Presently, Monmouth REIT (NYSE: MNR) is trading at $10.75 I'd really like to reinvest in it at $10/share though and they require a minimum contribution amount of $500 (yikes!!). I guess I'll be socking away some money to cover this (courtesy of Barclays). :P Fortunately for me, they charge no fees for processing contributions and, best of all, I get a 5% discount off the market price when purchasing through my DRIP plan. That is like receiving a 5% gain right there!
Now of course I didn't just buy the share without digging into the fundamentals. First I had to figure out what in tarnation an REIT is. I've never heard of REIT's before. So I set about reading up on REIT's. Their primary drawbacks for me lie in the fact that I will end up paying much more in tax than I would otherwise for the distributions (which I learned aren't technically dividends anyway). I suppose increased tax is the price of awesomeness in this case.
Apparently, REITs are a special organization that pools the money of thousands, even millions of investors in order to purchase real estate and then lease this real estate to people. They are then mandated to distribute 90% of any profits back to investors. There are a broad variety of REITs ranging from specializing in mortgages (I don't understand these so am avoiding them) to straight out owning the real estate and leasing to tenants (this makes sense to me) which range from hotels, to commercial and industrial businesses, to residential set ups. MNR specializes in commercial real estate leasing and their biggest customer is FedEx, which has locked in and renewed several leases as well as a new facility.
What particularly impressed me about Monmouth REIT was their balance sheet. I did a bit of digging and pulled up their financials reported to the SEC from 2009, just to see what things looked like for them at the height of the real estate melt down. The results shocked me. In 2009, they had total assets of $394 million and total liabilities of $229 million. Fast forward to 2014, 5 years later, and they have doubled their total assets to $743 million, while only increasing total debt to $323 million. In other words, the management not only weathered our nation's financial woes in the great recession, but came out swinging to grow the company's assets by 17.6% while only increasing debt 8.2% annually. This actually lowered the debt/asset ratio from an already fair 0.58 to 0.42. With numbers like these and a price tag hovering at $11, which makes it affordable for even my tight budget, I had to pull the trigger. :)
Now, as a bonafide, shareholder, I am excited to begin my foray into the world of investing. We'll see what the future brings and I am sure I'll have a lot of ups and downs and critical lessons to learn. But for better or worse, I am now a stock market investor!!