Let's Fire Up the Nets
Driven by sustainably high-quality income, the Triple-Net REIT sector has recently become the "golden child" for fixed-income investors.
Differentiated by contractual long-term leases and "wide moat" diversification fundamentals, the Triple-Net REIT players have all become beacons for durably attractive dividend investors.
The demand for repeatable dividend income has pushed shares higher for many REITs while also creating a wave of consolidation in the $14.8 billion investment category.
Still smaller than the primary real estate food group -- shopping centers, apartments, office, and industrial -- the Triple-Net sector is beginning to blossom into a primary investment classification.
The Triple-Net REITs were once perceived as a niche REIT sub-sector made up of a few landlords wanting to securitize fast food stores, daycares, and smaller automotive service assets. However, the demand for low cost debt and equity has stimulated a whole new era for investing as property owners have begun to flood the market with just about every form of free-standing real estate that could be leased on a long term basis.
Take for example Penn National Gaming
But wait! Aren't REITs supposed to have diversified income streams? In addition, don't REITs have management teams dedicated to controlling portfolio risk and making sure that all of the individual rent checks are converted to dividend checks? (Remember REITs are forced to payout at least 90% of earnings).
Triple-Net REITs Today
Today Triple-Net REIT investors have a growing menu of options and, as part of the competitive landscape, many of the "best in class" players are implementing strategically-unique platforms - all aimed to deliver consistency in the form of stable and growing dividends.