Looking forward to the report. Should be a good one. Maybe another increase in the quarterly dividend. Closed on Friday near their 52-week high. KIM raised its dividend by over 11% on Feb. 2, 2022 (finally).
David
Long BRX and KIM (still).
Good robust results (and the CC is tomorrow morning at 10 AM ET/ 7 AM PT):
https://finance.yahoo.com/news/brixmor-property-group-report…
Highlights for the quarter:
Reported an increase in same property NOI of 9.7%
Reported FFO of $0.46 per diluted share
Stabilized $67.9 million of reinvestment projects at an average incremental NOI yield of 9%, with the in process reinvestment pipeline totaling $374.3 million at an expected average incremental NOI yield of 9%
Completed $191.9 million of acquisitions and $116.2 million of dispositions
Highlights for the twelve months ended December 31, 2021:
Executed 6.8 million square feet of new and renewal leases, with rent spreads on comparable space of 11.4%, including 3.1 million square feet of new leases, with rent spreads on comparable space of 27.6%
Reported an increase in same property NOI of 8.9%
Reported FFO of $1.75 per diluted share
Stabilized $168.2 million of reinvestment projects at an average incremental NOI yield of 11%
Completed $259.4 million of acquisitions and $244.3 million of dispositions
Based on the FFO of $1.75 for the year ending 2021, the dividend to FFO ratio is only 55%. Pretty conservative for a REIT suggesting to me that more robust increases are in store. And projected 2022 FFO is a minimum of $1.86 which with the current dividend would be a FFO ratio of 51%.
This puts BRX’s forward P/FFO at 14 vs KIM’s at 18. More share price appreciation in store for BRX?
Thoughts?
David
Long BRX and KIM
The discount gap between KIM and BRX is there for a long time. I don’t know when it is going to narrow. So the mid-point on guidance is $1.9. I think currently the shares are fairly valued.
Now, I see BRX as more of a total return story. Look for $1 to $2 price appreciation and $1 dividend, together can give you anywhere between 8% to 12% return. Not great, but when you look around and see $200 B market cap moves, you need some anchors in the portfolio.
Also, like you mentioned the low payout ratio, allows them to fund growth with internally generated cash flow and increase dividend at a steady clip for many more years. This is key, this allows them to fund the equity part with the internally generated cash flow (unlike selling shares). Note, from 2015 they have not issued new shares. They generated all the capital from the recycling and internally generated cash flow’s. The significance of this is at some point the FFO multiple for BRX will catch up or CAP rate on BRX will come down. If CAP rate comes down by 1x that is like $5 increase on the share price, all else being equal.
Good points, Kingran!
I think BRX will a good dividend-grower for the foreseeable future.
David
Sold Aug $30 calls for $.75 to $.8. If the stock price is above $30, probably I am ready to sell, if not, along with $.96 dividends, add $.75, you get 6.7%+ return.
Hey K!
I never did trade in options. But it sounds like you know what you’re doing. Murph traded in
options, too. I just never bothered to learn the process.
I may never sell my BRX shares. I buy, hold and watch. Sell? Sometimes but not very often. I still hold my AAPL shares that I bought in 2013 in my taxable account.
David
All my August calls I have sold expired and I fully collected the premium. Generally you don’t have much liquidity or good price for REIT options. So I was glad to have spotted and took advantage of it.
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Here is the price comparison between Kim and BRX. You can do it for 10,5,3, whatever period you like… At the beginning of this year, BRX started separating from KIM. Now KIM is trading 10x FFO and BRX is at 10x FFO. At last the discount gap is erased. While is KIM is acquiring and bulking up, BRX is sticking to what it is doing.
The total return of cap-ex, dividends are far higher than KIM. I would have lost money if I held on to KIM, luckily I didn’t.
This closes my long-running thesis that BRX will eventually be more valuable than KIM and the gap will be closed.
BRX has been a really good investment and I continue to hold with a rather large paper capital gain and a dividend yield on my original cost of 8.3%. And I agree with you, Kingran, that BRX has been a better investment than KIM. That said, I still have a rather large paper capital gain on KIM and a generous dividend yield on my cost of 7.8%. I will continue to hold both for the time being.
Frankly, I like the CEOs of both BRX and KIM.
David
While BRX share price stayed flat, business performance improved, that means the cap-rate has widened. If the stock declines to $20 or below, it is a great buy, as any Fed rate cut will result in cap-rate re-rating and pushing the price to $25~$26 range.
PS: I don’t own any share in BRX, I have sold it all sometime back. I suspect if REIT’s share price decline that may coincide along with overall market decline and there may be other opportunities that will be more compelling.