STORE Capital Corporation (NYSE: STOR) is a net-lease REIT specializing in single-tenant retail (restaurants, fitness spas and early childhood educational institutions) that operates across 46 states. STORE is an abbreviation for Single Tenant Operational Real Estate. After selling two REITs, the management team, whose track record is 35 years, established in 2011 STORE Capital, which went public last November. STORE Holding, owned by several investment funds managed by Oaktree Capital Management, represents about 71 percent of the company’s ownership.
With around 1,100 properties, STORE Capital has specialized in unrated middle-market to large companies. According to management, this market has been highly fragmented and companies underserved. Because of tightened regulations, companies have sought alternatives to debt and equity capital, and STORE has been catering to such needs.
Their modus operandi has been unlike that of other net-lease REITs. Management believes some of their primary competencies have been associated with their extensive credit analysis and pressing for stronger contracts. They believe that over 75 percent of their contracts are equivalent to investment grade.
Customer base is diversified; the largest tenant comprises 3.2 percent of Annualized Base Rent. STORE’s weighted-average remaining lease contract term is one of the longest—fifteen years.
Recent IPO ensures there’s been too little historic valuation metric to analyze. Their 4.8-percent dividend yield has been near the retail-sector median. Price-to-FFO has been about 16.
Certainly, before investing in STORE, one must weigh the pros and cons. Pros include the management track record, investment approach and dividend yield. Cons include little public history as Store Capital, a riskier tenant base and lower portion of publicly traded shares. The second in particular is something to consider; the other two may change over time.
Source: STORE Capital, Fast Graphs
Written by Heli Brecailo
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