Why I'll Never Sell Realty Income
I wound up owning Realty Income (NYSE: O) thanks to the real estate investment trust's purchase of VEREIT in 2021. It was a fitting, and ultimately positive, end to an investment mistake I made when I bought VEREIT's predecessor American Realty Capital Properties. But now that I'm back in it, my plan for Realty Income is to hold on until I bequeath it to my daughter. Here's why.
Realty Income is what's known as a net lease REIT. Basically that means that it owns single-tenant properties, but its tenants are responsible for most of the operating costs of the assets they occupy. Any single-tenant property has a lot of risk associated with it, given that there's only one tenant. But when spread across a large enough portfolio, as is the case here, the risk actually winds up being pretty low. That's a vast simplification, but allows Realty Income to focus on collecting rent and expanding its portfolio since it doesn't have to worry about things like local taxes and cleaning up the parking lot.
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Source Fool.com
