Multifamily REIT Monogram Residential is in High Gear

Younger renters are less likely to believe that renting is cheaper than owning. Renters with lower income levels have shown a desire to own.

Sourced through from:

Monogram Residential Trust (NYSE:MORE) is a newer multifamily REIT that had its initial public offering (IPO) in November of last year. Although the company has only been traded publicly for a short time, the market has demonstrated great faith in the stock. Its price to FFO currently sits at 18x. Monogram is well positioned in Class A properties within coastal and high grown markets that are geared towards young people. Some of their locations exhibit the highest growth rates for employment in the country.

Monogram is also largely benefiting from millennials that are renting instead of buying. Homeownership has recently declined to near twenty-year lows. Some surveys have shown that people in their 20s and 30s still would like to own a home, but have been deterred by several factors. ColoradoWealthManagementFund has explored this topic recently. Please click on the link above for more information.

What makes Monogram different? The company boasts the youngest property age in the market, averaging five years, and total capital expenditure per unit is one of the lowest. In addition, their core FFO, and AFFO have spiked up, by 63 percent, to $0.13 per share in the Second Quarter of 2015 versus the same period in 2014. Monogram has recently announced their quarterly dividend at $0.075 per share, resulting in a secure 58 percent dividend payout.

Monogram does not own one hundred percent of its 55 multifamily communities. Instead, they typically maintain a 50 to 70 percent ownership interest. The same model applies to the company’s aggressive $1.1 billion development calendar, with a company’s total market capitalization of over $3.0 billion. This May, the company acquired joint venture interests in six multifamily communities, and one mezzanine loan for a total of $225 million. As to dispositions, they have completely exited Chicago.

Twenty-five percent of Monogram’s same property NOI is in San Francisco and Los Angeles. This is the company’s largest portion amongst all markets. Washington DC at 16 percent and Texas at 15 percent have also large representation.

Monogram is an extremely tempting high growth stock due to solid fundamentals, great locations, aggressive growth with external partners, and low capex per unit. The only negatives are the short company’s public history, and unproven management in public markets. This REIT stock is worth considering.

Click here to see performance of Monogram and other multifamily REITs

Curated by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.

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