November 30, 2010
This article is part of the Rising Stars Portfolios series.
My first real-money portfolio purchase, Retail Opportunity Investments (Nasdaq: ROIC ) , or "ROIC" for short, has been quiet since I picked the stock in early November. Since it'll take a little time for the thesis to play out, retail investors have an open window of opportunity to accumulate shares, before fixed-income institutions unearth the story. Watch the video, then read on below:
ROIC is essentially a niche REIT start-up focused on acquiring distressed and low-priced neighborhood shopping centers. The company is run by real estate veteran Stuart Tanz, who has a track record of making money for his shareholders. Tanz and company are opportunistic buyers and disciplined operators who can get every last nickel out of a deal.
The company stays focused and avoids losing money by targeting specific properties with three favorable characteristics:
- Geography: coastal states with positive population trends and limited space availability.
- Density: densely populated areas where at least 180,000 people live within a one- to three-mile radius.
- Income demographics: neighborhoods with median incomes of at least $62,000 a year.
As ROIC converts its war chest into income-producing properties, expect the dividends to flow. As the dividend and yield increases, the market will begin to grant ROIC valuation multiples more in line with more seasoned REITs such as Regency Centers (NYSE: REG ) and Kimco Realty (NYSE: KIM ) . ROIC is a high-conviction pick for me, and I expect it to be one of my largest positions in my real-money portfolio.
If ROIC has piqued your curiosity, check out my Rising Star profile, and follow me on Twitter @TMFAloha!