Investing 101 teaches us that portfolios should include a variety of diverse assets, in order to protect from downside risk and to lower volatility. Frequently, investors are instructed to include a mix of US equities, foreign equities (both emerging and developed markets), investment grade bonds, and high yield bonds in their portfolios. However, the effectiveness of this diversification strategy varies, depending on the correlation among constituent assets. Continue reading
Back in 1967, Lyndon Johnson was our President, Sgt. Pepper’s Lonely Hearts Club Band topped the Billboard charts, a gallon of gas only cost 33 cents, and the homeownership rate was 63.3%.
In the second quarter of 2015, Barack Obama was our President, See You Again topped the Billboard charts, a gallon of gas cost $2.80 and was considered cheap, and the U.S. homeownership rate fell below 63.5% for the first time in 48 years! Continue reading
Many QSR (quick-service restaurant) franchisees work with brands (e.g. Taco Bell) that allow the franchisee to own the underlying real estate in addition to the restaurant operating companies themselves. While this may provide necessary additional control over the operations, it also carries additional risk (environmental, market value, and eminent domain, to name a few) and can inhibit the franchisee from accessing all-important capital needed to grow. As we all know, the vibrancy of many QSR brands can change dramatically… and sometimes quickly. Having available growth capital allows franchisees to take advantage of positive market dynamics and trends. Continue reading
In 2014, Broadstone Net Lease (BNL) closed over $245 million of acquisitions. Currently, the REIT owns 248 properties across 32 states. BNL’s strong history of successful acquisitions has been possible due to an availability of debt and equity capital when attractive triple net lease properties come to market. Broadstone’s Capital Markets team raises equity throughout the year and the Acquisitions team seeks to deploy that capital in a timely manner so that shareholders can achieve attractive returns. BNL typically buys properties (or portfolios of properties) valued from $5 million to $100 million and targets a 50% leverage ratio, portfolio-wide. Continue reading
In 2014, Broadtree Homes purchased 203 homes from The Dominion Group, a single-family operator based in Baltimore, Maryland. Broadtree completed the acquisition over four closings through the last six months of the year from June 2014 to December 2014. Broadtree gained a presence in a market targeted for its population and household formation growth as well as job creation.
This transformative transaction began in the latter part of 2013 when Broadtree shifted strategic gears of buying homes in singular transactions to buying portfolios of stabilized homes. In addition to seeking a portfolio, Broadtree sought to partner with a group that had vast experience in single-family housing for rent.
Up to that point, Broadtree had acquired 98 homes in singular transactions. For varied reasons, Broadtree had to go through this process to learn how to underwrite successfully and to acquire more complicated deals, such as portfolios, that involved many moving parts.
“Yield…I don’t need no stinkin’ yield.”
Or do you?
I spend my days speaking with wealth advisers, trust officers, clients, prospects and shareholders. It’s a fulfilling job that, along with my incredible team, I tackle with enthusiasm each day. Since my arrival at Broadstone nearly 3 years ago, there has been one common and resounding theme in my discussions: there is no yield to be found in the fixed income marketplace. None. Nada. Nil.
Well, not quite none, but with a 1-yr CD at 0.23% and the 5-year treasury at 1.329% yield, we might as well be speaking about nada. Consider that the average pace of inflation over the past 50 years has been 4.0%. Even in the past 10 years when inflation ran at a measly 2.1% per year, those rates are terrible. You’re barely staying afloat once inflation adjusted returns are calculated on those yields. And clients need income. So what is an investor to do? Continue reading