This article is about pretend investing that I do in the online site Updown. I'm documenting my stock picking choices so that in the future I can look back and learn from my mistakes and successes.
I've been sitting on a pile of cash in Updown from stuff I've sold. I've seen some of my REIT purchases go up quite a ways and I just sold off half my HPT to cash in profits. So I figured I should go looking for some new good REITs to buy.
I ran a filter in the stock screener at Yahoo starting with just any REIT with a yield > 5%. From there I examined the financials of REITs with attractive yields to see if any were good value. I crossed off any REITs that seemed to be having troubles or otherwise on a downward path. If I was interested after checking out their basic stats and finances I then skimmed through the last annual report. After eliminating a few less attractive REITs I ended up with a couple REITs that I thought would be worth buying.
Heres some detail on the two REITS and what I liked and didn't like about them:
Getty Realty Corp. (GTY) - Getty owns and leases gas station and convenience store property. The REIT was created as a spin off of the real estate assets of a gas station owner. That company is called Getty Petroleum Marketing which is now Getty Realty's primary customer. They are paying a dividend of 8.2%. They have consistent revenue and profits with good funds from operations. Their debt doesn't mature until 2011. Pros: Fairly safe business that is generally recession proof, good financials and low debt risk. Con: Rely heavily on one customer Getty Petroleum Marketing. 2008 Annual Report. Current Price: $23.09 Target : $26.50
Medical Properties Trust Inc. (MPW) - As their name implies Medical Properties Trust owns hospitals. Their financials are pretty solid. Right now the yield is 7.7%. They don't have significant debt due until 2011. Pros: Relatively safe sector. Con: Not much upside, high executive pay. 2008 Annual Report Current price: $10.28 Target $12.
Note the current prices listed are from a few days ago since I'm writing this after I did the initial research.
I bought both REITs in Updown then put in some sell limit orders to sell 50% of my stake if they hit my target prices.