Returns from REIT-land
02/06/2004 12:00 am EST
"Dividend diehards are looking for some juice," says Barry Vinocur, REIT expert and editor of the Realty Stock Review. "Those focused on yield have a number of REIT-land alternatives, including higher-yielding common shares or individual REIT preferreds." Here’s his latest buy.
"We continue to recommend Maguire Properties (MPG NYSE). At a 6.7% common yield, Maguire’s common still rates a place near the top of our Income Portfolio Planner Recommended List. The stock went public in June 2003 at $19.00 per share. The company owns 13 commercial real estate properties, consisting of nine office properties with approximately 7.1 million net rentable square feet; one 350-room hotel; and three off-site parking garages totaling 2,749 spaces and approximately 1.0 million square feet. MPG also owns an undeveloped two-acre land parcel adjacent to an existing office property that could accommodate 300,000 net rentable square feet of office development. Maguire’s existing portfolio is located in three Southern California markets – the LA business district, the tri-cities area of Pasadena, Glendale, and Burbank, and the Cerritos sub-market of Los Angeles County.
"One REIT preferred we like – a lot – is the recently-issued Maguire Properties 7.625% Series A cumulative redeemable preferred (MPGAP NYSE). The preferred pays $1.90625 annually. The call date is January 30, 2009. The current yield is 7.610%. The yield-to-call (what you should focus on) is 7.582%. Not only does the yield on MPG’s Series A preferred look attractive, but we also believe that over time as Maguire’s business plan plays itself out, and office markets recover (as they eventually will), Maguire’s implied credit rating should move up at least a notch or two. Put simply, we like Maguire for the long run."