VEREIT, Inc. (VER - Free Report) recently announced receiving roughly 84% of April rent, 84% of May rent and 82% of June rent as of Jun 16, 2020, including 2% to be paid in arrears by a Government agency tenant.
Particularly, eight of VEREIT's top 10 tenants have paid their June rents, denoting 77% of the top 10 tenant rent. The company expects to collect additional rent through the end of this month.
The coronavirus pandemic has been wreaking havoc and affecting demand for real estate. Also, amid the macroeconomic uncertainties and job-market choppiness as well as adverse impact on business and consumer sentiment, the rent-paying capability of tenants has significantly suffered.
VEREIT also announced receiving rent-relief requests from tenants representing around 33% of rental income on an annualized basis as of Jun 16, 2020. This list also comprises some tenants that have paid their April, May and/or June rents.
Generally, rent-relief requests range from two to four months, and are expected to be paid back within 12 months. Of the 33%, 16% were approved, 6% are in negotiations, and 11% have either been denied or VEREIT has not yet taken action.
However, VEREIT’s rent collection update indicates that the company is benefiting from its portfolio’s geographic, property type and industry diversification, investment-grade tenancy and public versus private ownership.
The company has a combined allocation of more than 80% to single-tenant office & industrial, high collection/necessity based retail and quick-service restaurants. These sectors have been lesser affected than others in the pandemic and so, rent collections are better despite the challenging environment.
Rent collections in recent months have been particularly strong in the office (96% in June) and industrial (94%) portfolio. Also, necessity-based retail focus has helped the company make 86% of June rent collection in the retail sector. However, rent-relief requests poured in more from the restaurant category (69% of rental income on an annualized basis).
Apart from providing rent-collection details, the company also apprised about its balance-sheet position. The company had corporate liquidity of $1.2 billion as of Jun 16, 2020. This included $1.1 billion of availability under its credit facility, and $101.0 million in cash and cash equivalents.
The company also noted that it has investment-grade ratings from all three credit agencies — BBB (Stable Outlook), Baa3 (Positive) and BBB- (Stable) from Fitch, Moody's and S&P, respectively. As such, backed by decent balance-sheet strength and cash flow from operations, the company is well poised to sail through the crisis.
Shares of this Zacks Rank #3 (Hold) company have appreciated 43.4%, quarter to date, as against the 17.4% rally of its industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1.
City Office REIT, Inc.’s (CIO - Free Report) FFO per share estimate for the ongoing year has been unchanged at $1.11 over the past 30 days. The company sports a Zacks Rank of 1 at present.
Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimate for the current year has been unrevised at 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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