We all know that the pandemic has posed some serious questions about traditional office spaces. Commercial real estate news, especially from places like New York, is filled with stories about how rents are falling and tenants are vacating properties. There is no doubt that the future roadmap of when and how people will return to work is uncertain. Work-from-home may turn into a more permanent feature for specific job profiles. However, not all commercial real estate may be doomed. Certain assets like a standalone Walgreens or a standalone Taco Bell may actually still generate decent cash flow. Standalone single-tenants properties are precisely what Realty Income Corporation invests in. It is an exciting proposition for an investor looking to buy REIT stocks today. Why do we say today? Because the overall pessimism surrounding commercial real estate could provide a window of opportunity to go long.
Background Info On Realty Income Corporation
Realty Income Corporation was founded by William and Evelyn Clark in the year 1969. The company made its first acquisition in 1970, over 50 years ago. The acquisition was a Taco Bell restaurant. Realty Income Corporation went public in 1994 and was added to the S&P 500 index in 2015. Realty Income Corporation made its first overseas purchase in 2019 when it concluded a sale-leaseback transaction of 12 Sainsbury properties in the UK. The largest tenant of Realty Income by the percentage of revenues is Walgreens, followed by 7-Eleven and Dollar General. FedEx and Dollar Tree make the top 5. Realty Income employed over 200 people and owned 6,600 properties as of 31st December 2020. It is among the top REIT retail stocks.
Realty Income was trading at a 4.33% dividend yield on 9th April 2021. The dividend yield is one of the most critical metrics for any REIT stock. The 5-year average yield is about 4.26%, while the 10-year high is 4.97%. The price of Realty Income has gained 37% since the lows of March 2020.