Realty Income and W.P. Carey: Perfect Together
I own Realty Income (NYSE: O), the largest net lease real estate investment trust (REIT). I also own W.P. Carey (NYSE: WPC), the second-largest net lease REIT. On the surface, that suggests I'm doubling down on net-lease properties. However, there are some important nuances when you dig in a little bit.
Realty Income and W.P. Carey both use the net lease approach. A net lease requires the tenant to pay for most property-level operating costs. That fact leads to lower operating costs and reduced risks for the REITs. They also focus heavily on sale-leaseback transactions, meaning they buy assets from companies that turn around and become tenants. This is usually a financing transaction for the sellers, allowing them to raise cash for other purposes while retaining effective control of the property.
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Source Fool.com
