I am retired and take educated guesses on all things financial.

January 06, 2008

January 7, 2008: What? An REIT?? Maybe. MNRTA

Although the smart money is snapping up distressed real estate on the cheap in many areas of the country for long term rental purposes, most readers can't run away fast enough from almost anything associated with real estate. I can't quarrel with that attitude. However, I would like to bring to your attention one little known REIT that may provide a hefty yield coupled with reasonable security for your portfolio.
That REIT is Monmouth Real Estate Investment Corporation (MNRTA).

Monmouth has been in business since 1968 and invests in net-leased (primarily triple-net leased) industrial properties with long-term leases to investment grade tenants such as Anheuser-Busch, Caterpillar, DHL Express, Western Container, Mead Paper and Sherwin-Williams. The high quality of this $191 million dollar portfolio gives investors the unique opportunity of investing in institutional quality real estate while at the same time receiving high yields generally available only with more speculative investments. In tune with smart money buying on the cheap, Monmouth has acquired over $100 million dollars in net-leased industrial properties since late 2004. MNRTA currently owns 58 properties in 26 states, making it regionally diversified. It leases over 5,700,000 square feet of space.

Monmouth has traditionally maintained a conservative balance sheet, although the fourth quarter 2007 gained significantly over the fourth quarter 2006. Especially noteworthy was an increase in rental revenue by 27%. The stock is trading as of this writing at approximately $7.90 a share and yields 8.61%.

Neither institutions (15% of shares outstanding) nor analysts have appeared to discover this REIT to any degree. The Landy family, which has had its hands in everything from harness racing to mobile home parks holds influence over the operations of this REIT and two other entities, Monmouth Capital and UMH Properties.
They appear to be a steady influence that mandate the "steady as you go" approach that befuddles many of the hot-shot REITs.They also seem to relish high dividends.

In a down and out real estate world, this company stands an excellent chance of avoiding carnage and should be considered as a cash generator for portfolio diversification.

DISCLOSURE: I own MNRTA in my Permanent Portfolio.

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