Is STORE Capital a Buy?
With the sudden increase in interest rates, investors are beginning to worry about financial stocks. Last year was particularly hard on the real estate investment trust (REIT) sector. Apartment, retail, and office REITs all had issues with struggling tenants and vacancies. The triple-net lease REITs, including STORE Capital (NYSE: STOR), seemed to weather the storm a little better than most given their tenant mix and business model. Now that rates are increasing, what does the future look like for this sector?
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The triple-net lease REITs generally focus on stand-alone properties, where a single tenant occupies a space and is responsible for insurance, taxes, and maintenance. These leases are generally longer-term and have automatic rent escalators. STORE Capital (the STORE stands for Single Tenant Operational Real Estate) has a heavy focus on service industries, with restaurants and child education as the biggest industry concentration. This is a bit different from Realty Income, which has a higher focus on nondiscretionary retail.
Source Fool.com
