Why I Think This Is the Best Real Estate Stock
For the most part, I'm a conservative income investor, and real estate investment trusts (REITs) fit well into my approach. But, like all companies, not all REITs are created equal. When I boil this sector down, W.P. Carey (NYSE: WPC) stands out as one of the best names. Here's why I own it.
The core of W.P. Carey's approach is that it buys single tenant properties directly from companies and then leases the asset back to the seller. The seller agrees to pay for most of the operating costs of the asset and signs a long-term contract, usually with built-in rent hikes. This is what's known as a net lease.
It works well for the seller because they maintain almost complete control of a vital asset while still using it to raise growth capital. The REIT, meanwhile, gets an attractive new property with a long-term tenant and has to put in little extra work to maintain the property. Although any single property is a high risk, given that there's only one tenant, spread across a large portfolio the risk here is pretty low. W.P. Carey owns 1,300 properties.
Source Fool.com
