Same business as O: Stand alone property, retail REIT.

Similar conservative financial approach: Low debt/total capital (42%), conservative FFO payout ratio (75%), estimated P/FFO (11.5 for 2008).

Both O and NNN yield about 6.8% at current prices and latest dividend rates.

S&P assigns NNN a B+ quality rating and 4 stars (buy).  Unfortunately, M* does not have an analysts report for NNN. 

Past 5 year total returns for O and NNN are similar. 

NNN's  website has informative fact sheets: 

http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=103064

NNN's 2007 annual report is investor friendly:

http://216.139.227.101/interactive/nnn2007/

I became interested in finding a similar REIT to O because my position in O has grown to greater than 4% and 4% is my (arbitrary) limit for any single stock holding.   

Has anyone else researched NNN?  I'd be interested in opinions.

Regards,
Russ

Russ,

The May 5 issue of Forbes has a little information on this REIT. Dividend increased each year for the past 18 years. Well diversified geographically and across industries (that is, the industries of its tenants).

It's described as a "sale-leaseback" operation. Businesses that no longer want to own their property, for whatever reason, sell to NNN and then lease the property back. So many/most of their properties are single-tenant. Relative to the overall REIT industry, it seems like a lower-risk strategy.

Regards,

Duane

Does NNN pay monthly like "O"?

Dick

Russ, the graph and comments on page 4 of their annual report are about as clear a signal as a company makes regarding the growth of future dividends.  They basically say that they've brought down their payout ratio to a level they like - 75% - and that future dividend increases should mirror increases in their FFO.  Sounds good to me based upon their recent track record, their business and their customers.  I guess I would expect that their dividend growth rate will become greater in the near term.  Looks like a quality outfit.

As an aside, I like their ticker - NNN for 'triple net' - almost as much as I like HOG for the bike company and BUD for the beer company.

Regards.

Cliff 

Thanks all for the comments.  Pretty much concurs with my thoughts.

Cliff, our minds seem to run along parallel lines, as does a major part of our portfolio strategy.  I am referring, of course, to our mutual interest in pipeline MLPs.  I was particularly impressed with NNN's annual report. 

I established a small position (~1%) in NNN this morning and will likely add to it from time to time. 

I must admit the origin of the "NNN" passed over my head.  It is clever.  It got my mind thinking of companies and potential tickers.  How does a fertilizer company with the ticker CRAP sound?  :-)

Regards,
Russ

"How does a fertilizer company with the ticker CRAP sound?  :-) "

[/quote]

Russ, I'm afraid the French beat ya to it.  CRAP is the ticker for a French bank traded in Paris - CRCAM Alpes Provence.  I understand they do some lending to farmers though, so maybe . . . . "

Funny stuff.  A French bank.  CRAP.   :)

Added:  I'm going to check the portfolios of my global funds to see if I own a piece of CRAP.

I'm on a total return kick this morning

stock                                1 yr                               10 yr

O                                    $ 9,339                          $37,051

NNN                                   9,939                           31,209

Roberta 

Total returns:

TIME    O    NNN
1 mo   -2.6    3.7
3  mo   7.3    4.7
1  yr   -7.9    0.3
3  vrs   6.8   12.8
5 yrs   12.2  14.3
10 yrs 14.2  12.5

data per M* through 4/30/08

Regards,
Russ
 

O's been doing very well for me.  NNN looks promising but I may go for more MLPS or Amroys.

Don't have any CRAP, but I've sure enjoyed my POT for the last year.

Zwilnik

Russ,

I wasn't negative about NNN.  I think it's a good option and was planning to also look at it seriously.  I think you made a superb find for us.

Roberta 

Hi Roberta.  IMO, finding negative aspects of an investment is even more important than finding positive ones.  It's better to make investment decisions with "open eyes" and avoid negative surprises.  I agree with you that looking at longer term total "returns" is highly informative.  Also, looking  for trends in "total returns" is also useful, which is why I posted the "total return" data for different time frames.  Starting with 10 year returns and moving to the present, I noticed a positive trend for NNN relative to O.

Between Realty Income, O, and National Retail Properties, NNN,  I lean toward O because of their long track record of success, conservative management, and shareholder friendliness.   However, since O has moved past 4% weight in my portfolio, I started looking for alternatives and found NNN.   NNN appears to be very similar to O in it's most important financial aspects. 

I always appreciate your comments and pay careful attention to them. 

Regards,
Russ