Beating S&P REIT Index by More Than 2 to 1

On Tuesday, May 1, I removed Senior Housing Property Trust (SNH) from the e-FinancialWriter REIT portfolio. The balance of the stocks held for the week ending May 4, 2012, are up 25.7% since implemented, not including 3.69% in dividends!

You might notice that I added the S&P United States REIT Index to the table below. I wanted to give a better apples-to-apples comparison of how an individual investor can do managing a real estate portfolio.

And as of May 4, we’re beating the index’s 1-year return by 2.32 to 1.

REIT	Sector	Blog date	Price	Closing price 05/04/12	Return to date %	Dividend yield %
PSA	Self storage	3/14/2010	90.75	140.49	54.81	2.81
VTR	Health care	12/30/2010	52.87	58.53	10.71	4.00
HCP	Health care		36.81	40.71	10.59	4.81
HCN	Health care		47.53	56.21	18.26	5.18
IAECREIN:CN	Canada	9/27/2011	19.45cn	24.26cn	24.73	0
ZRE:CN	Canada		16.29cn	19.89cn	22.10	5.04
INVRLPRA:CN	Canada		5.45cn	5.48 cn	0.47	1.94
NNN	Retail	1/29/2012	27.18	26.94	-0.88	5.72
Index return since inception*					25.70
Avg 12-mo return of REITs in portfolio*					13.64
Avg dividend yield of REITs in portfolio						3.69
12-mo return S&P REIT index*					5.89
12-mo return S&P 500*					2.16

Source: Bloomberg

*Does not include dividends paid

If you have trouble seeing the chart, just in zoom in with your web browser.

Enjoy your weekend!

George

P.S. I’m on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

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Reducing Portfolio’s health-care exposure

Senior Housing Property Trust (SNH), one of the e-FinancialWriter REITs, reported its 2012 first quarter results yesterday.

Revenue rose to $145 million from $99 million. Net income was $32.4 million, or $0.20 per share, missing consensus estimate of $0.24. For the same period last year, net income was $31.8 million, or $0.22 per share.

SNH is expanding operations and has acquired or is in the process of acquiring 14 more properties. But the stock hasn’t gone anywhere since I added it at the end of 2010, and is dragging down the Portfolio’s total performance. The consolation, of course, is the 6+ percent dividend.

I think we are well-covered in the health care sector with three other holdings, in fact over weighted. 

And I’m concerned about the state of the health care industry ...

Medicare and Medicaid cutbacks for hospitals, nursing homes, and assisted living facilities are almost guaranteed. Insurance companies are getting out of the long-term care business, Prudential being the latest. So with less backstops to protect the elderly and sick, patients will be forced to pay more out of pocket, which for many will be impossible.

Plus I want to diversify into another real estate sector … residential rentals.

Therefore, I am removing SNH from the portfolio today.

Best wishes,

George

P.S. I’m on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwrite to receive updates on either your cell phone or Twitter page.

Younger Boomers opting for hybrid LTC insurance

It’s not just older Boomers, 65 and over, who are worried about skyrocketing long-term care costs. According to a 2012 Buyer Study by the American Association for Long-Term Care Insurance, 53% of buyers were younger than 65 and going for combination policies.

In 2011, 48% of the buyers fell in that age group.

Combination policies include life insurance with the option for long-term care benefits. For the advantages and disadvantages of these hybrid policies, pick up a copy of A Boomer’s Guide to Long-term Care.

Best wishes,

George

P.S. I’m on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwrite to receive updates on either your cell phone or Twitter page.

What investors can learn from Storage Wars

Have you watched the A&E TV show Storage Wars?

People bid for property left by storage bay tenants who stopped paying their rent. The bidders can’t go inside the units and only get five minutes to take a peek and decide how much they’ll pay. Sometimes they find some valuable goodies, such as rare paintings, and other times the stuff is worthless. So it’s kind of a crapshoot.

From a landlord’s prospective, though, think about how this storage business works …

If the tenant doesn’t pay within a week or so, you put a giant-sized chain and lock on the door. At that point you’re free to throw their possessions away or sell them, like happens on the TV show. The stuff is gone, you sweep the place out, maybe change the light bulb, and watta bing watta bang … you’re ready for the next tenant.

Local laws might vary somewhat, but you get the point.

I’ve owned and managed residential property for over 25 years, and getting dead-beat tenants out is tough. It can take months, and you could end up with half-a-dozen government agencies involved before it’s over.

Now, I hope you understand why I absolutely love self-storage REITs, like PSA, which is up 58.6% (plus dividends) since I put it in the portfolio on March 14, 2010.

For the week ending April 27, 2012, the e-FinancialWriter REIT portfolio is up almost 26% since implemented, not including 4% in dividends! Once again proving that real estate deserves a piece of your investment portfolio.

REIT	Sector	Blog date	Price	Closing price 04/27/12	Return to date %	Dividend yield %
PSA	Self storage	3/14/2010	90.75	143.93	58.60	2.74
VTR	Health care	12/30/2010	52.87	59.23	12.03	3.96
HCP	Health care		36.81	41.35	12.33	4.69
HCN	Health care		47.53	56.73	19.36	5.09
SNH	Health care		22.00	22.01	0.05	6.86
IAECREIN:CN	Canada	9/27/2011	19.45cn	24.30cn	24.93	0
ZRE:CN	Canada		16.29cn	20.13cn	23.57	4.98
INVRLPRA:CN	Canada		5.45cn	5.48 cn	0.59	1.78
NNN	Retail	1/29/2012	27.18	27.38	0.74	5.62
Index return since inception*					25.81
Avg 12-mo return of REITs in portfolio*					11.49
Avg dividend yield of REITs in portfolio						3.97
12-mo return S&P 500					2.92

Source: Bloomberg

*Does not include dividends paid

If you have trouble seeing the chart, just in zoom in with your web browser.

Health Care REIT (HCN) announced this week that its Board of Directors declared a cash dividend for the quarter ended March 31, 2012 of $0.74 per share. The dividend will be the company's 164th consecutive quarterly payment, payable May 21, 2012, to shareholders of record on May 8, 2012.

Senior Housing Properties (SNH) will report it first quarter 2012 results on Monday. I’ll give a recap in a future posting.

Enjoy your weekend!

George

P.S. I’m on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement.

If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwrite to receive updates on either your cell phone or Twitter page.