Day: October 1, 2024

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Some real estate investment trusts (REITs) are a perfect portfolio fit for investors looking to see steady income with limited risk. One of the most popular is Realty Income (NYSE:O). Known as the monthly income dividend company, Realty Income has a current yield of 5.06% and a payout of $3.16 per year.

Where it wins is consistency. The company has declared 651 consecutive monthly dividends and is a Dividend King and a member of the S&P 500 Dividend Aristocrats® index, having increased its dividend for 30 years in a row. Since going public, it has paid around $14 billion in dividends to shareholders. Nareit reported that the compound average annual total return was 13.5%, a solid performance for a REIT.

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For years, triple net leases, mostly in retail with clients like Dollar General and Walgreens, have been its bread and butter. Over the last few years, Realty Income has been evolving its strategy, which may be more than just old reliable. At the helm is CEO Sumit Roy, who sees new opportunities and areas of exploration that could grow the company and add some risk.

The Evolution Of A New Strategy

Speaking to Nareit, Simon Yarmak, managing director of investment bank Stifel, said the company has had a significant turnaround over the past decade. “They’ve grown sevenfold from an $8 billion equity market cap to a $55 billion equity market cap,” he said, remarking on their transformation from far more than just triple net leases. In the past several months, Stifel has raised its price target on Realty Income twice, most recently from $67.50 to $70.25, putting it at the top end of analyst targets.

“About 10 years ago, we started to move into single-tenant industrial properties, which was a natural supplement to our retail business,” Roy told Nareit. Now, around 15% of its portfolio is in industrial centers.

The company has also gone international, sticking close to its retail roots by starting with 12 properties in the United Kingdom leased to Sainsbury’s grocery business. Roy said the company has gone from zero to $11 billion in five years. Earlier this year, it announced a 527-million-euro sale-leaseback transaction for 82 retail properties leased to sports retailer Decathlon, exposing it to Germany, France and Portugal.

Story continues

Realty Income’s new heft in the marketplace has led it to a substantial path of portfolio diversification. Its $1.7 billion sale-leaseback with Wynn Resorts Limited for Encore Boston Harbor in 2022 was a big signal to the market that something was changing about the company. More capital has led to the ability to make bigger deals, such as its $950 million investment with Blackstone Real Estate Income Trust, Inc. in 2023 to acquire The Bellagio Las Vegas. Gaming is now around 3.3% of its portfolio.

Another partnership in 2023 with Digital Realty (NYSE:DLR) took the company into the world of data centers. Data centers are one of the hottest areas of real estate due to the growing demand for capacity fueled by AI. For investors, there are only a handful of data center REITs, so getting added exposure may be a bonus. While this area is subject to far more volatility than Realty Income’s traditional retail business, the upside could make up for the risk.

“Generally, when companies diversify their story, people question whether it’s the right thing to do, but each time Realty Income has gone into other businesses, they’re not dipping their toes in, they’re acquiring big quality assets,” Yarmak remarked.

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The Path To $100 Billion

Sumit Roy sees Realty Income’s opportunity as nearly infinite. “I don’t see an end to what a company like ours can become in size,” he said, noting that adding European assets took the company’s addressable market from $4 billion to $13 trillion.

Yarmak believes the company will build on its legacy categories while expanding into other areas. “Realty Income is now a $70 billion company and over the next few years I can see it becoming a $100 billion REIT.”

James Shanahan, senior equity research analyst for Edward Jones, suggests investors consider Realty Income’s role within a portfolio. Its massive size means that while it is still expanding, it may not be a high-growth story. He recommends investors examine the company and pair it with other companies that have a high-growth strategy.

For long-term investors, it’s always a good idea to monitor a company’s changing strategy regarding its investments. So far, Realty Income has made strong strategic moves, benefiting from key growth areas. Its diversification could serve it well if there are any concerns with one aspect of the business. Its top tenants are still less than 5% of the business, meaning that Realty Income should be protected no matter what storms come.

Better Yields Than Some REITs?

The current interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through publicly-traded REITs.

Arrived Homes, the Jeff Bezos-backed investment platform, has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

This article “I Can See It Becoming A $100 Billion REIT” – What Will It Take For This High-Yield Company To Hit New Heights? originally appeared on Benzinga.com

• Acquisitions complement Ingersoll Rand’s product and technology offerings and increase geographic reach, while adding new pump technology and capabilities
• Execution of bolt-on acquisition strategy continues to enhance company’s durable financial profile by serving high-growth, sustainable end markets
• Demonstrates company’s commitment to capital allocation and expected achievement of mid-teens return on invested capital (ROIC) by third full year of ownership

DAVIDSON, N.C., Oct. 01, 2024 (GLOBE NEWSWIRE) — Ingersoll Rand Inc. IR, a global provider of mission-critical flow creation and life science and industrial solutions, has acquired Air Power Systems Co., LLC (“APSCO”), Blutek s.r.l. (“Blutek”), and UT Pumps & Systems Private Limited (“UT Pumps”) for a combined purchase price of approximately $135 million. These acquisitions add more than $50 million in revenue cumulatively acquired at a high-single digit multiple of 2024 estimated Adjusted EBITDA.

APSCO, based in the United States, is a leading provider of hydraulic and pneumatic products and engineered solutions serving diverse specialty work truck vehicles. For 60 years, APSCO has served its customers with comprehensive offerings across hydraulic coolers, systems, and components in addition to pneumatic consoles, cylinders, valves, and switches. The acquisition will expand Ingersoll Rand’s leading position in the dry and liquid bulk markets with energy efficient, innovative solutions. APSCO will join the Industrial Technologies and Services (IT&S) segment.

Blutek, based in Italy, specializes in the design and production of highly engineered solutions for compressed air and nitrogen generation in mission-critical environments. As a certified supplier to leading Engineering, Procurement, and Construction (EPC) companies, Blutek will increase Ingersoll Rand’s ability to compete in high specification projects, adding technology capabilities, expertise, and aftermarket potential in high-growth end markets including biogas and carbon capture. The business will join the IT&S segment.

UT Pumps is a leading Indian manufacturer of screw pumps and triplex plunger pumps. This acquisition adds new pump technology to Ingersoll Rand’s portfolio. Its high-pressure pumps are mainly focused on attractive end markets including water, wastewater, food and beverage, pharmaceuticals, general industrial, and chemicals. UT Pumps will join the Precision and Science Technologies (P&ST) segment.

“Investments in sustainability, innovation, and aftermarket are core to our growth and today’s announcement underscores our commitment to deploy capital in pursuit of this strategy,” said Vicente Reynal, chairman and chief executive officer of Ingersoll Rand. “These acquisitions demonstrate our successful bolt-on acquisition playbook, which when combined with the power of Ingersoll Rand Execution Excellence (IRX), will continue to deliver value to both customers and shareholders.”

Thus far, Ingersoll Rand has closed 14 acquisitions this year as part of its disciplined capital allocation strategy.

About Ingersoll Rand Inc.
Ingersoll Rand Inc. IR, driven by an entrepreneurial spirit and ownership mindset, is dedicated to Making Life Better for our employees, customers, shareholders, and planet. Customers lean on us for exceptional performance and durability in mission-critical flow creation and industrial solutions. Supported by over 80+ respected brands, our products and services excel in the most complex and harsh conditions. Our employees develop customers for life through their daily commitment to expertise, productivity, and efficiency. For more information, visit www.IRCO.com.

Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to Ingersoll Rand Inc.’s (the “Company” or “Ingersoll Rand”) expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “on track to” “will continue,” “will likely result,” “guidance” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements other than historical facts are forward-looking statements.

These forward-looking statements are based on Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) adverse impact on our operations and financial performance due to natural disaster, catastrophe, global pandemics (including COVID-19), geopolitical tensions, cyber events or other events outside of our control; (2) unexpected costs, charges or expenses resulting from completed and proposed business combinations; (3) uncertainty of the expected financial performance of the Company; (4) failure to realize the anticipated benefits of completed and proposed business combinations; (5) the ability of the Company to implement its business strategy; (6) difficulties and delays in achieving revenue and cost synergies; (7) inability of the Company to retain and hire key personnel; (8) evolving legal, regulatory and tax regimes; (9) changes in general economic and/or industry specific conditions; (10) actions by third parties, including government agencies; and (11) other risk factors detailed in Ingersoll Rand’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in its periodic filings with the SEC, which are available on the SEC’s website at http://www.sec.gov. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this release. Ingersoll Rand undertakes no obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.