Realty Income's Premium Price Might Not Be So Premium After All
Real estate investment trusts (REITs) are income-producing securities that give investors a simple way to own institutional-level property. But what happens when an institutional money manager buys a REIT, like the recent agreement between GIC and its partners and STORE Capital (NYSE: STOR)? The answer is that Wall Street gets a look at what the "smart money" thinks about REITs. That's good news for investors worried about the premium valuation that's long been afforded to net lease giant Realty Income (NYSE: O).
STORE Capital is a net lease REIT that owns around 3,000 single-tenant properties. Net lease refers to the fact that STORE Capital's tenants are responsible for most of the operating costs of the assets they occupy. Given the size of the portfolio, this is a pretty low-risk approach, even though any single property is high risk because there's just a single tenant. Notably, STORE Capital's portfolio makes it one of the largest net lease names on Wall Street.
That won't last for much longer, however, because STORE Capital has agreed to sell itself to GIC and institutional partner Oak Street. GIC is an institutional money manager that oversees Singapore's investments. Oak Street is an institutional investor focused on net lease assets owned by Blue Owl, a global wealth manager focused on alternative assets. Arguably, these entities are the "smart money" on Wall Street.
Source Fool.com
