September 30, 2009

Researching REITs - Made a Decision

Previously I discussed how I was researching some REITs with a goal of buying another REIT to replace the shares of HRPT Properties Trust (HRP) which I sold after it doubled. First I screened for a list of REITs with yields over 9% and I took a look at those and crossed off all but three. Second I looked at those three remaining REITs.

The final 3 REITs were: Northstar Realty (NRF), Mission West Properties (MSW) and UMH Properties (UMH).

I decided to cross off two of them because of some major concerns I had. I didn't want to be in Mission West since they are so specialized in Silicon valley properties. I chose not to buy UMH because their funds from operations where going down every year for the past few years. This is not to say that I think these two REITs are bad investments, but that I liked Northstar a bit more. There are a lot of good things about Mission West and UMH. But I made my choice based on what I thought was the best of the 3...

I ultimately decided to buy Northstar.

They have strong financials and good potential for share rebound. The main risk concern with Northstar is that they have exposure to defaults on the commercial loans they own. But I have good confidence in the economy is on a rebound at this point and if I'm going to invest in REITs at all then I have to believe commercial properties are generally over the worst of it.

I bought 400 shares of Northstar at about $3.52.

I'll again note that I am not a professional financial expert and this should not be taken as financial advice in any way.

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