No Need to Own it All !

It seems many investors are in the mindset that in order to be properly diversified you have to own stocks in every single corner or subset of the market.

I was reading an article lately about Farmland Partners (FPI). The article was centered around whether or not FPI would be able to cover its future dividends or not because so many of their land leases were being terminated despite the fact that they have a 25% penalty for early termination. One of the commenters on the article stated that maybe people should consider owning (CUT) Guggenheim MSCI Global Timber ETF instead. Get real ! First of all you are paying middle men (which my readers know I despise) and second it has a yield of less than 2% !

This got me to thinking in an entirely different direction. Why would I want to own this REIT sub segment at all ? The fact is there are lots of areas that I shy away from in the markets. Some examples are most Retail, Airline Stocks, Railroad Stocks, Banks, and many others. I avoid these areas because I have learned for various reasons not to trust them as they can be very volatile, subject to high Bankruptcy rates, have below average dividend yields etc.

It seems many investors are in the mindset that in order to be properly diversified you have to own stocks in every single corner or subset of the market. This is not true. My advice is to give as much thought to the types of stocks you are investing in as to which stocks you are investing in. By avoiding segments that are traditionally low performing areas you can help to avoid potential losses in the markets. There  are no rules saying you have to buy these stocks just because someone dreamt them up.

While it is wise to invest in a diverse area of stocks it is equally unwise to invest in all areas of the stock market just to be in them. Only invest in areas that you believe will not only pay good dividends abut will continue to thrive. Be selective and cautious about your investments.

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Whitestone REIT Worth a Look

“If you are a Dividend Income Investor or looking to beef up your portfolios yield this is definitely a stock you may just want to take a closer look at.”

I had not planned on writing an article about Whitestone REIT (WSR) today but the market was screaming at me to do so.

Shopping Center and Mall REITS have taken a beating the past couple of weeks. The broad sell off was triggered by the poor income and revenue showings of many retailers stocks. So like investors tend to do they over react. They sell off anything remotely connected and in the process create bargains. Whitestone’s share price  also declined because many investors are unhappy that they issued 7 million shares to pay for recent acquisitions. Perhaps these investors did not bother to read their Business Strategy clearly posted on their Web Site ! Here is what it states :

Our primary business objective is to increase shareholder value by acquiring, owning and operating Community Centered Properties™. The key elements of our strategy include:

Strategically Acquiring Properties

We seek to expand our geographic diversification by strategically acquiring commercial properties in high-growth markets.  Our acquisition targets are located in densely populated, culturally diverse neighborhoods, primarily in and around Phoenix, Chicago, Dallas, San Antonio and Houston, five of the top 15 markets in the USA in terms of population growth.  We may also pursue opportunities in other Southwestern and Western regions that are consistent with our Community Centered Property strategy.We believe that during the next several years there will be excellent opportunities in our target markets to acquire quality properties directly from owners, at historically attractive prices. Many of these assets may benefit from our management team’s experience in turning around financially distressed properties, portfolios and companies.

Redeveloping and Re-tenanting Existing Properties

We “turn around” properties and seek to add value through renovating and re-tenanting our properties to create Whitestone-branded Community Centered Properties™. We seek to accomplish this by (1) stabilizing occupancy, with per property occupancy goals of 90% or higher; (2) adding leasable square footage to existing structures; (3) developing and building on excess land; (4) upgrading and renovating existing structures; and (5) investing significant effort in recruiting tenants whose goods and services meet the needs of the surrounding neighborhood.

Recycling Capital for Greater Returns

We seek to continually upgrade our portfolio by opportunistically selling properties that do not have the potential to meet our Community Centered Property strategy and redeploying the sale proceeds into properties that better fit our strategy. Some of our properties which were acquired prior to the tenure of our current management team may not fit our Community Centered Property strategy, and we may look for opportunities to dispose of these properties as we continue to execute our strategy

It sure seems clear to me !

Some property pictures of recent acquisitions

 

Whitestone REIT which was founded in 1998 now owns over 70 properties which are primarily located in Texas and Arizona.  Some would see the lack of geographical diversity as a negative but because these are growing markets a and Whitestone targets the more upscale neighborhoods ( average income exceeds $75 thousand a year) and because they are concentrated I believe that it gives them an advantage of fully understanding  their markets.

I personally already owned a sizable position in Whitestone REIT but yesterday added an additional 300 shares @ $10.98 per share. That was at a whopping 10.38% yield that I could not just pass up on a stock that I believed in.  Since the dividend has remained at $1.14 per share since 2012 but with a current yield over 10% who needs dividend growth? After all – One in the hand equals two in the bush – right?

If you are a Dividend Income Investor or looking to beef up your portfolios yield this is definitely a stock you may just want to take a closer look at.  Retail might be struggling and going through some changes but its far from dead and Whitestone REIT will provide income for a good many more years.

For more information please visit the Whitestone REIT website.

Read previous article: Whitestone REIT Acquiring two Retail Centers

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Whitestone REIT Acquiring two Retail Centers

“Whitestone REIT (WSR) is acquiring two upscale retail centers in Texas”

Whitestone REIT (WSR) is acquiring two upscale retail centers in Texas. The agreement is two separate transactions. The first center, Eldorado Plaza is located in McKinney, Texas. The second center, BLVD Place, is located in Uptown Houston, Texas. Both centers are located in affluent areas. The total cost for both centers is 205 million.

Eldorado has an option to purchase an additional 1.86 acres of  land that will give Whitestone the ability to build and develop an estimated 24,000 square feet of additional leased space. BLVD Place includes an additional 1,43 acres of land that will give Whitstone the ability to develop another 24,000 square feet of space that can be leased.

In a separate press release Whitestone announced that it intends to issue an additional 8,100,000 of common shares

“Whitestone will contribute the net proceeds of the offering to its operating partnership in exchange for units of limited partnership interest in the operating partnership.  The operating partnership intends to use the net proceeds from the offering initially to repay a portion of outstanding indebtedness under Whitestone’s unsecured revolving credit facility, which amounts will then become available for future borrowings, including to fund a portion of the purchase price of two pending acquisitions of properties, or for general corporate purposes.”

Source: Whitestone Press Release

The shares are down approximately 5% in after hours trading.

I am long Whitestone REIT and am considering picking up additional shares if the price drops further.

Comments or thoughts ?