ROIC - Retail Opportunity Investments: A High-Single-Digit Return From A Defensive REIT
2024-06-19 09:08:32 ET
Summary
- Retail Opportunity Investments operates grocery-anchored shopping centers with a focus on the West Coast.
- Q1 2024 occupancy was down 1.9% Y/Y to 96.4% but is expected to recover quickly.
- Net debt accounts for 45% of enterprise value but there are no maturities after 2028 despite well-laddered structure.
- The market cap rate of 6.9% post administrative expenses is quite attractive given the defensive profile of the portfolio.
- The company has been growing rents above inflation recently, likely straining tenants whose sales cannot keep pace.
Introduction
Retail Opportunity Investments ( ROIC ) has underperformed the Vanguard Real Estate Index Fund ETF ( VNQ ) so far in 2024, with the company posting a low-double-digit decline against a 5% drop for the benchmark ETF:
ROIC vs VNQ in 2024 (Seeking Alpha)