In the world of triple-net REITs, most of the attention this week is on the planned merger of American Capital Realty Properties (ARCP) and Cole Real Estate Investments (COLE). I recently wrote about ARCP, noting that the stock had seen heavy insider buying over the summer—at prices higher than today’s—and recommended the stock based on its growth prospects within a sector I love and its high dividend yield—6.5% at today’s prices.
ARCP fell on the news on the COLE merger, which is typical for the acquiring firm (as a general rule, the acquirer falls and the acquired rises). But I continue to see value in ARCP.
Today, however, I want to highlight insider buying in one of ARCP and COLE’s competitors, STAG Industrial (STAG).
The scale of the insider buying of STAG is considerably smaller than that of ARCP. But its scope is every bit as wide, as six company officers have made purchases in the past quarter. As you can see from STAG’s insider trading history, the company’s officers have been steadily and consistently accumulating the shares over the past year.
Should you follow their lead?
With bond yields back to 2.5% and with quantitative easing promising to stay in place a little longer, STAG’s 5.8% dividend is attractive, if not spectacular. STAG is also a young, growing REIT with a small market cap of less than $1 billion and a clean balance sheet. STAG is not likely to double in price in the next year or two, but in my view it would be a nice addition to a diversified income portfolio. And given its size and pricing, I expect it to outperform most of its peers in the REIT sector.
Disclosures: Sizemore Capital is long ARCP.
