s expected phenomenal growth during the next few decades.

The five wealthiest cities in Africa are located in three countries:

1. Johannesburg, South Africa ($276 billion)
Founded in the Witwatersrand Gold Rush of 1886, South Africa’s City of Gold is a hub for financial services, professional services (law firms and consultancies), construction, telecommunications, and basic materials.

2. Cape Town, South Africa ($155 billion)
One of South Africa’s three capital cities, Cape Town’s major sectors include real estate, financial services, retail, and tourism. Cape Town has the highest prime residential rates on the continent at US$6,100 per square meter, similar to cities such as Washington, D.C., or Berlin.

3. Cairo, Egypt ($140 billion)
A hub for Africa and the Middle East, Cairo’s major sectors include real estate, construction, financial services, and basic materials.

4. Lagos, Nigeria ($108 billion)
The clearing house for 80% of Nigeria’s imports, major sectors include basic materials, real estate, construction, telecommunications, transport, and financial services.

5. Durban, South Africa ($55 billion)
Home to the biggest shopping center in Africa – complete with 350 stores, 70 restaurants, 18 movie theaters, an IMAX theater, an indoor climbing wall, and a skate park designed by Tony Hawk – Durban’s major sectors include real estate, finance, healthcare, construction, retail, and transport.

How To Invest In Farmland – Gladstone Land & How To Invest In Farming & Buy Farmland Without Owning A Farm

Gladstone Land (Nasdaq stock symbol: LAND) invests in farms and farmland. The real estate investment trust (REIT) owns approximately 75 farms and 63,000 acres of land across nine states. Its land portfolio is valued at approximately $537 million and is 99.7% leased. The farmland owned by Gladstone Land is primarily used to grow fresh fruits and vegetables, rather than commodity crops like corn, wheat, and soybeans. The advantages of fresh produce farms are higher productivity and rents. Also, there is no tariff risk since production from Gladstone farms is consumed domestically and rarely exported.

The market for farmland is highly fragmented in the United States. In addition, roughly two-thirds of American farmers are nearing retirement age, creating many farm acquisition opportunities for Gladstone Land.

Gladstone had its initial public offering (IPO) in 2013 and pays monthly dividends. Farm portfolio growth and annual rent increases have fueled 11 dividend increases over five years and approximately 48% dividend growth.

Gladstone Land Stock Price.
Gladstone Land Stock Price.

How To Invest In Farming & Buy Farmland Without Owning A Farm

Investing in farming can seem like a good strategic move for real estate and land investors. After all, whether the overall economy is in recession or booming, people still have to eat food. Because of this, many real estate and land investors regard agriculture and farming investments as being recession-proof. Furthermore, as the world’s population increases, farming will play an increasingly important role in sustaining people around the world. That said, buying a farm is not very easy for the average investor because it can require a large capital commitment and the time and cost of operating or leasing farmland is often substantial. Fortunately, real estate and land investors have many other means to gain exposure to the sector without having to actually buy a farm.

Farmland Real Estate Investment Trusts (REIT)

The closest that an investor can get to owning a farm without actually purchasing farmland is by investing in a farming focused real estate investment trust (REIT). Some examples include Farmland Partners Inc. (New York Stock Exchange symbol: FPI) and Gladstone Land Corporation (Nasdaq stock symbol: LAND).

These real estate investment trusts (REIT) typically purchase farmland and then lease it to farmers. Farmland real estate investment trusts (REIT) offer many benefits, such as providing much more farmland diversification than by simply buying a single farm, as they allow an investor to have interests in multiple farms across a wide geographic region.

Farmland real estate investment trusts (REIT) also offer greater liquidity than does owning physical farmland, as shares in most of these real estate investment trusts (REIT) can be quickly bought and sold on stock exchanges for as little as $4.95 in commissions with a stock broker such as Charles Schwab. In addition, farmland real estate investment trusts (REIT) such as Gladstone Land (Nasdaq stock symbol: LAND) also decrease the amount of capital needed to invest in farmland, as the minimum investment is just the price of one real estate investment trust (REIT) share (or less if you use a stock broker that allows fractional shares). In other words, you can become an indirect farmland part owner for less than $100 United States dollars.

How To Purchase Land (Real Estate) Online The Easy Way | How To Easily Purchase Land On The Internet

This guide produced by ZARZAR LAND, one of eBay’s most prominent land sellers, is to provide information for people inquiring about purchasing land via the Internet. The information is displayed in a user friendly lay-out and the purchasing process instructions have been condensed into 3 easy steps. Take a look!

Step: 1 “What is it you’re looking for?”
There are several land sellers that sell property with buildings already on it, some land sellers sell undeveloped property that you may or may not be able to build on. Be sure that you read every word of the listing carefully. Top land sellers should be able to provide you with an eclectic amount of properties from various states throughout the nation. ZARZAR LAND sells properties in California, New Mexico, Colorado, Texas, Michigan and Florida to assure that they are providing their clients with choices so they may purchase a property that satisfies their needs.

How do I know that they really are selling me land and it is not just a gimmick?

True land sellers should be able to provide you with a parcel map. Some land sellers refer to parcel maps as “plat maps”. These are plotted maps that show where the property is located by using the unit, track, block and lot number. It is legal proof that the property does exist. Most properties should have an APN (assessor’s parcel number) ATN (assessor’s tax number) or Legal Description which is used to describe where property is located using directions. For example: NW ¼ of SE ¼ Section 5 Blk 3 Unit 1. This is used until the property is assigned an APN or ATN number. Keep in mind that if properties are being sold for a cheap price it is probable that the company has not visited this property and it should be stated on the listing. Be sure to read all disclaimers, because if you purchase the property without fully reading the listing and conducting your own research you could end up unsatisfied. Reputable sellers should provide disclaimers on their listing to make sure the client does not have any surprises after they purchase the property. As you can see, top eBay land sellers such as ZARZAR LAND have several disclaimers because they are honest with their clients up front. You can decipher a top land seller by viewing the land sellers who are placed at the top of the eBay land category acquisitions page. Purchasing property is a great investment and you want to make sure to take every precaution when doing so.

How do I know if I can build on this land? Are there utilities, road access, etc?

Conducting your own research guarantees that you will be completely sure of the correct answer. Regulations regarding properties tend to change, so the county will be able to provide you with the most updated information. Simply call the countys assessor’s office which you can search through an Internet search engine or you may contact the seller and they should have some contact information for that county. Contact the county where the property is located and provide them with the ATN/APN or Legal Description so they may provide you with all of the updated limitations and information regarding that specific property.

Step 2: Bidding
This is the second step because you should not bid on a property unless you know you want to purchase it. This is a system land acquisition companies use to make the purchase process a little more competitive. Clients enter bids on a particular property, but other potential clients may want that same property and enter in a higher counter bid. The winning bidder at the end of auction is the one who receives the property. It is important to note that the winning bid amount may have a minimum requirement of anywhere from $1, $100 or a hidden reserve price that only the seller has knowledge of. So make sure your bid meets those requirements if they exist.

Types of Auctions:
1. Normal
2. Straight Sale

A Normal auction is when the winning bid amount is the down payment price which is then subtracted from the total price of the property. ZARZAR LAND uses this method for most of their auctions because it allows people to purchase properties at low initial costs and then continue to make low monthly payments until the property is fully paid for. Legitimate land acquisition companies should state on their listings that client is only bidding on the down payment. ZARZAR LAND does this because they do not wish to trick their clients in any way.

A Straight Sale auction is when the client is bidding on the full price of the property. This means that there will not be any monthly payments involved, but perhaps some flat fees such as a $199 closing fee or other applied flat fees. This is a very fast method of purchasing property because you pay for the entire property all in one payment and then the transfer of ownership is expedited. Most sellers will have the phrase “straight sale” stated in their listing somewhere to make the client aware of the type of auction they are bidding on. ZARZAR LAND states the straight sale in the title of their listings to fully inform their clients.

Step 3: Purchasing
This is the last step to finalizing your property. Large Corporations will accept several types of payments. ZARZAR LAND accepts land payments through PayPal (an online payment service), personal check, corporate check, e-check, cashier’s check, money order, credit card (as long as they under $3,000), over the phone payment, electronic wire transfer payment and other payments in foreign currency are also accepted.

Some companies will offer discounts if the client pays in full within 30 days from the end of auction. ZARZAR LAND offers a 15% discount on the total price of the property as long as the payment is received within 30 days from the end of auction.