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IS COVID-19 A BLACK SWAN EVENT? Like a lot of you, it’s been 11 weeks since my shelter-in-home confinement started due to the coronavirus. Of course, a lot of my time has been occupied with researching and analyzing REITs. I have also been working on the second edition of The Intelligent REIT Investor . There have been a lot of changes since I co-wrote the first book in 2016. The new copy will include a significant chapter that will share the name of the book EDITOR, BRAD THOMAS I’m reading now, The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb. His book analyzes “black swans”—extremely IN THIS ISSUE: unpredictable events that have massive impacts on human society. An example COMMENTARY .1 of a past black swan event is 9/11. PLAYING OFFENSE & DEFENSE . 3 Are we facing a black swan event now? Taleb, who wrote in his 2007 book COVID-19 IMPACT ON OFFICE REITS .9 10 HIGH-YIELDING REIT BUYS .12 that he sees the risk of an acute virus spreading throughout the planet, does not DIY PORTFOLIO GUIDE .13 consider the Covid-19 pandemic a black swan event because what is taking place HOTEL FOCUS: APPLE HOSPITALITY .16 NET LEASE REITS FOR THE LONG RUN .19 now was not a completely unforeseen occurrence. According to Taleb, a “white 3 PREFERRED PICKS .21 swan” event like the coronavirus was preventable. SMALL POWERFUL REIT .23 He told Bloomberg, “We issued our warning that, effectively, you should kill HOUSING RECOVERY ETFS .26 DURABLE INCOME PORTFOLIO .30 it in the egg” but that governments didn’t “want to spend pennies in January. SMALL-CAP PORTFOLIO .32 Now they are going to spend trillions.” CASH IS KING PORTFOLIO .34 DIY PORTFOLIO .36 Personally, I’m anxious to finish reading his book. The way I see it, Taleb’s PORTFOLIO COMPARISON .37 background as an options trader and his work in probability theory should INDEXES .38 FREI REIT SECTORS .39 inspire me to become a more thoughtful investor. Obviously, reading his book BUY LISTS .41 doesn’t mean I’ll be able to see what will happen in the future. And neither can PREFERRED STOCK & BOND TRACKER . 43 Taleb. That’s the whole thesis to his work: black swans, unlike white swans, are GLOSSARY .46 FREI TERMS .48 always unpredictable. They’re the “unknown unknowns” for which even our most comprehensive models can’t account.

WWW.FORBESNEWSLETTERS.COM But we can try to prepare for the unknown as best as The most important we can. One way to do this is by simply committing to smart, quality investment strategies. So, in this issue I focus lesson here is to be on risk mitigation, recognizing that risk avoidance is the most essential part of the investing process. As the legendary prepared for adversity by investor Howard Marks framed it, “Outstanding investors, in my opinion, are distinguished at least as much for their investing in high-quality ability to control risk as they are for generating return.” Given the current state where many are working stocks and practice from home, avoiding social interaction and becoming financially stressed, it seems safe to say that risk is certainly sound diversification elevated. But as Marks also says, “Risk is inescapable.” As investors, our job is to seek out the best alternatives in order to “intelligently bear risk for profit.” Personally, I’m not going to quibble over whether REITs, in which we point out the risks and returns Covid-19 was predictable or not. The most important associated with this sector. Dividend yields on many lesson here is to be prepared for adversity by investing stocks have risen; we look at 10 from our Buy List (see in high-quality stocks—or what I call SWANs—and page 12) and we take a close look at the once-monthly practice sound diversification. dividend payer Apple Hospitality REIT (APLE) Portfolio returns have definitely been beaten down I should also mention that, on page 19, we provide a since early March. There’s no avoiding that fact. But we’ve net lease REIT update. Incidentally, we’ve recently taken advantage of market pullbacks by purchasing new deployed capital into names like Realty Income (O) and shares in some of the highest-quality stocks. Four Corners Property Trust (FCPT). We’re also Once again, quality is the key here; it’s the reason our introducing a new REIT to our coverage spectrum. It’s a risk-mitigation strategies have been so successful. To nano-cap by the name of Power REIT (PW). quote Marks one more time, “A skilled and sophisticated Finally, we close out the June edition with a investor can look at a portfolio in good times and decide commercial mortgage and ETF update, as well as three whether it’s low risk or high risk.” preferred stock picks. With that in mind, this month’s newsletter features All that should keep you busy thinking and acting smart an article on winning with offense and defense (see page during these unusual times. And, in honor of the summers 3), which is a risk-management piece focused on stress “official” opening, I want to wish all of you a prosperous testing. On page 9 you’ll find Covid-19 Impact On Office summer. Stay safe out there, and happy SWAN investing.

2| FORBES REAL ESTATE INVESTOR | JUNE 2020 OFFENSE WINS BALL GAMES, DEFENSE WINS CHAMPIONSHIPS The Covid-19 pandemic, also dubbed the “Great we’re expected to see the strongest economic growth in Lockdown” and the “Coronavirus Recession,” is history, at more than 20%. unprecedented. Never in history have countries However, in this article, I want to point out how representing more than 60% of the global population this unique white swan event has largely upended one essentially shut down, virtually overnight. of the most basic assumptions REIT investors have, The Congressional Budget Office estimates that especially about such treasured safe income names as second-quarter economic growth will be -40%. The Realty Income (O), Federal Realty Trust (FRT) and New York Fed and the St. Louis Fed estimates are more triple net lease REITs in general. dire, at -47% and -50%, respectively. But next quarter

3| FORBES REAL ESTATE INVESTOR | JUNE 2020 GREAT LOCK DOWN: WHEN DEFENSIVE NAMES Realty Income and Federal Realty, tend to have less BECAME SPECULATIVE AND SOME ECONOMICALLY recession sensitivity because most of their tenants are SENSITIVE NAMES BECAME DEFENSIVE either recession-resistant or much of their rent comes More than 180 companies have announced dividend from grocery-anchored shopping centers (and 11% cuts or suspensions so far, and plenty of economically from apartments). sensitive REITs are among them. In contrast, industrial REITs tend to have It’s no surprise that hotel REIT dividends haven’t economically sensitive cash flow (another REIT industry survived the recession. Even in typical recessions hotel with 75% or less AFFO payout ratio safety guidelines). REITs lack the long-term leases and stable cash flow of However, the lockdowns have turned these normal other equity REIT industries. That’s why I consider a defensive/cyclical relationships on their head. In April, safe AFFO (adjusted funds from operations) payout industrial REITs, many of which are leased to the likes ratio for hotel REITs 75% or less, rather than the 90% of FedEx or Amazon as online fulfillment centers, that’s safe for most REITs. You need a safety buffer collected virtually all their rent. People cooped up at when recession strikes and hotel occupancy falls. home are ordering record amounts of online goods and Similarly, low-quality mall and shopping center industrial REITs are thriving like never before. REITs with high leverage, like Whitestone Realty In contrast, the April Nareit rent survey found that (WSR), Macerich (MAC) and Washington Prime half of triple net lease rents (industry-wide) were not Group (WPG), have cut or suspended dividends, which collected. Over half of shopping center REIT rents were is something we warned income investors was likely to similarly deferred or under negotiations. This sent happen, even before the lockdowns. so-called “bond alternatives” like Realty Income But here’s what’s surprising: In a typical recession crashing from their overvalued bubble levels (a 39% triple net lease REITs and shopping centers, such as decline from October 2019 highs to March lows).

4| FORBES REAL ESTATE INVESTOR | JUNE 2020 We have always warned income investors that no I then stacked that cash flow hit on top of the dividend stock, not even highly defensive triple net already 5% or so reduced AFFO estimates analysts have lease REITs, with cash flows backed up by 15-year provided for most retail/triple net lease REITs in recent leases (when new) from thousands of properties, are months. I then looked at this conservative stress tested bond alternatives. This recession is teaching that AFFO payout ratio for all higher risk (pandemic timeless lesson to plenty of investors the hard way. exposure) REITs as well as applied the cash flow decline But there is an even more important risk to leverage and interest coverage ratios. management lesson we can learn from a recession Realty Income and Federal Realty had stress test AFFO unlike any before. payout ratios of 94% and 104%, respectively, thus earning temporary safety downgrades to 4/5 above-average safety. However, ultimately my stress test conclusions were SWAN STOCKS: HOW YOU AVOID LOSSES WHEN in-line with Brad’s triple net lease safety review, which THINGS GO WRONG (AND THINGS WILL ALWAYS showed Realty Income and National Retail Properties EVENTUALLY GO WRONG) (NNN) as the safest dividends in the industry, and I recently stressed tested all retail REITS, medical REITs unlikely to be cut. and office REITs on the Dividend Kings Master List, That’s not just due to reasonable payout ratios applying a three-month assumed lockdown scenario to (even under conservative stress test conditions) but the April rent survey data from Nareit. Three months is strong balance sheets and high liquidity that allows double the duration of any lockdown anywhere in the them to temporarily borrow to pay dividends even in a world so far, and thus provides a conservative estimate worst-case scenario. of how much cash flows might decline in 2020.

5| FORBES REAL ESTATE INVESTOR | JUNE 2020 Source: iREIT

NNN has a 30-year dividend growth streak to investment-grade customers, which make up 50% of defend (dividend champion), and Realty has a 25-year cash flow, paid their rent on time and in full. Realty’s streak that makes it a dividend aristocrat. FRT has a 52 CEO Sumit Roy said, “we have constructed our real year-streak that makes it the only dividend king REIT estate portfolio, the majority of which is leased to in the world (and one of six with an A-credit rating leading national or multi-national operators, with a from two or more rating agencies). focus on economic resiliency.” Realty Income just reported earnings and while During recessions, resiliency isn’t the main thing some feared that half of the rent might be missing that matters, it’s the only thing that matters. During in April or May, the table on the next page shows normal economic times (the U.S. economy has grown what management reported. 85% of the time since 1980) growing cash flows are The defensive core of Realty’s portfolio, meaning what drives dividends and share prices higher. convenience stores, drug stores, dollar stores and During recessions? Safe payout ratios and strong grocery, paid all their rents because these essential balance sheets are what allow dividends to not just be businesses never closed. In total it collected 83% of maintained but keep growing at a modest pace from May rent on May 1. top quality blue chips like Realty Income, National Not surprisingly, gyms, movie theaters, daycare Retail and Federal Realty. services and restaurants didn’t pay some or even all Speaking of Realty’s fortress balance sheet, here’s their rents, because of the lockdowns. what management reported on May 4. “We continued However, note how diversified Realty’s business is: the positive momentum into a strong first quarter of Across 20 major industries, just six saw any significant 2020, investing $486 million in property acquisitions amount of lease breaches and virtually all Realty’s and ending the quarter well-positioned with a modest

6 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Source: Realty Income investor presentation

7 | FORBES REAL ESTATE INVESTOR | JUNE 2020 net debt to EbitdarRE ratio of 5.0x and a fixed charge Remember that stress test I applied? It showed coverage ratio of 5.5x, which represents an all-time Realty might face a 94% AFFO payout ratio in 2020 if high. As of May 1, we had approximately $1.2 billion of half its rent vanished for 25% of the year. Well, the cash on hand and $1.1 billion available on our $3.0 payout ratio in the first quarter was 78%, actually lower billion revolving credit facility, excluding the $1.0 than 2019’s 82%. billion accordion feature, which we believe provides us What’s more, even if we faced a never-ending significant financial flexibility through the duration of lockdown across America (15 states have started phase the year.” 1 restarts as of May 1) for the next year, Realty would In recessions, cash is king, especially for dividend- likely still collect 83% of its rent from its tenants. That paying companies. would be slightly worse than my stress test resulting in Realty’s total liquidity now stands at $3.3 billion, about 95% AFFO payout ratio over the next 12 including its credit facility accordion, which it can tap months. But that’s still under 100%, meaning that in case things get financially tight during the recession. Realty could not just sustain the dividend but keep on buying properties at what’s likely higher cash yields u$3.3 billion in liquidity than it was able to before the recession began. u$885 million annual dividend cost Realty income is a perfect example of the old axiom uRealty could fund the dividend for 5 quarters “offense wins ball games, defensive wins championships.” with cash on hand The fortress-like balance sheet Realty processes, uRealty could fund the dividend for 3.7 years with combined with the A- credit rating it earned over more its current liquidity than a quarter-century of conservative asset allocation by management, is what will almost certainly allow Now obviously management isn’t going to use up all its Realty Income to not just keep paying the same liquidity just to keep its status as a dividend generous monthly yield income investors rely on but aristocrat and “the monthly dividend company” intact. But keep growing it every year, barring a literal apocalypse. the lockdowns aren’t likely to last for years either. By Adam Galas

Forbes Real Estate Investor is published monthly by Forbes NOTE: Forbes Real Estate Investor is intended to provide Media LLC., 499 Washington Blvd., Jersey City, NJ 07310 information to interested parties. As we have no knowledge of individual circumstances, goals and/or portfolio Editor: Brad Thomas Contributor : Michael Terry concentration or diversification, readers are expected to Junior Research Analyst: Noah Blacker complete their own due diligence before purchasing any stocks mentioned or recommended. It does not guarantee Forbes Media LLC. that securities mentioned in this newsletter will produce Vice President/Editor, Newsletters: Matthew Schifrin profits or that they will equal past performance. Although all Editorial Director: Tina Russo content is derived from data believed to be reliable, accuracy cannot be guaranteed. Brad Thomas and members of the To subscribe call 1-866-891-2748 or visit Forbes.com Investment Newsletters staff of Forbes Real Estate Investor june hold positions in (www.forbes.com/newsletters) on the Web. Copyright 2020 by Forbes Media LLC. some or all of the stocks listed. Brad Thomas receives advertising income on his Web site from REITs including Vereit,

8 | FORBES REAL ESTATE INVESTOR | JUNE 2020 COVID-19 IMPACT ON OFFICE REITS A colleague of mine, Alex Pettee, recently wrote an To a large degree, we’ll just have to wait and see. You article on office REITs that I couldn’t agree with more. can, however, make educated guesses and I’m afraid I Office REITs: Work-From-Home Is Here To Stay don’t think the news will be good for the office real addresses one of the many casualties of social distancing. estate investment trust subsector. There are plenty to choose from, of course, starting with the people who make their living from social AN INTRODUCTION AND ANALYSIS OF OFFICE REITS interaction, from servers and hosts at restaurants and In case you’re not familiar with the ins and outs of retail-related cashiers to hairdressers, childcare office REITs, here’s what Pettee wrote about it on May providers, fitness instructors and hotel workers. 20: “There are 24 office REITs that account for roughly Depending on what state or country we’re looking $75 billion in market value. The office sector is at, it’s also affecting those employed by car dealerships, generally segmented into two distinct categories. turnpikes and other toll-collecting roads, the mining ‘Gateway REITs’ hold portfolios that are concentrated sector, drycleaners or laundromats, construction, in the six largest U.S. cities: New York City, Chicago, concerts and other big-venue gatherings and Boston, Los Angeles, San Francisco and Washington amusement parks—that’s a short list of businesses that D.C. While ‘non-gateway REITs’ naturally hold haven’t been allowed to operate as usual and whose portfolios concentrated in cities outside of these employees haven’t been able to work. ultra-dense cities, generally in Sunbelt regions and/or Of course, some businesses will recover. But some in secondary U.S. office markets.” won’t. Some may never open their doors again after all Pettee also said, “Move aside WeWork. Zoom and this is said and done. Others will try, only to have to ‘work-from-home’ technology suites have emerged as admit defeat after a matter of days, weeks or months. the bigger competitive threat to the office REIT

OFFICE REITS HIT BY SHELTERING IN PLACE

RE IT Ticker Price P/FFO Normal P /FFO Variance Dividen d Yield

American A ssets AAT $25.93 12.0 21.2 -43% 3.1% Boston P roperes BXP $79.91 11.3 21.2 -47% 4.9% Br andywine BD N$9.506.711.2-40%8.0% City O ffice REIT CIO $9.18 8.1 12.3 -34% 6.5% Columbia P roperty T rust CXP $12.43 8.4 12.8 -34% 6.8% Corporate O ffice P roperes OFC $23.44 11.5 13.1 -12% 4.7% Cousins P roperes CUZ $27.05 10.3 14.8 -30% 4.4% Douglas E mme DEI $28.24 13.4 18.8 -29% 4.0% Easterly G overnment DEA $24.29 20.1 16.7 20% 4.3% Empire S tate R ealty ESRT $7.14 8.9 19.6 -54% 5.9% Highwoods P roperes HIW $34.52 10.1 14.1 -28% 5.6% Hudson P acific HPP $21.56 10.5 19.7 -46% 4.6% Kilroy R ealty KRC $55.97 14.3 20.5 -30% 3.5% Mack-Cali R ealty CLI $14.58 9.9 11.4 -14% 5.5% Office P roperes I ncome OPI$23.604.18.5-51%9.3% Paramount G roup PGRE $7.82 8.0 17.3 -54% 5.1% Piedmont O ffice R ealty PDM $14.68 8.0 11.9 -33% 5.7% SL G reen R ealty SLG $37.42 5.4 15.3 -65% 9.5% Vornado R ealty VNO $35.75 8.2 22.1 -63% 7.4% Wash ington R EIT WRE $20.58 12.6 16.1 -22% 5.8%

9| FORBES REAL ESTATE INVESTOR | JUNE 2020 subsector as more than half of companies expect to shrink their physical footprint. He continued, “Recent Remote workers report survey data has indicated that the ‘crash-course’ in higher levels of job remote work may result in lasting changes in office utilization, including data from CoreNet Global, which satisfaction than those found that 69% of respondents expect their company to shrink their office footprint, while 94% expect the still going into the increased use of remote work to last beyond the pandemic. The Gartner survey found that 74% of office… but there’s the companies expect to permanently shift at least 5% of their workforce to permanent remote work possibility that this is a arrangements after the pandemic, with nearly half of respondents saying at least 10% of their workforce will temporary state of mind— be permanently shifting exclusively to work- people may get tired of from-home environments.” And why shouldn’t they if that means significantly staying at home all day cutting down on certain major expenses. If their employees are working from home, they don’t have to pay rent, utilities, certain types of insurance coverage, secretarial fees, phone fees, cleaning fees, etc. walking to the corporate cafeteria or waiting in lines Depending on the size of the company in question, that at a local eatery. Why wouldn’t companies take could save tens of thousands to tens of millions of advantage of the perks? dollars per year. Recently CNBC reported, “In the latest CNBC/SurveyMonkey Workforce Survey, about half of WHY BOTHER WITH OFFICE SPACE? all people in the workforce (48%) indicate they’ve been Perhaps the truth is that many office-bound employers able to do their jobs remotely in recent weeks. In the have been ready to move to work-from-home models survey, remote workers report higher levels of job for a while. The technology has been there for years. satisfaction than those still going into the office. Many There’s remote access to company servers, interactive workers say they want to keep working from their online meeting capabilities and cloud-based sharing. improvised kitchen table offices with their spouses, Plus, task-specific programs, such as those offered children and dogs as their new coworkers.” So, could through Adobe, have long-since shifted away from this be the new normal? hardware applications to downloads and subscriptions. As such, graphic designers, website creators and other OFFICE REITS AREN’T IN A GREAT PLACE such professionals don’t have to worry about being at Note that the survey “polled a national sample of 9,059 traditional workstations. They can simply log in to workers in the United States.” Considering what a small these programs from wherever they are. Even if that’s fragment of the population that is, we’re not entirely at home. willing to cite it as an end-all, be-all analysis. From a purely practical standpoint, it’s fair to ask There’s also the possibility that this is a temporary state the question, “Why bother?” when it comes to working of mind—people may get tired of staying at home all day. out of an office anymore. More than likely, those working in big cities with Plus, working from home can offer fewer big traffic issues will trend toward the beauty of a distractions of certain varieties. For instance, not being commuteless existence. Whereas smaller towns and in the office eliminates the possibility of unnecessary suburban areas might end up thinking otherwise, watercooler conversations that last much longer than which would therefore be the difference between five minutes. There’s no need for long lunchbreaks gateway and non-gateway REITs.

10 | FORBES REAL ESTATE INVESTOR | JUNE 2020 There’s also the question of conducting meetings. For years many people have been predicting the While it’s easy to argue that companies hold far too gradual rise of working from home, but the shutdowns many time-wasting meetings every week, that kind of have sped up the process in ways we’ll probably be gathering can prove to be exceptionally helpful— reeling from for quite a while (I say “probably” because especially when it’s traditionally done. no one knows for sure). Back in 2015—before any of us had a clue we’d be But all the data currently available indicates forced to work from home (if we’re fortunate to be that office buildings aren’t going to be nearly working at all)—Norm Aamodt, president of Event as popular or occupied moving forward. Which Strategy Group, wrote about the benefits of in-person means that office REITs won’t be making nearly meetings on Entrepreneur.com. He listed five benefits, as much money. including reduced distractions and the opportunity to That’s why I’m not holding onto any of them speak more freely in one-on-one situations. right now. I’m still evaluating them, to be sure. I But, to be perfectly honest, that might have to be haven’t given up on these landlords completely. But I a lesson each company figures out for itself over want to protect my portfolio and markets are too time. For the short term at least, I do think that uncertain to play with even potential fire. As such, working from home will be the new norm. And that’s I’m standing on the sidelines when it comes to these bad for office REITs. investments until more clarity can be seen.

WILL OFFICE REITS SURVIVE?

REIT Ticker S&P R ang YTD T ot R et urn B/S/H April R ent C ollecon May R ent C ollecon

American A ssets AAT BBB- -43% HOLD 94% -- Boston P roperes BXP A- -41% HOLD 95% 90% Br andywine BD N BBB- -38% HOLD 96% 95% City O ffice R EIT CIO - -30% HOLD 98% -- Columbia P roperty T rust CXP BBB -39% HOLD 97% 95% Corporate O ffice P roperes OFC BBB- -19% HOLD 97% 97% Cousins P roperes CUZ - -33% HOLD 95% 95% Douglas E mme DEI - -35% HOLD 90% 87% Easterly G overnment DEA - 4% BUY ( WATCH) 99% 99% Empire S tate R ealty ESRT - -48% HOLD 73% 69% Highwoods P roperes HIW BBB -28% HOLD 96% 96% Hudson P acific HPP BBB- -42% HOLD 95% 93% Kilroy R ealty KRC BBB -32% HOLD 96% 96% Mack-Cali R ealty CLI B+ -36% HOLD 94% 95% Office P roperes I ncome OPI BBB- -24% STRONG S ELL 96% -- Paramount G roup PGRE - -43% HOLD 95% 94% Piedmont O ffice R ealty PDM BBB -33% HOLD 96% 96% SL G reen R ealty SLG BBB- -58% HOLD 90% 86% Vornado R ealty VNO BBB -45% HOLD 90% 83% Wash ington R EIT WRE BBB -28% HO:D 91% 93%

11 | FORBES REAL ESTATE INVESTOR | JUNE 2020 10 HIGH-YIELDING REIT BUYS Equity REITs are down about 20% year-to-date measured Ventas (VTR) has a payout ratio of 100% with a using the Vanguard Real Estate ETF (VNQ). However, forward 2020 earnings estimate of -18%. As you investors should recognize that VNQ has 183 stocks ($54.6 review our ten picks, you will see that many of these billion in assets under management) with broad property high-yielding REITs have elevated payout ratios, sector weightings: Residential (14.4%), industrial (10.7%), which means the dividend is at a higher risk of a office (8.9%), retail (8.5%), health care (8.0%), diversified cut or suspension. (3.4%), hotel & resort (2.7%) and other (43.4%). Several of the bellwether names, including Omega Lower returns make higher yields more appealing Healthcare Investors (OHI) and Simon Property and given the Covid-19-inspired selloff, many REITs Group (SPG), are also generating above-average yields. have become juicier, in terms of their dividend yield. While we own all these REITs currently, it’s worth We put together a list of some of the highest-paying mentioning again that some of these REITs are at an REITs from our Buy list (including spec buys). But keep elevated risk of seeing their dividend be cut. in mind that traditionally a double-digit yield can For the large part, we believe that much of the signal that the REIT’s dividend could be at risk. investor fear has already been priced in, but we Before providing you with this list, here some consider the best risk mitigation tool summed up on in interesting facts about our ten picks: one word: diversification. uAverage dividend yield: 13.3% Simply put, don’t put all your eggs in one Average P/FFO discount: -32.2% basket—and that includes REITs. On page 13 we put u uAverage year-to-date total return: -39.0 together a DIY (do it yourself) guide to building your uAverage analyst 2020 P/FFO growth estimate: -16.0 own REIT portfolio for turbulent times. While uAverage analyst 2021 P/FFO growth estimate: 12.5% several of these REITs will be included in the DIY uAverage payout ratio: 99% basket, we encourage you to practice sound diversification practices in order to ensure that you I highlighted these important metrics: -16% growth are protecting your hard-earned principal at all costs. forecasted in 2020 and average payout ratio of 99%. As Frank Williams wrote, “the quick profits are Note that one of these REITs, Ladder Capital (LADR), just froth. They arouse a fever in the blood and don’t has a growth forecast of -52% in 2020 with a payout last. The worst thing that can happen to a new ratio of 170%. I think these are indications that we’ll see spectator is to make a lot of quick money on his a dividend cut for Ladder in the not so distant future. first trade.”

HIGH-YIELEDING REITS

D ividend CurrentNormalP/FFO S&P 2020 2021 Payout YTD REIT TickerPrice YieldP/FFOP/FFOVarianceRangP/FFO % P/FFO % Rao Tot R eturn Ladder C apital LADR$7.7717.56.19.3-34%na-52%26%170%-55% GEO G roup GEO $11.20 17.1 5.1 10.7 -52% BB- -20% 20% 98% -33% Simon P roperty G roup SPG $54.59 15.3 4.7 17.3 -73% A -11% 1% 78% -61% Co reCi vic CX W$17.4815.34.99.2-47%BB-21%20%88%-34% Arbor R ealty ABR$7.8915.16.18.7-30%na-15%2%99%-42% Brookfield P roperty P artners BPY $9.30 14.3 7.6 11.0 -31% BBB -10% 10% 100% -43% Iron M ountain IRM $27.17 10.2 10.9 14.5 -25% BB- -9% 20% 86% -21% Ve ntas VT R$33.719.49.415.5-39%BBB+-18%4%100%-39% Broadmark R ealty C apital BRMK $7.87 9.4 9.0 14.8 -39% na 2% 20% 82% 36% Omega H ealthcare I nvestors OHI$29.579.19.712.9-25%BBB--2%2%89%-28% Av erage 13. 3-37. 0% -16% 12. 5% 99% -32%

12 | FORBES REAL ESTATE INVESTOR | JUNE 2020 DIY (DO-IT-YOURSELF) GUIDE TO BUILDING YOUR OWN REIT PORTFOLIO Since early March, the coronavirus pandemic has large majority of them in the lodging and retail sectors. forced many investors to rethink their retirement To mitigate the risk of losses, while also maximizing portfolios, placing a much higher emphasis on risk returns, I put together a DIY guide to assist you with management. Dividend income has become scarce as building a balanced portfolio. many dividend-paying stocks have become challenged It’s clear that some property sectors, such as those due to stretched payout ratios and lack of liquidity. focusing on sheltering in place (residential), In a Barron’s article , Janus Henderson Investors said technology (data centers and cell towers) and cold that “global dividends will total about $1.2 trillion, down storage have seen earnings rise and are likely to 15% from 2019 levels. However, under the worst-case continue this trend post-pandemic. scenario, payouts would fall by 35% to about $930 Other sectors that are struggling now, like billion.” In the U.S., around 45 companies in the S&P 500 restaurants, hotels, medical office buildings and have cut or suspended their dividends, which leaves about 370 shopping centers, could see a boon once the Covid-19 companies in the index whose payouts are intact or higher. crisis is over. Meanwhile, other property sectors, such Meanwhile, in the equity REIT sector, 50 as theaters and malls, are likely to see longer lasting companies have cut or suspended their dividends, a pain and suffering.

13 | FORBES REAL ESTATE INVESTOR | JUNE 2020 To help with this post-pandemic REIT portfolio, I reached out to Rick Ramona, managing director at PGIM Real Estate and head of the Global Real Estate Securities business. Ramona is the CIO and senior portfolio manager for all GRES funds and investments and is a member of the Global Investment Committee and the Americas Executive Council. On a phone call a few days ago Ramona said that in certain sectors he sees opportunity because of the temporary impact to Covid-19 and he said that the best way to think about portfolio modeling is to think of it like a barbell. investor.” He also said certain net lease REITs with Starting with the left side of the barbell, he restaurants could eventually benefit, especially because of explained that the lower risk sectors are “less the Paycheck Protection Program money, as he said, “they economically cyclical and they don’t rely on social could survive without government help.” gathering and benefit from work at home.” He added Gaming, another subsector of net lease, is an area that these companies “traded down and are positioned that Ramona likes. He added, “gaming sold off 50% to to play offense and issue growth capital.” He cited 70%.” Another beaten-down sector he favors is lodging examples such as data centers, cold storage, cell tower where shares are “trading at 40% to replacement cost” and manufactured housing. and he said that “certain types will go back quicker Then Ramona pointed me to the right side of the where they don’t rely on conferences,” barbell with property types that are likely to see Another property sector with promise is medical temporary mispricing. He said that assisted living office buildings (MOBs) in which there has been facilities is one such example and “it may take a while “headline risk on elective procedures that are being but will come back.” stopped.” Ramona said that “utilization has decreased, Granted there are risks, such as headline risk and so tenants had a bad March and April, but it’s a expe nse pressure, but as he pointed out, “shares should temporary impact. Structurally or secularly nothing is normalize” and “you must be a patient long-term wrong with the business model.”

DIY POST-COVID-19 PORTFOLIO

Normal DividendPayout20202021Fair Margin of REIT TickerPrice P/FFOP/FFOVarianceYieldRaoFFO % FFO % Value Safety Recommendaon Apple Hospitality APLE $9.15 9.4 10.9 -13% 0.0% na -103% 2020% $17.00 -46.2% STRONG S PEC B UY Av alonBay AV B$153.6716.422.8-28%4.1%68%0%1%$157.50-2.4%HOLD Crown C astle CCI$156.2026.721.425%3.1%80%4%7%$120.0030.2%HOLD CyrusOne CONE $72.31 19.5 17.3 13% 2.8% 53% 6% 8% $63.65 13.6% BUY ( WATCH) Digital R ealty DLR$135.8121.215.735%3.3%74%-9%8%$120.0013.2%BUY ( WATCH) Essenal P roperty EPRT $13.21 11.6 19.9 -42% 7.0% 75% 12% 4% $19.00 -30.5% STRONG B UY Federal R ealty FRT $78.49 13.1 24.0 -45% 5.4% 74% -8% 6% $120.60 -34.9% STRONG B UY Four C orners P roperty FCPT $21.40 14.6 17.8 -18% 5.7% 83% 2% 6% $22.56 -5.1% BUY Iron M ountain IRM $24.17 11.0 14.6 -25% 10.2% 85% -9% 20% $36.00 -32.9% STRONG S PEC B UY Omega H ealthcare I nvestors OHI $29.57 9.7 12.7 -24% 9.1% 88% -2% 2% $35.10 -15.8% STRONG B UY Park H otels PK $9.39 5.7 9.8 -42% 0.0% na -108% 512% $28.90 -67.5% HOLD Physicians R ealty DOC $16.68 16.4 19.4 -15% 5.5% 87% 7% 3% $20.00 -16.6% STRONG B UY PSB B usiness PSB $121.81 18.6 19.1 -3% 3.5% 63% 4% 3% $126.00 -3.3% BUY Public S torage PSA $186.47 17.4 21.5 -19% 4.3% 75% -1% 0% $218.50 -14.7% BUY QTS R ealty QTS$62.2223.218.823%3.0%68%5%10%$50.0024.4%BUY ( WATCH) Realty I ncome O $52.1515.819.6-19%5.4%84%1%5%$61.75-15.5%STRONG B UY STAG I ndustrial STAG $25.36 13.8 15.3 -10% 5.7% 78% 0% 4% $26.10 -2.8% STRONG B UY Store C apital STOR $18.72 9.6 16.5 -42% 7.5% 74% -5% 6% $28.50 -34.3% SPEC B UY Ventas VTR $33.71 9.4 15.0 -37% 9.4% 100% -18% 4% $54.00 -37.6% STRONG S PEC B UY Vici G aming VICI $18.83 15.2 47.2 -68% 6.3% 101% 0% 47% $19.55 -3.7% HOLD Average $ 61.97 14.9 19.0 -17.7% 5.1% 78.4% -11% 134% $67.24 -14.1%

14 | FORBES REAL ESTATE INVESTOR | JUNE 2020 The middle of Ramona’s barbell analogy includes grocery-anchored shopping centers where he said that “grocery REITs sold off a lot and I view it as a need-based Strategy F acts business. In-line tenants took a hit, but we see opportunity.” Number o f H oldings 20 He seemed to be bearish with the office sector, as he Dividend Y ield 5.10% pointed out the negative impacts from working at Opportunisc 5 0% home and he said that “malls have never been tested Neutral 2 5% like this and now risk has accelerated.” He also told me that the “demise of urban office is too early to predict.” Safe 2 5% I asked him his views on campus housing, and he said that shares are “trading like there was no With that in mind, I will allocate 50% of the preleasing” yet there has been notable preleasing (as per capital to the right side, 25% to the left-side and 25% first-quarter 2020 ACC report). He pointed out the to the middle section of the barbell. We will risks in international students (not traveling to the allocate 5% to each name. Below is a snapshot of U.S.) could be “offset by juniors not going abroad.” We the DIY REIT Portfolio based on property agreed that the “sector pricing reflects a big hit to NOI.” sector orientation. With this barbell model in mind, I put together a We’ve added the DIY REIT Portfolio to the 20-stock REIT portfolio with $100,000 of virtual portfolio pages of the newsletter. This new barbell capital (see page 14). To be opportunistic, I overweight strategy is designed to produce long-term capital the “right” side of the barbell to screen for the most appreciation and current return. Above is a snapshot of deeply discounted shares. the new strategy.

DIY PORTFOLIO ALLOCATION

5% 5% 15% 15% 10%

5%

5% 25% 5%

10%

Health C are Lo dging Net L ease In dus trial Se lf- Storage Sho pping C ent er Ap artment Data Ce nter Ce ll T ower Ot her

15 | FORBES REAL ESTATE INVESTOR | JUNE 2020 HOTEL FOCUS: APPLE HOSPITALITY Lodging REITs have underperformed as travel has been lockdown easing continues. As we have learned from curtailed across the globe. Management teams have China, the first people to start to travel have been the swiftly shifted to counteract the impact by reducing domestic leisure travelers. staff and suspending operations. Many companies took Most lodging REITs cut or suspended their the steps to preserve liquidity by cutting dividends and dividends in mid-to-late March to preserve liquidity, drawing down lines to limit their cash burn. and we assume these REITs will likely not resume No one knows the exact timeline for the country paying dividends until 2021. Herhsa Hospitality (HT) reopening and various segments will behave differently is the only lodging REIT to suspend dividends on when returning to the “norm.” We are reluctant to preferred issues. recommend lodging REITs given the limited to no Most lodging REITs entered the pandemic with net visibility on fundamentals and the impact to balance sheets. debt to Ebitda of 3.6x on average, and in upcoming However, as Rick Ramona with PGIM Real Estate weeks many borrowers are likely to breach their debt told me, “hotels are trading at 40% to replacement covenants. At this stage, we are maintaining HOLD or costs and certain types will go back quicker where they SELL ratings on all but one REIT, which is the subject don’t rely on conference business.” of this article. The key he added, is the determine “who is the Apple Hospitality (APLE) invests in upscale hotels quickest to recover” as he prefers “REITs that have more and is one of the most diverse lodging REITs with a select service with more hotels open versus convention portfolio of 233 hotels (with 28,000 rooms). Apple has center hotels.” highly concentrated brand ownership that incudes We believe it could be an attractive time to enter the Hilton and Marriott and is ranked among the top five sector, especially in the drive-to-leisure segment as largest owners for both Hilton and Marriott.

16 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Apple has less exposure to urban, gateway markets Apple has less exposure and we believe this will enable the company to mitigate Covid-19 risks due to its geographic focus. As of May to urban, gateway 15, all of Apple’s hotels were surprisingly open and operational, and occupancy remains highest among its markets and we believe peers. Here’s a summary of first-quarter 2020 earnings: uRevPAR growth: -20.7% this will enable the uFFO/sf: $0.17 per share company to mitigate uAdjusted Ebitda: $53.8 million uHotel Ebitda: decreased 40.1% Covid-19 risks due to its Apple’s largest geographic segment is suburban geographic focus (55%), which should allow the company to ramp up faster than most peers. The urban (20%) and resort (6%) exposure will likely be slower to recover.

Source: FAST Graphs

17 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Apple’s balance sheet is in good shape, with nearly three months of 2020 Apple repurchased around 1.5 $440 million in cash that includes the draw down million shares for $14.3 million ($9.42 per share) and the revolver funds. Using average occupancy of 20%, company has since suspended its buyback activity. Apple’s burn rate is around 24 months. There are Apple shares closed at $9.15 on May 22 and while limited debt maturities through 2021. the dividend is suspended, we believe there’s value to Apple did close on a dual-branded Hampton Inn & consider. Our 12-month price target is $12.00, which Suites and Home2 Suites recently in Cape Canaveral, represents a 10.0x latest 12-month Ebitda estimate. Florida for $47 million. The company terminated an Given the substantial selloff, Apple has returned -45% acquisition for a Courtyard in Denver ($49 million) and year-to-date. We are forecasting shares to return 40% it has two other hotels under contract. During the first annually over a two-year hold.

Source: FAST Graphs

18 | FORBES REAL ESTATE INVESTOR | JUNE 2020 NET LEASE REITS FOR THE LONG RUN As we explained earlier, we created a new do-it- quarterly dividend from $0.53 per share to $0.40 per yourself REIT portfolio in order to capitalize on the share; and American Finance (AFIN) cut its monthly mispricing of REIT shares due to the impact of payout from $0.09 per share to $0.07 per share. Covid-19. The portfolio is overweight shares in net Given the potential for rent abatement and lease REITs (see pie chart page 15) given their possible store closures, we have been carefully monitoring attractive risk-adjusted profile. these REITs in order to determine their overall safety. One of the reasons we have become more Based on our latest data (earnings reports, liquidity and enthusiastic about this sector is because of its analyst consensus) we have put together a 2020/2021 promising risk-reward attributes in which the AFFO per share earnings model (see page 20). For a look pricing has become opportunistic, compared with at net lease FFO payouts see page 39 of REIT Lab. other REIT property sectors. We determined that Store Capital (STOR), Net lease REITs have returned -31.9% but we Essential Property, Realty Income (O) and Four consider this long-duration lease model to be attractive Corners Property (FCPT) provide the best risk- given the “temporary” pressure on rent collection. As adjusted return profile. The average dividend yield for all the table on page 20 shows, net lease REIT rent four REITs is 6.5%. We are forecasting shares to return an collection in April ranged from a low of 15% for EPR average of 20% annually over the next two years. Properties (EPR) to 98% for Global Net Lease (GNL). For retirees, net lease REITs provide powerful Four net lease REITs recently cut or suspended dividend income and given their discounted valuation, their dividend: Vereit (VER) cut its quarterly dividend we recommend overweighting shares. This temporary from $0.14 per share to $.08 per share; EPR Properties dislocation should provide investors with long-term suspended its dividend; Global Net Lease cut its rewards, and that will help you sleep well at night.

YTD T otal Retur n

20 10. 9 19 8. 4 18 6. 4 -13. 1 17 -14. 2 16 -15. 0 15 -19. 2 14 -21. 7 13 -25. 3 12 -25. 8 11 -28. 6 10 -28. 7 9 -30. 2 8 -31. 9 7 -33. 4 6 -33. 8 5 -46. 7 4 -50. 6 3 -56. 1 2 -57. 1 1 -70.0 -60.0 -50.0 -40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0

19 | FORBES REAL ESTATE INVESTOR | JUNE 2020

AFFO EARNINGS MODEL

RE IT Ti cker 2020e A FFO p er s hare 2021e A FFO p er s hare Agree R ealty ADC 3 5 American F inance AFIN 4 12 EPR P roperes EPR-2813 Essenal P roperes R ealty EP RT 12 4 Four C orners P roperty FC PT 2 6 Gey R ealty GTY -3 4 Global N et L ease GNL5 6 Naonal R etail P roperes NNN -1 3 Postal R ealty PSTL na 23 Realty I ncome O1 5 Spirit R ealty Capital SRC -12 0 Store C apital ST OR -5 6 Ve reit VER -13 1 WP C arey WPC-2-2

20 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Dividend Y ield 16. 0% 14. 6% 14. 0% 12. 0% 12. 0% 9. 8% 10. 0% 8. 8% 9. 1% 7. 6% 8. 0% 6. 7% 6. 8% 7. 0% 5. 5% 5. 8% 6. 0% 5. 0% 5. 4% 3. 8% 4. 0% 2. 0% 0. 0% AD C PST L O GT Y FC PT NN N WP C EPR T ST OR SR C EPR VER AF IN GN L

3 PREFERRED PICKS FOR JUNE As we did in last month’s issue, we are providing three scaling a new, modern ground lease platform. top preferred REIT picks. Therefore, the preferred stocks are well positioned. iStar (STAR) is focused on reinventing the ground iStar has three series of preferred stock, STAR D, lease sector, helping create a logical new approach to STAR G and STAR I. All three preferred stocks are the way real estate is owned, and continues to use its cumulative. This means that if the dividend cannot be historic strengths in finance and net lease to expand paid, it accrues until it can, and is paid before common this unique platform. The company finances, invests in divi dends. Also, all three preferred stocks are currently and develops real estate and real estate-related projects redeemable in whole, or in part, at a cash redemption as part of its fully integrated investment platform. It price of $25.00 per share, plus an amount equal to all also manages entities focused on ground lease and net dividends accrued and unpaid. STAR D has an 8% lease investments. coupon. As of May 22 (for all the following statistics), STAR has invested more than $40 billion during the STAR D’s price and yield were $22.99 and 8.70%, past two decades and is structured as a real estate respectively. STAR G has a 7.65% coupon. Its price and investment trust with a diversified portfolio focused on yield were $22.30 and 8.58%, respectively. STAR I has a larger assets located in major metropolitan markets. Its 7.5% coupon. It’s price and yield were $21.70 and 8.64%. primary reportable business segments are net lease, real estate New York Mortgage Trust (NYMT) is a REIT in the finance, operating properties, and land and development. business of acquiring, investing in, financing and In May, iStar’s board of directors decided to managing primarily mortgage-related assets and increase the quarterly common dividend per share to financial assets. Its objective is to manage a portfolio of $0.11 from $0.10 as part of a multi-year strategy to investments that will deliver stable distributions to steadily increase the dividend, while focusing on stockholders over diverse economic conditions.

21 | FORBES REAL ESTATE INVESTOR | JUNE 2020 NYMT achieves this objective through a combination of net interest margin and net realized capital gains from its investment portfolio. The portfolio includes All three preferred certain credit sensitive assets and investments sourced stocks are cumulative from distressed markets in recent years that create the potential for capital gains, as well as more traditional so holders will receive types of mortgage-related investments that generate interest income. dividend payments in Year-to-date, the company took several actions to manage its portfolio and improve its liquidity. It sold arrears before common all its first loss multifamily POs and certain mezzanine shareholders CMBS securities issued by the Consolidated K-Series for total sales proceeds of $555.2 million, recognized a net realized loss of $54.1 million and reversed previously recognized net unrealized gains of $168.5 AFIN intends to focus its future acquisitions million. As a result of the sales, NYMT deconsolidated primarily on net leased service retail properties, defined as $17.4 billion in multifamily loans held in single-tenant retail properties leased to tenants in the securitization trusts and $16.6 billion in multifamily retail banking, restaurant, grocery, pharmacy, gas, collateralized debt obligations. convenience, fitness and auto services sectors. New York Mortgage has four series of preferred The company’s portfolio consists of 848 net lease stock, NYMT B, NYMT C, NYMT D and NYMT E. All properties located in 46 states and the District of are cumulative. NYMT B and NYMT C are currently Columbia comprised of 18.9 million rentable square redeemable in whole, or in part, at a cash redemption feet as of March 31, 2020. AFIN is 94.7% leased, up price of $25.00 per share, plus an amount equal to all from 94.0% at the end of first quarter 2019, with 8.9 dividends accrued and unpaid. years remaining weighted-average lease term. NYMT D and NYMT E are redeemable on or after Nearly 81% of leases have contractual rent October 15, 2027 and January 15, 2025, respectively. increases of 1.3% on average based on annualized NYMT B has a 7.75% coupon. As of May 22, (for all the straight-line rent. Sixty-six percent of single-tenant following statistics) NYMT B’s price and yield were portfolio and 30% of multi-tenant anchor tenants $18.80 and 10.31%, respectively. NYMT C has a annualized straight-line rent is derived from 7.875% coupon. Its price and yield were $18.25 and investment grade or implied investment grade 10.79%. NYMT D has an 8% coupon. Its price and tenants. Rent is derived from 80% retail properties, yield were $17.74 and 11.27%. NYMT E has a 7.875% 11% distribution properties and 9% office properties. coupon. Its price and yield were $17.25 and 11.41%. Sixty-nine percent of the retail portfolio is focused on American Finance Trust (AFIN) is a diversified either service or experiential retail, giving the REIT focused on acquiring and managing a diversified company strong alignment with e-commerce resistant portfolio of primarily service-oriented and traditional real estate. retail and distribution related commercial real estate American Finance has one series of preferred stock, properties in the U.S. The company owns a diversified AFIN A. The preferred stock is cumulative. On or after portfolio of commercial properties comprised March 26, 2024, AFIN A is redeemable in whole, or primarily of freestanding single-tenant properties that in part, at a cash redemption price of $25.00 per are net leased to investment grade and other creditwor - share, plus an amount equal to all dividends thy tenants and a portfolio of multi-tenant retail prop - accrued and unpaid. AFIN A has a 7.5% coupon. As of erties consisting primarily of power centers and May 22, AFIN A’s price and yield were $19.22 and lifestyle centers. 9.76%, respectively.

22 | FORBES REAL ESTATE INVESTOR | JUNE 2020 A SMALL POWER(FUL) REIT I’m sure everyone is familiar with the game of Pittsburgh & West Virginia Railroad was founded Monopoly where you can own houses, hotels, utilities in 1916 and is now called Power REIT (PW). The and railroads. When the game was created in the early company owns and leases a 112-mile railroad that runs 20 th century it was called the Landlord’s Game and by from eastern Ohio to western Pennsylvania (located in 1933 the game evolved into a modern version sold by Marcellus Shale territory). Parker Brothers. The railroad track is an irreplaceable property Since the first REIT wasn’t formed until 1960, the leased to Norfolk Southern Railway under a 99-year average investor was not able to access many lease with unlimited renewal options. This means it’s a institutional-held properties in 1933. It also means high-quality credit tenant—rated BBB+ by S&P and there are no REITs on the Monopoly board. BAA1 by Moody’s. It’s hard to think of the board game without I first heard of Power REIT around five years ago railroads coming to mind. Railroads are considered when the company was engaged in a lawsuit. “real estate” because they are attached to land and are According to a Todd Merkle article , “to fund litigation no different than owning shares in infrastructre REITs efforts, in 2011 Power REIT cut its annual common like Uniti Group (UNIT) and Crown Castle (CCI). share dividend to $0.40 per share; in 2013, the dividend Today I take a look at an interesting new name in was eliminated entirely.” the REIT sector that owns railraod assets. This nano- It was a painful lawsuit. Merkle said, “On April 22, cap has been around for more than 100 years and 2015, the court granted Norfolk Southern’s motion for shares have increased by a whopping 120% over the summary judgment and dismissed all Power REIT’s last 75 days. The REIT has seen extraordinary growth claims. And, upon appeal, on August 29, 2017, that and has returned more than 160% year-to-date. I verdict was affirmed by an appellate court, which know, that seems too good to be true. What’s more, I essentially concluded that the over $17 million of think this nano-cap REIT still has more room to run. ‘additional rent’ due to Power REIT will only become

Source: PW Investor Presentation

23 | FORBES REAL ESTATE INVESTOR | JUNE 2020 payable upon termination of the railroad lease. In the end, the company’s only reward was a codified $17 million operating loss carryforward for tax purposes that resulted from the ill-fated litigation.” Power REIT has pivoted beyond railroads into other asset classes with enormous growth potential. This new initiatve is focused on CEA (controlled environment agriculture) greenhouse properties that require about 70% less energy than indoor growing and 9 5% less water usage. There are many people for and against the legalization of marijuana but it’s hard to ignore some of its uses: cannabis is considered an alternative medical solution for a variety of ailments such as seizures and spasms, multiple sclerosis, posttraumatic stress disorder, migraines, arthritis, Parkinson’s disease, Alzheimer’s and PTSD, among others. The opportunity set for CEA is strong: 74% of the national population has legal access to cannabis; 36 Source: PW Investor Presentation states and Washington D.C. have medical marijuana laws, and 11 states plus Washington D.C. have recreational marijuana laws. While the growth of the On May 15 Power REIT announced the acquisition industry continues to be impacted by state and local of a property located in southern Maine such that the regulations, the overall story is one of significant tenant is responsible for paying all expenses related to growth and maturation. the property, including maintenance expenses, Cannabis is one of the few markets historically to ever see insurance and taxes. e term of the lease is 20 years and double-digit growth. The current total annual demand for provides two options to extend for additional five-year recreational cannabis (legal and black market) in the U.S. is periods. In addition to the third bullet point of the May estimated at $50 billion -$60 billion, surpassing the demand 1 agreement, the rent is structured as follows: for pizza (currently at $47.5 billion). ue lease is structured whereby aer a In addition to cannabis, Power REIT also has deferred-rent period of six months, the investments related to solar energy that includes 600 rental payments provide Power REIT a full acres (107 megawatts utility-scale solar farms). This return on invested capital over the next three business represents 24% of Power REIT’s business years in equal monthly payments. and provides consistent cash flow generating leases uAer the deferred-rent period, rent is with implicit credit enhancements. structured to provide a 12.9% return base On May 1 Power REIT entered into an agreement on the original invested capital amount with for expansion of a property located in southern annual rent increases of 3% rate per annum. Colorado and leased to Original Cannabis Growers of Ordway LLC. The rent is structured as follows: Power REIT acquired the Maine asset for uA 12.5% return on the original invested capital $1,000,000 which is a 3.06-acre land parcel approved amount that will increase at a 3% rate per annum. for cannabis cultivation with a 32,800 square-foot uAer year six of the lease, if cannabis is greenhouse and a 2,800 square foot processing/ legalized at the federal level, the rent will be distribution building that are both under construction. readjusted down to an amount equal to a 9% As part of the transaction, the trust has agreed to return on the original invested capital and fund $2.97 million to complete the construction as will increase at a 3% rate per annum based well as reimburse the tenant $950,000 of the on a starting date of the start of year seven. approximately $1.5 million it has incurred to date

24 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Source: PW Investor Presentation

Source: FAST Graphs

25 | FORBES REAL ESTATE INVESTOR | JUNE 2020 related to the construction. Accordingly, Power investors who have a large tolerance for risk. REIT’s total capital commitment totals $4.92 million We’re adding Power REIT to the net lease sector plus acquisition expenses. in Intelligent REIT Lab with a HOLD rating. Power REIT is expected to grow its core FFO per One last note on Monopoly : I sent the CEO share substantially in 2020. of Hasbro (which owns the board game) a message An important warning: Power REIT is a on LinkedIn, letting him know I’m available nano-cap REIT with a market cap of just under $45 to help redesign a modern day “REIT version” of million. Nano-caps (penny stocks) are inherently the game that includes health care, net lease, data risky due to their size and lack of liquidity. Shares are centers and even cannabis REITs. I’ll let you know highly volatile and should only be considered by if he responds.

PLAY THE HOUSING RECOVERY WITH THESE ETFS Housing-related stocks, including rental REITs and home - Hoya Capital Housing ETF (HOMZ), has surged nearly builders, were slammed at the outset of the pandemic on 50% since the late-March lows through the week fears that a coronavirus-induced recession could enflame a ending May 22, led by a dramatic rally in homebuilders and repeat of the Great Recession in the potentially devastating residential REITs, compared to the roughly 35% rebound effects on the U.S. housing market. Financial media pundits in the S&P 500 ETF (SPY) and the 30% rebound in the pounced on the “housing crash” narrative, forecasting wide - broad-based Vanguard REIT ETF (VNQ). spread rent strikes and a new wave of foreclosures, resulting in pain for landlords, developers and real estate investors. HOUSING DATA SHOWS STUNNING REBOUND Not so fast. Instead, data indicates that the housing The sudden change in fortune for housing-related industry has seemingly roared back to life in recent stocks has been driven by unexpectedly strong “high- weeks with high-frequency metrics exhibiting a “V- frequency” housing data and encouraging commentary Shaped” recovery pattern while rent collection has from homebuilders, home improvement retailers and averaged more than 95%. A sharp contrast from the rental REITs over the past month. Even residential dire predictions of the pundits, this recent data has mortgage REITs—which were effectively on life- indicated that the housing industry could assume a support in early April—conveyed unexpected very different “role” during the coronavirus-induced sanguinity on their first-quarter earnings calls, citing recession, serving as an unexpected source of strength early indications of not only stabilization but of to lead the post-pandemic economic rebound. emerging strength in the residential mortgage markets. Left for dead in late March amid these concerns Data released by real estate brokerage and data firm over nonpayment of rents, an unsustainable surge in Redfin (RDFN) revealed a stunning rebound in mortgage forbearance and a myriad of potential issues housing market activity over the last month as home - that have so far not materialized to any significant buying demand is now 16.5% above pre-coronavirus degree, housing-related stocks have sprung back to life levels while home values have seen accelerating growth. over the past two months and few equity sectors have The Mortgage Bankers Association, meanwhile, delivered stronger performance over this time. reported on May 20 that home purchase mortgage After being pummeled during that dramatic four- applications rose for the fifth straight week and are now week period in March that saw heart-stopping volatility lower by just 1.5% from last year compared to the 35% across global financial markets, the housing sector ETF, decline in early April.

26 | FORBES REAL ESTATE INVESTOR | JUNE 2020 This data was broadly consistent with recent RENT STRIKES? RENTAL REITS REPORT STRONG RENT commentary from the largest single-family home - COLLECTION, OTHER REIT SECTORS STRUGGLE builders, including DR Horton (DHI) and Meritage Rent Strikes were certainly a hot-topic in early April Homes (MTH) as well as data from real estate data with a seemingly endless wave of apocalyptic stories and technology firm Zillow (Z), that noted a “full appearing in the mainstream press forecasting that rebound” in housing market activity on their millions of Americans would abstain from paying their platform from the lows seen in mid-April. Bidding April rent amid the coronavirus shutdowns, sending wars are back, and competition is fierce according to potential shockwaves through the real estate industry Redfin, particularly in the entry-level segments that and crushing landlords and investors alike. are especially popular among millennials and in Instead, rent collection was largely a non-issue for suburban markets outside the most heavily impacted rental operators as the vast majority of Americans did cities, including New York and Chicago. indeed prioritize their housing payments, perhaps the Meanwhile, home improvement retailers like ultimate essential service considering the circumstances. Home Depot (HD) and Lowe’s (LOW) have reported Residential REITs reported that more than 95% of rents surprisingly strong sales and store traffic over the were collected in April, according to our tabulations. past two months, bucking the otherwise devastating Other non-essential commercial real estate sectors weren’t apocalyptic trends seen across most of the retail so lucky, however. Rent collection among mall REITs barely sector during April. Sales at building materials and cracked 20% and shopping center and net lease REITs saw home improvement stores were by-far the strongest roughly a third of April rents go unpaid while other REIT physical retail category in the Census Bureaus’ April sectors including office, skilled-nursing and hotels remain Retail Sales report, suggesting that homeowners may deeply troubled as dividend cuts mount. be repurposing the time saved from their daily office Of the 50 equity REITs from our universe of 165 commute into DIY projects and other investments in REITs that cut or suspended their dividends since the start their home. of the coronavirus pandemic, only one residential REIT—

27 | FORBES REAL ESTATE INVESTOR | JUNE 2020 small-cap Independence Realty Trust (IRT)—announced tailwinds throughout the 2020s, which makes housing- a reduction in its dividend while not a single residential related stocks a compelling opportunity for investors REIT has completely eliminated its dividend. seeking a balanced blend of income and long-term growth. Considering the wide reach and cross-industry nature of the housing sector—a massive asset class that HOW TO PLAY THE HOUSING RECOVERY spans across the real estate, industrials, consumer The U.S. housing sector was finally firing on all cyclicals, financials, materials and technology sectors— cylinders before the pandemic following a decade of a exchange-traded funds are an excellent way to gain notoriously grinding recovery that saw historically low broad-based exposure to the aforementioned themes. levels of new home construction and persistent upward Hoya Capital Housing ETF, for instance, packages the pressure on rents and home values. After assuming the entire housing sector into a single fund, investing in 100 “villain” role as an instigator to the prior recession, companies across the U.S. housing sector, including early data indicates that the housing industry could residential equity and mortgage REITs, homebuilders, return to this pre-pandemic glide path and is poised to home improvement, home financing and home be a source of stability and resilience during the post- technology firms. HOMZ pays a monthly dividend, coronavirus recovery. designed in part to replicate the frequency of rent and Regardless of the near-term economic impact from mortgage payments, and has an expense ratio of 0.45%. the coronavirus pandemi c, the compelling structural Investors seeking more targeted, but potentially fundamentals of Millennial-led demographic growth and more volatile, exposure to specific subsegments of the the lingering housing shortage should serve as powerful housing industry can also take a look at the single-

28 | FORBES REAL ESTATE INVESTOR | JUNE 2020 family homebuilder-focused ETFs, including the SPDR environments. With less time spent on the daily S&P Homebuilders ETF (XHB) or the iShares U.S. Home commute and more time spent at home, expect Construction ETF (ITB) or the residential REIT focused Americans to put more thought—and investment— ETFs like the iShares Residential Real Estate ETF (REZ). into their current living arrangements. Investors should note, however, that these more-focused Irrespective of the near-term impacts of the funds tend to be quite a bit more top heavy, with 50% or pandemic, there continues to be a compelling long- more exposure allocated to the top-ten holdings. term investment case for housing-related stocks over the next decade and beyond as the combination of historically low housing supply and strong KEY TAKEAWAYS: HOUSING MAY BE THE ULTIMATE demographic-driven demand has provided a favorable ESSENTIAL SERVICE long-term macroeconomic backdrop for companies Americans have been spending more time than ever in involved across the U.S. housing industry. their homes amid the coronavirus pandemic and the While the “Housing Crash 2.0” narrative may make critical importance of one’s home as the “ultimate for “good print” in the financial press—and has pushed essential service” has perhaps never been clearer to housing-related stocks to discounts not seen in years— millions of households who have naturally exhibited a forward-looking data suggests a far more positive out - propensity to prioritize housing-related spending and look for the critical U.S. housing industry, which has investments over the last two months. wide-reaching macroeconomic implications beyond These trends may be here to stay even after stay-at- the residential real estate sector itself. home orders are eased as an increasing number of companies, including Facebook, have publicly Full disclosure: Hoya Capital Real Estate, the advisor to HOMZ, announced plans to permanently shift a sizable is a contributor to iREIT on Alpha and a guest contributor to percentage of their staff to work-from-home the Forbes Real Estate Investor newsletter.

29 | FORBES REAL ESTATE INVESTOR | JUNE 2020 DURABLE INCOME PORTFOLIO Core REIT portfolio formed seven years ago. It is our largest and most diversified portfolio.

SECTOR ALLOCATION

FUNDAMENTALS Dividend Yield: 6.0% Current Portfolio Value: $235,343 Year-To-Date Return: -19.2% % SWAN: 55.2% Avg. R.I.N.O. Rating: 3.30

Over the last 90 days the portfolio’s average total returning an average of 9.4% versus 3.5% for VNQ. return is -4.5% compared to -12.3% for Vanguard Since inception it has an annualized return of 14.2% Real Estate ETF (VNQ) during the same period. The versus 6.6% for VNQ. portfolio bounced back over the last 30 days,

30 | FORBES REAL ESTATE INVESTOR | JUNE 2020 CURRENT HOLDINGS RECENT TRADES

SW AN / R. I.N. O. YT D Di v. Ho lding RE IT Ticker SAL SA Rati ng B | H | S Re turn Yi eld %V alue Ti cker B|S Date Value Commercial M ortga ge VI CI BU Y5/28/2020$4,012 Blackstone M ortg age BXMT SALSA - HOLD -3 0.2% 8.9% 1. 15 %$2,703 GT YBUY5/28/2020$5,070 Hannon A rmstr ong S usta inable In fra HASI SALSA - HOL D -4 .7% 4.5% 3. 12% $7, 349 KKR R eal Esta te Fi nance KREFSALSA-SPEC B UY -18.5% 10.3% 0.9 5% $2,242 Ladder C apita lLADRSALSA-STRON G B UY -5 2.7% 10.9% 6. 83% $1 6, 099 TPG R E F inance TRTXSALSA-SELL-6 2.5% 11.6% 0. 62% $1 ,45 8 Heal thcar e Health care T rust o f A merica HTA SWAN 4.0 BUY -1 0.7% 4.8% 2.38% $5,614 LTC P roperti es LTC SWAN 3.9 STRON G B UY -1 1. 9 % 5 . 9 % 3. 45% $8 ,130 Medical P roperti es MPWSALSA3.6 HOL D -1 1. 2 % 5 . 8 % 1. 8 7 % $ 4 , 4 16 Om ega H ealth care In vesto rs OH ISALSA3.8 BUY -24.7 %8.7 %2.6 4% $6,236 Physicians R ealty DOC SALSA 3.8 STRON G B UY -3.2 %5.2 %2.6 3% $6,200 Venta sVTRSWAN4.2 STRON G B UY -33.4 %7.7 %6.3 8% $15,0 53 Net Le ase Essenti al Properti es R ealty EPRTSALSA3.5 STRON G B UY -44. 1% 6. 8% 5. 70% $13, 440 Fo ur C orners Property FC PT SALSA 3.5 BUY -21.2% 5.7 %2.3 7% $5,590 Getty R ealty GTY SALSA 3.1 BUY -1 7.6% 5.6% 2. 06% $4, 853 Realty In come O SWAN 4.4 STRON G B UY -23.4 %5.1 %7.2 8% $17,1 55 Sto re C apital STOR SWAN 4.2 SPEC B UY -43. 7% 6. 9% 1. 57% $3,697 W.P . C arey WPC SWAN 4.0 BUY -1 9.2% 6.6% 2. 56% $6, 048 Pr ison CoreCivic CXW SALSA 3.2 STRONG S PEC B UY -26.1% 0.5 7% $1,3 48 The GE O Gr oup GE OSALSA3.0 SPEC B UY -2 3.1% 16.7% 0. 58% $1 ,37 5 Lo dg ing Park H ote ls & R esorts PK SALSA 3.5 HOL D-59.9 %9.1 %1.58%$3,722 Data C enter CyrusOn eCONESWAN3.9 BUY ( WATCH) 14.6 %2.7 %6.5 7% $15,4 87 Digita l R ealty DLR SWAN 4.4 BUY ( WATCH) 20.9 %3.1 %5.7 0% $13,4 32 Ot he r P rope rty S ector Ir on M ounta in IR MSALSA3.3 STRONG S PEC B UY -17.4% 9.1 %2.21%$5,200 Ma ll Simon P roperty Gr oup SPG SWAN 4.3 SPEC B UY -60.7 %13.7%0.8 3% $1,9 62 Tanger Fa cto ry Ou tl et C ente rs SKT SALSA 3.9 SELL -55.3 %16.0%1.1 8% $2,788 Sho pp ing C ent er Brixmor P roperty Gr oup BRX SAL SA 3.5 HOLD -4 5.7% 7.0% 0.54% $1,275 Fe deral Realty In vestm ent FR TSWAN4.6 STRON G B UY -37.3 %5.3 %1.79%$4,2 12 Kimco R ealty KIM SW AN 3.7 HOLD -4 4.5% 4.9% 0.63% $1,474 Indu stria l STAG I ndustrial STAG SWAN 3.4 STRON G B UY -1 2.9% 5.4% 3.00% $7,080 Monmouth R eal Estate MNR SAL SA 3.3 BU Y -8 .0% 5.3% 1.18% $2,791 Self S torage Extr a S pace S to rage EXR SWAN 3.1 BUY -7.5 %3.7 %1.20%$3,324 Public S torage PSA SWAN 3.5 BUY -3.9% 4.0% 2.03% $5,6 37 Cell T ower Crown C astle International CCI SALSA 3.9 HOLD 22.1% 2.8% 3.38% $7,9 76 Campus H ous ing American C ampus Communities ACC SWAN 3.6 STRON G B UY -2 9.6% 5.9% 2.45% $5,789 Ga ming VIC I P roperti es VIC I SAL SA 3.5 HOLD -2 1. 8 % 6 . 4 % 2 . 9 3 % $ 6 , 9 14 Ap art me nt Essex P roperty ESSSW AN 4.2 HOLD -1 8.6% 3.4% 5.03% $11,871 AvalonBay C ommuniti es AVB SWAN 3.9 HOL D-24.8 %4.1 %2.2 9% $5,403

31 | FORBES REAL ESTATE INVESTOR | JUNE 2020 SMALL-CAP PORTFOLIO Less diversified portfolio. More risk due to its concentration and volatility often associated with small-caps.

SECTOR ALLOCATION

FUNDAMENTALS Dividend Yield: 6.6% Current Portfolio Value: $120,452 Year-To-Date Return: -20.5% % SWAN: 21.1% Avg. R.I.N.O. Rating: 1.8

Since inception in March 2016, the portfolio has an the last 30 days the portfolio is up 10.6% versus annualized return of 27.8% compared to 4.9% for the 3.5% for VNQ. Top performers in May include Arbor Vanguard Real Estate ETF (VNQ). It’s 90-day average Realty (+35%), Ladder Capital (+18.5%) and LTC return is -2.3%—in the red but much better than the Properties (+17.5%). performance of VNQ, which had a loss of 12.3%. Over

32 | FORBES REAL ESTATE INVESTOR | JUNE 2020 CURRENT HOLDINGS RECENT TRADES

SW AN / R. I.N. O. YT D Di v. Ho lding RE IT Ticker SAL SA Ra ting B | H | S Re turn Yi eld %V alue Tic ker B|S Date Valu e Commercial M ortgage GM RE Buy 5/10/2020 $5,255 Arbor R ealty ABRSALSA-STRON G S PEC B UY -3 9.9% 12.2% 8. 2% $1 0,281 FP IBuy5/28/2020$5,061 Broad m ark R ealty BRMK SALSA - SPEC BUY 10.4% 6.2% $7,7 40 Ladder C apita lLADRSALSA-STRONG B UY -53.4% 11.2 %10.3 %$12,9 61 Ot he r P rope rty S ector Landmark I nfrastructure LMRKSALSA2.8SELL -3 2.1% 7.5% 4. 2% $5, 23 2 Heal thcar e Global M edical REIT GMRE SALSA 3.81 BUY -17.3% 7.5% 4.5% $5,625 LTC P roperti es LTC SWAN 3.8 7STRONG B UY -15.6 %6.2 %13.5 %$16,8 84 Om ega H ealth care In vesto rs OHI SALSA 3.8 1BUY-23.6%8.6 %2.8%$3,5 05 Of fic e Easte rly Go vernment Properti es DEA SALSA 3.3 9BUY ( WATCH) 7.9 %4.1 %3.0%$3,7 15 Indu stria l Plymouth In dustrial PLYM SALSA 3.3 3HOL D-16.8 %6.6 %2.6%$3,2 91 STAG I ndustrial STAG SWAN 3.38 STRON G BUY -12.9% 5.4% 7.7% $9,638 WPT I ndustr ial WPTIF SALSA 3 SPEC BUY -9 .1% 4. 6% $5, 80 9 Fa rmla nd Gladstone L and LAND SALSA 3 SPEC B UY 13 .8% 3.7% 5. 8% $7, 27 0 Data C enter QTS R ealty QTS SALSA 3.34 BUY (WATCH) 27.7% 2.7% 1.8% $2,300 Pr ison CoreCivic CXW SALSA 3.1 6STRONG S PEC B UY -26.1 %2.4 %$3,0 67 REIT E TF Hoya C apita l H ousing E TF HOM Z- - - -1 4.3% 1. 7% $2,15 3 Net Le ase Alpine I ncome P roperty PIN E- - - -33.6%6.5 %16.7 %$20,9 83

33 | FORBES REAL ESTATE INVESTOR | JUNE 2020 CASH IS KING PORTFOLIO Created to take advantage of the Covid-19 selloff. Targets the highest quality equity REITs.

SECTOR ALLOCATION

FUNDAMENTALS Dividend Yield: 6.3% Current Portfolio Value: $269,307 Year-To-Date Return: NA % SWAN: 46.9% Avg. R.I.N.O. Rating: 3.0

Since Inception the portfolio has an average return of Ladder Capital, returning 85.7%; Four Corners 18.9% versus -4.6% for the Vanguard Real Estate Property, up 63.8% and Hannon Armstrong ETF (VNQ). Top performers over this time include Sustainable Infrastructure, gaining 44.8%.

34 | FORBES REAL ESTATE INVESTOR | JUNE 2020 CURRENT HOLDINGS RECENT TRADES

SW AN / R. I.N. O. YT D Di v. Ho lding RE IT Ticker SAL SA Ra ting B | H | S Re turn Yi eld % V alue Ti cker B|S Date Value Commercial M ortgage BX MT Bu y5/3/2020$5,040 Arbor R ealty ABRSALSA-STRON G S PEC B UY -3 9.9% 12.2% 2. 1% $5 ,564 IR MBuy5/5/2020$11,270 Blackstone M ortg age BXMTSALSA-BUY-3 4.6% 9.5% 2. 0% $5, 405 VT R Bu y5/7/2020$5,416 Broadmark R ealty BRMK SALSA - SPEC BUY 10 .4% 4. 3% $1 1, 61 9 BAM Bu y5/17/2020$5,092 Hannon A rmstr ong S usta inable In fra HASI SALSA - HOL D -8 .1% 4.7% 5. 6% $1 5, 060 ABR Bu y5/19/2020$4,550 Ladder C apita lLADRSALSA-STRON G BUY -53.4 %11.2 %3.4 %$9,2 04 APL E Bu y5/23/2020$5,033 Self S torage BPYU Bu y5/27/2020$4,950 Public S torage PSA SWAN 3.5 BUY -3 .9% 4.0% 4. 4% $1 1, 750 VI CI Bu y5/28/2020$5,015 Indu stria l PS B usiness P arks PSB SWAN 3.8 HOL D-18.3 %3.2 %4.5 %$12,0 40 STAG I ndustrial STAG SWAN 3.4 STRONG B UY -12.9% 5.4% 4.6% $12,491 Net Le ase Essential P roperties Realty EPRT SALSA 3.5 STRONG B UY -4 4.1% 6.8% 7. 5% $20, 160 Fo ur C orners Property FC PT SALSA 3.5 BUY -2 1. 2 % 5 . 7 % 5. 8% $1 5, 581 Realty In come O SWAN 4.4 STRON G BUY -23.4 %5.1 %4.4 %$11,7 46 Spirit Realty C apital SRC SALSA 3.0 STRONG B UY -4 0.8% 8.8% 1. 1% $2,975 Sto re C apital STOR SWAN 4.2 SPEC B UY -4 7.1% 7.3% 1. 9% $5,033 W.P . C arey WPC SWAN 4.0 BUY -2 3.8% 7.0% 3. 8% $1 0, 276 Heal thcar e LTC P roperti es LTC SWAN 3.9 STRON G BUY -1 5.6% 6.2% 2. 1% $5 ,628 Om ega H ealth care In vesto rs OH ISALSA3.8 BUY -2 3.6% 8.6% 4. 1% $1 1, 055 Physicians R ealty DOC SALSA 3.8 STRON G BUY -6 .0% 5.3% 4. 7% $1 2, 721 Ventas VTR SWAN 4.2 STRONG B UY -3 7.7% 8.3% 8. 0% $21 ,431 Data C enter CyrusOn eCON ESWAN3.9 BUY ( WATCH) 14 .6% 2.7% 4. 4% $1 1, 840 Sho pp ing C ent er Federal R ealty Investment FRT SWAN 4.6 STRONG B UY -3 7.3% 5.3% 5. 2% $1 4, 077 Campus H ous ing American C ampus Communities ACC SWAN 3.6 STRONG B UY -2 9.6% 5.9% 3. 7% $1 0, 029 Ot he r P rope rty S ector Ir on M ounta in IR MSALSA3.3 STON G S PEC B UY -1 7.4% 9.1% 4. 8% $1 2, 850 No n-RE ITs Brookfield A sset Management BAM - - - -1 8.1% 1.4% 2. 0% $5, 399 Lo dg ing Apple Hospita lity R EIT APLESALSA2.9 STRON G S PEC B UY -3 5.9% 4.9% 2. 1% $5 ,715 Ma ll Brookfield P roperty R EIT BPYU SALSA 3.4 STRON G S PEC B UY -4 0.8% 1. 8% $4,813 Ga ming VIC I P roperti es VIC ISALSA 3. 5BUY-21 .8% 6. 4% 1. 8% $4, 845

35 | FORBES REAL ESTATE INVESTOR | JUNE 2020 DIY PORTFOLIO Balanced portfolio with a barbell strategy to produce long-term capital appreciation and current return.

SECTOR ALLOCATION

FUNDAMENTALS Dividend Yield: 5.4% Current Portfolio Value: $76,655 Year-To-Date Return: NA % SWAN: 39.2% Avg. R.I.N.O. Rating: 3.2

As we explained starting on page 13, we created a lease, health care, and hotels. This new portfolio “barbell” weighted portfolio that includes an consists of a mix of value and growth REITs. overweight of REIT property sectors that include net

36 | FORBES REAL ESTATE INVESTOR | JUNE 2020 CURRENT HOLDINGS RECENT TRADES

SW AN / R. I.N. O. YT D Di v. Ho lding RE IT Ticker SAL SA Ra ting B | H | S Re turn Yi eld % V alue Ti cker B|S Date Value Heal thcar e OH IBuy5/22/2020$5,000.29 Om ega H ealth care In vesto rs OHI SALSA 3.8 BUY -2 3.6% 8.6% 5. 9% $5, 24 4 DO CBuy5/22/2020$5,000.66 Physicians R ealty DOC SALSA 3.8 STRON G B UY -6.0 %5.3 %5.9 %$5,229APL E Bu y5/22/2020$5,000.48 Venta sVTRSWAN4.2 STRONG B UY -3 7.7% 8.3% 5. 6% $4, 91 8 VT R Bu y5/27/2020$5,000.11 Ga ming PK Bu y5/27/2020$5,002.25 VIC I P roperti es VIC ISALSA3.5 HOL D -2 1. 8 % 6 . 4 % 5. 5% $4, 83 5 EPR T Bu y5/27/2020$5,000.76 Indu stria l FC PT Buy 5/27/2020 $5,000.00 STAG I ndustrial STAG SWAN 3.4 STRONG BUY -12.9% 5.4% 5.6% $4,9 32 OB uy 5/27/2020 $5,001.72 PS B usiness P arks PSB SWAN 3.8 BUY -18.3 %3.2 %5.8 %$5,094ST OR Bu y5/27/2020$5,003.37 Lo dg ing VI CI Bu y5/27/2020$5,004.97 Apple H ospitality REIT APLE SALSA 2.9 STRONG S PEC B UY -35.9% 4.9% 6.4% $5,6 78 ST AG Bu y5/27/2020$5,001.41 Park H ote ls & R esorts PK SALSA 3.5 HOL D -5 9.9% 9.1% 5. 4% $4, 79 7 PSB Bu y5/27/2020$5,010.43 Net Le ase PSA Bu y5/27/2020$5,003.04 Essenti al Properti es R ealty EPRTSALSA3.5 STRONG B UY -4 4.1% 6.8% 5. 3% $4, 67 7 FR TBuy5/27/2020$5,002.26 Fo ur C orners Property FCPTSALSA3.5 BUY -2 1. 2 % 5 . 7 % 6. 1% $5, 368 IR MBuy5/27/2020$5,002.89 Realty In come O SWAN 4.4 STRONG B UY -2 3.4% 5.1% 5. 7% $5, 03 0 QT SBuy5/27/2020$1,004.25 Sto re C apital STOR SWAN 4.2 SPEC BUY -4 7.1% 7.3% 5. 5% $4, 89 2 Self S torage Public S torage PSA SWAN 3.5 BUY -3 .9% 4.0% 5. 8% $5, 110 Sho pp ing C ent er Fe deral Realty In vestm ent FR TSWAN4.6 STRONG B UY -3 7.3% 5.3% 5. 4% $4, 80 2 Ot he r P rope rty S ector Iron Mountain IRM SALSA 3.3 STRONG S PEC B UY -1 7.4% 9.1% 5. 7% $5, 05 0 Data C enter QTS R ealty QT S SALSA 3.3 BUY (WATCH) 27. 7% 2. 7% 1. 1% $1, 000

PORTFOLIO COMPARISON Here’s a look at how the portfolios stack up.

YT D Di vidend Cu rrent Av g. R.I.N.O. Poro lios % SWAN Pe rformance Yie ld Poro lio Value Ra ng

Durable I ncome P orolio -1 9% 6.0% $235,343 3.300 55%

DIY P orolio -5 .4% $76,655 3.209 39%

Small-Cap P orolio -2 0% 6.6% $120,452 1.812 21%

Cash I s K ing P orolio -6 .3% $269,307 3.039 47%

37 | FORBES REAL ESTATE INVESTOR | JUNE 2020 INDEXES

RE IT Ticker Sector Market C ap ( m) P/F FO Div. Y ield YTD R eturn R.I.N .O . R ating B | H | S American T ower AMT In fr astructure $114,45531.421.7%12.8%3.9 HOLD

S Digital R ealty DLRData S ector $37,8 42 24.1 03.1 %23.0 %4.4 BUY ( WATCH) O OS D DO D Ventas VTR Health C are $13,0 39 10.9 68.3 %-37.7 %4.2 STRONG B UY A AD A S SA S Realty In come O Triple N et $18,9 94 16.6 65.0 %-23.2 %4.4 STRONG B UY Simon P roperty Group SPG Mall $17,6 42 5.4 713.3 %-59.3 %4.3 SPEC B UY AV ERAG E: $40,394 6.3% -16.9% 4.3

RE IT Sector Market C ap ( m) P/F FO Div. Y ield YTD R eturn R.I.N .O . R ating B | H | S W.P . C arey WPC Triple N et $10,3 29 13.2 47.0 %-23.8 %4.0 BUY

O Store C apital STOR Triple N et $4,72210.7 87.0 %-44.9 %4.2 SPEC B UY N NO A AN A Agree R ealty ADC Triple N et $3,13119.9 33.8 %-9.7%3.7 HOLD W WA W W S SW S S Realty In come O Triple N et $18,9 94 16.6 65.0 %-23.2 %4.4 STRONG B UY National R etail P roperties NNN Triple N et $5,39811.9 86.4 %-37.8 %4.1 STRONG B UY AV ERAG E: $8, 515 5. 8% -27 .9% 4. 1

RE IT Sector Market C ap ( m) P/E Div. Y ield YTD R eturn R.I.N .O . R ating B | H | S Starwood P roperty STWD Mortgage REITs $3,7 43 7.17 12.9% -44.4% - SELL

T Apollo C ommercial Real E state ARI Mortgage R EIT s $1,2656.6 915.4 %-52.5 %- SELL S ST

A AS Blackstone M ortgage BXMT Mortgage REITs $3,1 93 10.24 9.5% -34.6% - HOLD L LA B BL TPG R E F inance Trust TRTX Mortgage REITs $568 -34.79 11.9% -63.4% - SELL Ladder C apital LADR Mortgage R EIT s $9589.3 511.2 %-53.4 %-STRONG B UY AV ERAG E: $1, 945 12. 2% -49. 7% E D DE

I ID RE IT Sector Market C ap ( m) P/F FO Div. Y ield YTD R eturn R.I.N .O . R ating B | H | S V VI I IV STAG I ndustrial STAG Industrial $4,0 00 14.68 5.4% -12.6% 3.4 STRONG BUY D DI D

Y Realty In come O Net L ease $18,9 94 16.6 65.0 %-23.2 %4.4 STRONG B UY L LY

H HL LTC P roperties LTC Health C are $1,444 12.7 56.1 %-14.0 %3.9 STRONG B UY T TH

N NT Gladstone L and LAND Farmland $310 21.01 3.7% 13.8% 2.8 SPEC BUY O ON

M MO AV ERAG E: $877 4.9% -0.1% 3.3

We use Sharesight to calculate percentage returns using a dollar-weighted return methodology, which measures investment performance taking account of the size and timing of cash flows. Sharesight annualizes returns weighting the length of time that each capital input has been invested for, by the amount of capital invested to determine the average years invested for each dollar of capital.

38 | FORBES REAL ESTATE INVESTOR | JUNE 2020 FORBES REAL ESTATE INVESTOR REIT SECTORS

------Share P rice------Ratings------Fundamentals------Performance------E arnings------SW AN/ R. I.N. O. REIT Ticker 28-May-20 Current V alue Variance SA LSA Ra ting B|H|S Market C ap Yield P/F FO FFO P ayout 1-Month YTD 1-Year

Healthcare [ 17] Alexandria R eal Esta te ARE $155.1 4$120.0 029.3%SWAN4.4HOLD$19,2842.7 %21.2x58%-2.1%-4.2 %8.5 % CareTrust R EIT CTRE $19.33 $18.00 7.4 %SALSA3.7 HOL D$1,8 40 5.3 %14.6 x74%13.0%-8.2 %-20.3 % Community H ealthcare CHCT $38.5 7$37.353.3%SALSA3.6 HOL D$8534.6%19.7 x86%-0.9 %-13.3%-2.9% Diversifi ed H ealth care DHC $3.9 4$7.6 5-48.5 %SALSA2.8 SELL $937 7.6 %4.8 x33%15.1%-55.1 %-49.4 % Global M edical REIT GMRE $11.2 5$10.358.7%SALSA3.1 SPEC B UY $498 7.5% 13.9 x99%2.9 %-17.3%9.5% Healthcare R ealty HR $31.40 $34.0 0-7.6 %SALSA3.5 HOLD$4,2373.9 %19.1x73%5.6%-6.3 %-0.4 % Healthcare T rust of A merica HTA $26.51 $28.5 0-7.0 %SWAN4.0 BUY$5,7924.8 %15.9x76%7.5%-11.3 %-2.8 % He althpeak PEAK $25.59 $31.50 -18.8% SALSA 3.6 BUY $13,771 6.0% 15.4x 89% -4.3% -26.7% -17.8% LTC P roperties LTC $37.52 $43.2 0-13.1%SWAN3.9STRONG B UY $1,471 6.2 %12.7x78%4.0%-15.6 %-13.1 % Medical P roperti es MPW $18.15 $18.0 00.8 %SALSA3.6 HOLD$9,4826.0 %11.3x67%5.5%-13.2 %7.5 % Nati onal H ealth care I nvestors NHI $57.81 $64.8 0-10.8%SALSA3.6HOLD$2,5817.7 %10.3x76%0.8%-30.5 %-24.8 % New S enior In vestm ent Gr oup SNR $2.9 8$6.30-52.7%SALSA2.3 SELL$24713.2%5.8 x75%-12.4 %-60.7 %-50.8 % Om ega H ealth care In vesto rs OH I$31.01$35.1 0-11.7%SALSA3.8BUY$7,0358.6 %10.3x89%6.8%-23.6 %-5.7 % Physicians R ealty DOC $17.44 $20.0 0-12.8%SALSA3.8BUY$3,5335.3 %16.5x87%12.0 %-6.0 %-0.8 % Sabra H ealth C are R EIT SBRA $13.70 $19.8 0-30.8%SALSA3.3HOLD$2,81511.1%8.3 x91%7.7%-34.0 %-24.2 % Venta sVTR$36.76$54.0 0-31.9%SWAN4.2STRON G S PEC B UY $13,714 8.3 %11.5x91%8.0%-37.7 %-41.9 % Wel ltower WELL $51. 34 $67. 50 -23. 9% SWAN 4. 1HOLD$2 1, 429 6. 2% 14. 1x 86% 0. 2% -36. 6% -34 .4% AVER AGE -13.0% $6,442 6. 8% 13. 3x 78% 4. 1% -2 3.5% -1 5.5%

Lodging [ 14] Apple Hospita lity APLE $10.39 $17.0 0-38.9%SALSA2.9STRON G S PEC B UY $2,317 4.9 %207.8 x1008%5.5 %-35.9 %-31.7 % Braemar H otels & Resorts BHR $3.6 5$9.14-60.1%SALSA3.0 HOLD$1227.9 %(8.4 x) -61% 8.6% -61.9 %-66.6 % Chatham L odging CLDT $7.36 $20.40 -63.9 %SALSA3.0 HOL D$3463.3%(41.6 x) -124% -10.1% -62.7% -62.7% CorePoint L odging CPLG $4.3 3$12.7 5-66.0%SALSA2.6HOLD$25215.2%(6.5 x) -90% -9.0% -60.9 %-64.3 % Hersha H ospitality HT $5.36 $18.70 -71.3 %SALSA2.8 SELL $207 6.9% (10.1 x) -66% -3.6 %-64.7%-69.4% Host H ote ls & R esorts HST $12.03 $17.1 9-30.0%SALSA2.7HOLD$8,4923.8 %207.4 x776%-3.0%-34.5 %-31.6 % Park H ote ls & R esorts PK $10.26 $28.9 0-64.5%SALSA3.5HOLD$2,4629.1 %44.8x393%3.4 %-59.9 %-60.9 % Pebblebrook H ote lPEB$14.09$29.7 5-52.6%SALSA3.4HOLD$1,8406.6 %(40.5x)-259%15.4 %-49.0 %-49.3 % RLJ L odging RLJ $10.63 $17.8 5-40.4%SALSA3.0HOLD$1,7524.1 %(30.5x)-120%11.0 %-41.7 %-37.7 % Ryman H ospita lity P roperti es RHP $35.01 $70.5 5-50.4%SALSA3.1HOLD$1,9032.8 %(210.9 x) -69% -3.3% -59.5 %-55.2 % Soth erly H otels SOH O$2.9 1$6.38-54.4%SALSA2.5 HOLD$43 - 5.0 x41.3 %-52.9 %-52.4 % Summit H ote l P roperti es IN N$6.3 1$11.9 0-47.0%SALSA3.0HOLD$6660.6 %(39.4x)-23%3.1 %-48.6 %-43.6 % Sunstone H otel Investors SHO $9.01 $11.90 -24.3 %SALSA2.8 HOL D$1,9 42 3.3% (49.5 x) -159% -3.7 %-36.1%-30.6% Xenia Hote ls & R esorts XHR $9.3 4$19.3 4-51.7%SALSA3.0HOLD$1,0596.6 %(87.3x)-559%-7.2%-57.2 %-54.6 % AV ERAG E-51.1%$1,6725. 8% (4. 3x ) 50% 3. 5% -5 1.8% 14.0%

Net L ease [15] Agree R ealty ADC $63.06 $54.1 516.5%SALSA3.7HOLD$3,1453.8 %20.0x75%-3.6%-9.7 %-2.0 % American F inance AFIN $7.60 $9.5 0-20.0 %SALSA2.4 STRONG S ELL $824 12.4 %8.0x99%-4.1 %-42.3%-20.8% EPR P roperti es EPR $32.99 $58.6 6-43.8%SALSA3.0STRON G SELL $2,593 7.7 %9.1 x67%7.3%-53.5 %-56.2 % Essential P roperties R ealty EPRT $13.44 $19.0 0-29.3%SALSA3.5STRONG B UY $1,236 6.8 %11.1x76%-7.1%-44.1 %-31.8 % Four Corners P roperty FCPT $21.4 7$22.56-4.8%SALSA3.5 BUY $1,5 10 5.7% 14.8 x84%-3.4 %-21.2%-21.1% Getty R ealty GTY $27.7 3$27.550.7%SALSA3.1 BUY $1,1 48 5.6% 15.7 x84%-2.0 %-17.6%-10.5% Global N et L ease GNL $14.3 0$17.10-16.4 %SALSA2.5 STRONG S ELL $1,2 79 13.0 %8.2x104%-2.5 %-26.9%-15.2% National R etail P roperties NNN $32.56 $47.5 0-31.5%SWAN4.1STRONG B UY $5,599 6.6 %12.1x77%-3.8%-40.0 %-37.7 % Posta l R ealty PSTL $16.64 $13.0 028.0%SALSA HOLD$904.8 %16.9x83%9.0%2.2 %9.2 % Power R EIT PW $23.26 HOLD $44 69.7 %159.7 %305.0 % Realty In come O $55.70 $61.7 5-9.8 %SWAN4.4 BUY$19,1275.1 %16.7x84%1.1%-23.4 %-16.5 % Spirit R ealty Capita lSRC$29.75$47.5 0-37.4%SALSA3.0STRON G S PEC B UY $3,063 8.8 %10.3x87%-7.6%-40.8 %-28.0 % Sto re C apital STOR $20.13 $28.5 0 -29.4% SWAN 4.2 SPEC BUY $4,915 7.3 %10.8x75%-3.6%-47.1 %-39.7 % Ve reit VER $5.57 $9.03 -38.3% SAL SA 2.9 HOLD $6,003 9.2% 9.1x 82% 0.0% -39.1% -31.9% W.P . C arey WPC $62.28 $72.2 0-13.7%SWAN4.0BUY$10,7377.0 %13.8x92%-8.9%-23.8 %-22.9 % AV ERAG E-16.4%$4,0887. 4% 12. 6x 84% 2. 7% -1 7.9% -1 .3%

Of fice [ 14] Bosto n P roperties BXP $87.76 $117.0 0-25.0%SWAN3.6HOLD$13,6304.6 %12.2x55%-11.5 %-37.0 %-32.1 % Brandywine R ealty BDN $10.09 $11.7 0-13.8%SALSA3.0HOLD$1,7637.9 %7.3 x55%-13.5 %-36.8 %-31.5 % City Off ice R EIT CIO $9.5 3$12.6 0-24.4%SALSA2.7HOLD$5077.2 %9.1 x64%-8.1%-28.7 %-15.5 % Columbia P roperty CXP $13.36 $19.8 0-32.5%SALSA3.1HOLD$1,5296.6 %9.1 x58%-9.4%-37.4 %-36.9 % Corporate O ffi ce P roperties OF C$25.21$26.1 0-3.4 %SALSA3.3 HOLD$2,8284.4 %12.3x54%-5.5%-14.0 %-5.6 % Cousins P roperti es CUZ $31.17 $27.0 015.4%SALSA2.6HOLD$4,6303.8 %11.4x43%3.1%-23.1 %-10.8 % Easte rly Go vernment Properti es DEA $25.36 $20.0 026.8%SALSA3.4BUY ( WATCH) $1,904 4.1 %20.7x85%-5.8%7.9 %46.0 % Empire S ta te R ealty ESRT $7.1 2$13.5 0-47.3%SALSA3.1HOLD$1,2616.5 %10.6x64%-20.7 %-52.0 %-55.2 % Highwoods P roperties HIW $38.46 $39.6 0-2.9 %SALSA3.3 HOLD$3,9955.0 %10.7x54%0.1%-19.8 %-8.2 % Kilroy R ealty KRC $58.72 $67.5 0-13.0%SALSA2.8HOLD$6,7573.5 %15.2x52%-8.3%-31.4 %-20.5 % Off ice P roperti es In come OP I$26.11$18.0 045.1%SALSA2.7STRON G SELL $1,259 8.7 %4.9 x42%-7.7%-18.5 %14.1 % Piedmont O ffice Realty PDM $17.2 5$15.3012.7 %SALSA3.0 HOL D$2,1 72 5.0% 9.0x 44% -2.7 %-23.4%-13.6% SL Gr een R ealty SLG $43.91 $85.5 0-48.6%SALSA3.2HOLD$3,3618.2 %6.5 x51%-20.1 %-53.3 %-48.7 % Vornado R ealty VNO $37.90 $58.5 0-35.2%SALSA2.8HOLD$7,2437.9 %12.7x97%-16.0 %-44.1 %-41.2 % AV ERAG E-10.4%$3,7746. 0% 10. 8x 58% -9. 0% -2 9.4% -1 8.5%

Shopping C enters [ 14] Acadia R ealty AKR $12.2 6$26.10-53.0 %SALSA3.3 HOL D$1,0 54 8.4% 10.0 x80%-5.3 %-53.7%-54.4% Brixmor P roperty Gr oup BRX $11.74 $19.8 0-40.7%SALSA3.5HOLD$3,4807.0 %6.8 x45%-2.5%-45.7 %-29.9 % Cedar R ealty CDR $0.79 $4.5 0-82.4 %SALSA2.6 SELL $71 18.8 %1.8x32%-28.2%-74.0%-71.6% Federal R ealty I nvestment FRT $80.44 $120.6 0-33.3%SWAN4.6STRONG B UY $6,083 5.3 %14.1x74%-4.0%-37.3 %-36.8 % Kimco R ealty KIM $11.71 $19.8 0-40.9%SWAN3.7HOLD$5,0654.9 %9.1 x42%1.8%-44.5 %-31.2 % Kite R ealty Gr oup KRG $10.33 $18.9 0-45.3%SALSA3.2SELL$86910.1%7.8 x74%-5.2%-48.8 %-30.5 % Regency C ente rs REG $44.69 $60.3 0-25.9%SWAN3.9BUY$7,5605.6 %12.3x65%-1.0%-30.4 %-31.6 % Retail O pportunity Investments ROIC $9.84 $18.00 -45.3 %SWAN3.7 HOL D$1,1 43 5.9% 9.9x 56% -3.2 %-46.0%-41.0% Retail V alue RVI $11.8 5$28.80-58.9 %SALSA2.9 HOL D$235-2.7x -19.9%-68.5%-62.3% RPT R ealty RPT $6.1 0$13.5 0-54.8%SALSA3.2HOLD$48810.7%6.7 x68%-15.4 %-60.2 %-48.4 % Urban E dge Properties UE $10.1 1$19.80-48.9 %SALSA3.4 HOL D$1,2 28 6.3% 10.2 x62%-15.2%-48.4%-41.4% Ursta dt B iddle P roperti es UBA $13.14 $22.5 0-41.6%SWAN3.8HOLD$5088.8 %9.1 x78%-12.7 %-46.8 %-37.8 % Weingarten R ealty In vesto rs WRI $18.85 $28.8 0-34.5%SALSA3.7HOLD$2,4157.5 %10.1x72%-1.7%-41.9 %-33.5 % White sto ne R EIT WSR $6.3 1$9.90-36.3%SALSA2.5 SELL$2668.3 %6.6 x53%-8.8%-53.3 %-46.8 % AV ERAG E-45.9%$2,1768. 3% 8. 4x 62% -8. 7% -5 0.0% -4 2.6%

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39 | FORBES REAL ESTATE INVESTOR | JUNE 2020 ------Share P rice------Ratings------Fundamentals------Performance------E arnings------SW AN/ R. I.N. O. REIT Ticker 28-May-20 Current V alue Variance SA LSA Ra ting B|H|S Market C ap Yield P/FFO FFO Payout 1-Month YTD 1-Year Industrial [ 13] Americold R ealty COL D$35.38$24.3 045.6%SALSA3.1HOL D$7,0852.3 %28.6 x67%16.7 %2.5 %16.4 % Duke R ealty DRE $34.8 3$25.2 038.2 %SALSA3.6 HOL D$12,8 29 2.7 %24.1 x65%0.1 %0.8 %18.1 % EastGr oup P roperti es EGP $119.6 1$90.0 032.9%SALSA3.3HOL D$4,6712.6 %23.0 x59%9.7 %-11.7 %7.7 % First In dustr ial R ealty FR $38.07 $28.8 032.2%SALSA2.9HOL D$4,8422.4 %21.4 x50%0.3 %-8.1 %12.4 % Industr ial L ogisti cs P roperti es IL PT $18.7 7$17.1 09.8 %SALSA2.8 HOLD $1,2 24 7.0 %10.7 x75%0.3 %-13.5 %6.0 % Lexingto n R ealty LXP $9.6 0$9.501.1 %SALSA2.8 HOL D$2,4504.3 %12.9 x56%-7.0 %-7.5 %11.4 % Monmouth R eal Estate MNR $13.0 4$13.50-3.4%SALSA3.3 BUY $1,2 78 5.3% 15.5x 82% -3.1% -8.0% -1.9% Plymouth In dustrial PLYM $14.50 $17.1 0-15.2%SALSA3.3HOL D$2146.6 %7.2 x48%5.6 %-16.8 %-8.3 % Pr ologis PL D$93.05$60.0055.1%SW AN 3.7 HOLD $68,740 2.5% 25.9x 64% 2.5% 3.4% 28.1% PS B usiness P arks PSB $132.6 5$126.0 05.3 %SWAN3.8 BUY$5,2373.2 %19.9 x64%3.5 %-18.3 %-14.3 % STAG I ndustr ial STAG $26.98 $26.1 03.4 %SWAN3.4 BUY$4,0125.4 %14.7 x79%2.9 %-12.9 %-3.0 % Terreno R ealty TRNO $51.88 $31.5 064.7%SALSA3.7HOL D$3,5122.2 %36.1 x78%-6.6 %-4.9 %14.6 % WPT I ndustr ial WPTIF $11.96 $14.4 0-16.9%SALSA3.0SPEC B UY - - 7.6 %-9.1 %-5.6 % AV ERAG E19.4%$9,6753. 9% 20. 0x 66% 2. 5% -8 .0% 6.3%

Commercial M ortgage [ 14] ( Using E PS) Apollo Commercial R E F inance ARI $8.45 $14.85 -43.1 %SALSA- SELL $1,2 99 15.4 %6.8 7x 103% 1.0% -52.5% -49.3% Arbor R ealty ABR $8.5 6$12.3 8-30.9%SALSA-STRON G SPEC B UY $947 12.2% 53.5 0x 641% 22.2 %-39.9 %-28.0 % Ares C ommercial R eal E sta te ACRE $7.9 8$12.6 0-36.7%SALSA- SELL$26713.2%8.85x109%-3.9 %-50.8 %-43.8 % Blackstone M ortgage BXMT $24.5 7$32.40-24.2 %SALSA- BUY $3,3 26 9.5% 10.67x 98% 0.3% -34.6% -27.8% Broadmark R ealty BRMK $8.61 $11.25 -23.5 % SALSA - SPEC BUY $993 10.4 %7.7 9x 81% Colony C redit R eal Esta te CLNC $5.1 5$13.5 0-61.9%SALSA- STRON G S ELL $661 6.1 %9.54x56%2.9 %-60.9 %-64.2 % Gr anite P oint M ortg age GP MT $5.1 1$15.9 8-68.0%SALSA- SELL$28216.5%4.50x71%-1.2 %-73.2 %-72.0 % Hannon A rmstr ong S usta inable I nfra HASI $30.00 $22.7 332.0%SALSA- HOL D$2,1404.7 %20.8 3x 94% 3.6 %-8.1 %17.2 % Jernigan C apita lJCAP$12.28$18.0 0-31.8%SALSA- HOL D$2867.6 %(15.3 5x) -34% -8.6 %-35.6 %-38.4 % KKR R eal Esta te F inance KREF $16.37 $17.7 8-7.9 %SALSA- SPEC B UY $914 10.3% 9.78x 100% 2.6 %-18.4 %-10.7 % Ladder C apital LADR $8.21 $15.75 -47.9 %SALSA- STRONG S PEC BUY $989 11.8 %9.3 5x 109% 0.0% -54.9% -46.7% New R esidenti al In vestm ent NRZ $7.5 4$14.4 0-47.6%SALSA- HOL D$3,13413.4%7.56x105%17.7 %-55.1 %-48.9 % Starwood P roperty STWD $13.9 1$20.70-32.8 %SALSA- SELL $3,9 26 12.9 %7.5 2x 92% 2.5% -44.4% -34.0% TPG RE F inance TRTX $7.5 1$17.3 3-56.7%SALSA- SELL$57611.9%(35.2 6x) -415% -3.6 %-63.4 %-59.1 % AV ERAG E-34.3%$1,41011. 1% 7.6x 86% 2. 7% -4 5.5% -3 8.9%

Apartment [ 10] AvalonBay C ommuniti es AVB $159.0 3$157.5 01.0 %SWAN3.9 BUY$22,3 81 4.1 %17.3 x69%-4.3 %-24.8 %-20.0 % Bluerock R esidential BRG $6.67 $9.0 0-25.9 %SALSA2.5 SELL $161 10.1 %- 802%10.5%-45.1%-39.4% Camden P roperty CPT $92.55 $81.0 014.3%SALSA3.4BUY ( WATCH) $9,013 3.6 %18.3 x66%4.0 %-12.8 %-7.5 % Equity R esidenti al EQR $60.8 7$63.0 0-3.4 %SWAN3.3 HOL D$22,6 50 3.9 %18.0 x71%-6.9 %-24.3 %-17.5 % Essex P roperty ESS $248.8 6$275.0 0-9.5 %SWAN4.2 BUY$16,2 79 3.4 %18.8 x62%-0.5 %-18.6 %-12.5 % In dependence R ealty IR T$10.17$8.1025.6%SALSA2.5SELL$9636.4 %14.1 x88%-1.8 %-28.2 %-3.3 % In vesto rs R ealty IR ET $70.09 $57.6 021.7%SALSA3.0HOL D$8533.9 %21.3 x85%13.2 %-0.9 %27.8 % Mid-America A partm ent C ommunity MAA $117.6 6$104.4 012.7%SWAN3.2HOL D$13,9 24 3.4 %18.9 x65%4.0 %-10.3 %5.9 % NexPoint R esidential NXRT $32.5 6$31.503.4%SALSA2.5 HOLD $809 3.9% 16.9x 65% 6.4% -28.4% -17.8% Prefe rred A partm ent C ommuniti es APTS $7.4 3$13.0 5-43.1%SALSA2.9SELL$35013.2%7.5 x90%-5.7 %-45.9 %-52.1 % AV ERAG E-0.3%$8,7385. 6% 16. 8x 146% 1. 9% -2 3.9% -1 3.6%

Malls [ 9] Brookfi eld P roperty P artn ers L .P .BPY$10.62$12.0 0-11.5%SALSA3.4STRON G SPEC B UY $4,669 12.8% 8.7 x109%14.1 %-40.4 %-38.6 % CBL & A ssociate s P roperties CBL $0.3 3$1.00-67.5%SALSA2.1STRON G S ELL $62 16.6% 0.3 x5%3.9 %-71.4 %-63.8 % Ma ceri ch MA C$7.24$40.00-8 1.9% SALSA 3.5 SELL $1,090 33.5% 2.7x 84% -8 .8% -7 2.0% -7 8.5% Pennsylvania R EIT PEI $1.2 3$3.00-59.0%SALSA2.9 SELL$9732.3%1.6 x47%13.9 %-76.5 %-79.0 % Simon P roperty Gr oup SPG $59.75 $125.0 0-52.2%SWAN4.3SPEC B UY $18,2 69 13.3% 5.5 x72%-13.6 %-60.7 %-63.1 % Tanger F acto ry Ou tl et C ente rs SKT $6.3 8$15.0 0-57.5%SALSA3.9SELL$59416.0%3.8 x58%-18.2 %-55.3 %-59.3 % Taubman C enters TCO $40.5 2$50.00-19.0 %SWAN3.9 HOLD $2,4 87 6.3% 11.8x 76% -4.1% 34.8% 0.7% Un ibail-Rodamco-Westfield UR W:Na $51.00 $100.00 -49.0% SALSA 4.0 HO LD $7,057 16.6% 5.0x 78% -11.2% -63.3% -60.2% Washingto n P rime Group WPG $0.72 $2.5 0-71.2 %SALSA2.8 SELL $135 20.3 %1.0x18%-25.5%-81.5%-81.5% AV ERAG E-52.1%$3,82918. 6% 4.5x 61% -5. 5% -5 4.0% -5 8.1%

Ot her P roperty S ector [ 9] Alexander & B aldwin ALEX $11.89 $18.0 0-33.9%SALSA3.2HOL D$8603.3 %14.4 x46%-13.2 %-45.0 %-48.8 % American A ssets AAT $27.1 6$33.30-18.4 %SALSA3.0 HOLD $1,6 31 4.0% 13.4x 52% -7.6% -42.5% -40.5% Armada H offl er Properti es AHH $9.1 0$14.6 3-37.8%SALSA3.1SELL$5145.6 %8.3 x44%-10.3 %-51.8 %-44.3 % CorEnergy I nfrastructure CORR $11.0 5$14.00-21.1 %SALSA2.9 SELL $151 2.0% 8.6x 16% -17.2% -77.2% -72.6% Ir on M ounta in IR M$25.70$36.0 0-28.6%SALSA3.3STRON G SPEC B UY $7,385 9.1 %12.0 x110%6.5 %-17.4 %-9.5 % Landmark I nfrastr uctu re Partn ers LMRK $10.69 $14.4 0-25.8%SALSA2.8HOL D$2727.7 %10.0 2x 75% -5.4 %-33.6 %-25.5 % Sa fehold SAF E$54.11$28.8087.9%SAL SA 3.3 HOLD $2,588 1.2% 37.4x 45% -5.1% 36.8% 100.4% Uniti G roup UNIT $8.34 $10.80 -22.8 %SALSA2.3 HOLD $1,6 04 7.5% 4.7 4x 35% 16.9% 3.0% -10.3% Washingto n R EIT WRE $22.3 5$25.20-11.3 %SALSA HOLD $1,8 40 5.5% 14.7x 79% -6.0% -23.9% -12.6% AV ERAG E-12.4%$1,8725. 1% 13. 7x 56% -4. 6% -2 7.9% -1 8.2%

Self-Storage [ 6] Cu beSmart CU BE $28.29 $28.50 -0.7% SALSA 2.8 HOLD $5,477 4.6% 17.4x 81% 12.9% -8.5% -11.0% Extr a S pace S to rage EXR $97.22 $99.7 5-2.5 %SWAN3.1 BUY$12,5 45 3.7 %19.9 x74%9.6 %-7.5 %-5.3 % Life S to rage ( Sovran S elf S torage) LSI $97.90 $90.2 58.5 %SALSA3.0 HOL D5.0 %16.9 x73% Nati onal S to rage A ffi liate sNSA$30.04$28.5 05.4 %SALSA2.9 HOL D$2,0444.4 %18.7 x82%5.4 %-9.8 %5.6 % Public S torage PSA $201.19 $218.50 -7.9% SWAN 3.5 BUY $35,135 4.0% 19.0x 76% 9.3% -3.9% -10.0% Global S elf S torage SELF $4.10 $4.5 6-10.1 %SALSA2.8 HOLD $38 - 18.6x 118% 4.8% -1.6% 19.6% AV ERAG E-1.2%$11,0484. 3% 18. 4x 84% 8. 4% -6 .3% -0.2%

Data C enters [ 5] CoreSite R ealty COR $127.75 $100.00 27.8 %SALSA3.4 HOLD $6,3 22 4.0% 24.8x 96% 3.0% 12.5% 11.8% CyrusOn eCON E$73.54$63.6 515.5%SWAN3.9BUY ( WATCH) $8,458 2.7 %19.2 x53%6.0 %14.6 %28.2 % Digita l R ealty DLR $146.0 5$120.0 021.7%SWAN4.4BUY ( WATCH) $38,4 98 3.1 %24.1 x74%-4.0 %20.9 %26.4 % Eq uinix EQ IX $693.35 $500.00 38.7% SAL SA 4.1 HOLD $59,578 1.5% 29.2x 45% 3.7% 20.5% 45.6% QTS R ealty QTS $66.6 8$50.0033.4 %SALSA3.3 BUY (WATCH) $4,0 36 2.7% 24.2x 68% 9.7% 27.7% 54.2% AV ERAG E27.4%$23,3782. 8% 24. 3x 67% 3. 7% 19. 3% 33. 3%

Timber [ 4] ( Using EPS) Catc hMark T imber CTT $8.2 6$10.8 0-23.5%SALSA3.0HOL D$4036.9 %- -234%1.5 %-29.4 %-10.7 % Po tlatch PC H$35.22$30.6015.1%SAL SA 3.0 HOLD $2,358 4.5% (126.69x) -5 50% -3 .2% -2 0.6% 3.6% Ra yonie r RY N$23.91$23.402.2%SALSA3.0HOLD$3,0894.5%72.45x327%-1.2%-26.5%-12.2% Weyerhaeuser C o. WY $21.44 $20.7 03.6 %SALSA3.1 HOL D$15,9 99 1.7 %171.5 2x 272% -7.7 %-32.3 %-5.6 % AV ERAG E-0.7%$5,4624. 4% 39. 1x -46% -2. 6% -2 7.2% -6 .2%

u CONTINUED ON NEXT PAGE

40 | FORBES REAL ESTATE INVESTOR | JUNE 2020 ------Share P rice------Ratings------Fundamentals------Performance------E arnings------SW AN/ R. I.N. O. REIT Ticker 28-May-20 Current V alue Variance SA LSA Ra ting B|H|S Market C ap Yield P/F FO FFO P ayout 1-Month YTD 1-Year Manufactured H ousing [ 3] Equity L ife sty le Properti es ELS $62.50 $54.0 015.7%SWAN3.7HOLD$11,3842.2 %30.3 x65%3.3 %-10.9 %7.8 % Sun C ommuniti es SUI $138.5 3$112.5 023.1%SALSA3.6HOLD$13,6132.3 %28.7 x65%2.1 %-8.0 %13.6 % UMH P roperties UMH $12.82 $12.6 01.7 %SALSA2.6 SELL$528 5.8 %19.8 x111%-2.3 %-18.5 %-1.6 % AV ERAG E13.5%$8,5083. 4% 26. 3x 81% 1. 0% -1 2.5% 6.6%

Gaming [ 3] Ga ming a nd L eisure P roperti es GL PI $37.43 $34.0 010.1%SALSA2.9HOLD$7,4796.3 %11.4 x73%25.1 %-16.6 %-4.8 % MGM G rowth P roperti es MGP $30.01 $23.8 026.1%SALSA3.1HOLD$3,6256.9 %11.8 x82%10.2 %-8.7 %-4.1 % VIC I P roperti es VIC I$22.51$19.5 515.1%SALSA3.5BUY$9,0826.4 %11.5 x74%12.6 %-21.8 %-7.2 % AV ERAG E17.1%$6,7296. 6% 11. 6x 77% 16. 0% -1 5.7% -5 .4%

Single F amily R entals [ 3] American Homes 4 R ent AMH $25.01 $34.0 0-26.4%SALSA3.1HOLD$7,5270.8 %22.6 x19%4.6 %-3.5 %5.5 % Front Y ard R esidenti al RESI $7.5 9$19.5 5-61.2%SALSA2.7SELL$4114.7 %14.4 x66%-34.3 %-38.5 %-32.2 % In vita ti on H omes IN VH $26.20 $23.8 010.1%SALSA3.1HOLD$14,2472.2 %20.8 x47%11.9 %-11.3 %5.6 % AV ERAG E-8.2%$7,3952. 6% 19. 2x 44% -5. 9% -1 7.8% -7 .1%

Prisons [ 2] CoreCivic CXW $12.56 $18.9 0-33.5%SALSA3.2STRON G S PEC B UY $1,503 6.3 x-8.3 %-26.1 %-38.2 % The GE O Gr oup GE O$12.38$18.0 0-31.2%SALSA3.0SPEC B UY $1,503 16.7% 88% -5.5 %-23.1 %-37.5 % AV ERAG E-32.4%$1,5036. 3x 88% -6. 9% -2 4.6% -3 7.8%

Farmland [ 2] Farmland P artn ers FPI $6.90 $8.1 0-14.8 %SALSA2.6 SPEC BUY $206 2.9% 29.1x 84% 5.2% 2.6% 14.9% Gladstone L and LAND $14.6 7$11.7025.4 %SALSA3.0 BUY (WATCH) $313 3.7% 21.3x 78% 8.4% 13.8% 24.5% AV ERAG E5.3%$2603. 3% 25. 2x 81% 6. 8% 8. 2% 19. 7%

Cell T owers [ 3] American T ower AMT $258.12 $195.00 32.4 %SWAN3.9 HOL D$114,4331.7%31.4x55%8.5%12.8%28.3% Crown C astle International CCI $168.79 $120.00 40.7 %SALSA3.9 HOL D$70,3 85 2.8% 27.6x 80% 8.0% 22.1% 39.5% SBA C ommunicati ons SBAC $310.6 9HOLD$34,6600.6 %33.7 x20%8.5 %30.8 %48.7 % AV ERAG E $73, 16 0 1. 7% 30. 9x 52% 8. 3% 21. 9% 38. 8%

Billboards [ 2] Lamar A dvertising LAMR $68.48 $58.5 017.1%SALSA2.9HOLD$6,9005.7 %13.9 x77%15.0 %-24.6 %-12.2 % Ou tfr ont M edia OU T$14.47$22.5 0-35.7%SALSA3.0HOLD$2,0895.7 %10.2 x56%-10.5 %-46.9 %-40.3 % AV ERAG E-9.3%$4,4955. 7% 12. 1x 67% 2. 2% -3 5.7% -2 6.2%

Campus H ousing [1] American C ampus Communities ACC $33.4 3$40.50-17.5 %SWAN3.6 STRONG B UY $4,5 91 5.9% 15.3x 87% -7.1% -29.6% -26.3% AV ERAG E-17.5%$4,5915. 9% 15. 3x 87% -7. 1% -2 9.6% -2 6.3%

BUY LIST

REIT Ticker 28-May-20 Current V alue Variance SWAN|SALSA AvalonBay C ommuniti es AVB $159.0 3$157.5 01.0%SWAN Blackstone M ortg age BXMT $24.57 $32.40 -24.2% SALSA Essex P roperty T rust ESS $248.8 6$275.0 0-9.5%SWAN Extr a S pace S to rage EXR $97.2 2$99.7 5-2.5%SWAN Four C orners Property FCPT$21.4 7$22.5 6-4.8%SALSA Getty R ealty GTY $27.73 $27.55 0.7 %SALSA Healthcare T rust of A merica HTA $26.5 1$28.5 0-7.0%SWAN He althpeak PEAK $25.59 $31.50 -18.8% SALSA Monmouth R eal Estate MNR $13.04 $13.50 -3.4 %SALSA Om ega H ealth care In vesto rs OH I$31.0 1$35.1 0-11.7 %SALSA Physicians R ealty DOC $17.4 4$20.0 0-12.8 %SALSA PS B usiness P arks PSB $132.6 5$126.0 05.3%SWAN Public S torage PSA $201.19 $218.50 -7.9 %SWAN Realty In come O $55.7 0$61.7 5-9.8%SWAN Regency C ente rs REG $44.6 9$60.3 0-25.9 %SWAN STAG I ndustrial STAG $26.98 $26.10 3.4 %SWAN VIC I P roperti es VIC I$22.5 1$19.5 515.1 %SALSA W.P. C arey WPC $62.28 $72.20 -13.7% SWAN

41 | FORBES REAL ESTATE INVESTOR | JUNE 2020 STRONG BUY LIST

Name Ticker 28-May-20 Current V alue Variance SWAN|SALSA B|H|S American Campus C ommunities ACC $33.4 3$40.5 0-17.5 %SWANSTRON G B UY Apple Hospita lity APLE $10.3 9$17.0 0-38.9 %SALSASTRON G S PEC B UY Arbor R ealty Trust ABR $8.5 6$12.3 8-30.9 %SALSASTRON G S PEC B UY Brookfi eld P roperty P artn ers L .P .BPY$10.6 2$12.0 0-11.5 %SALSASTRON G S PEC B UY CoreCivic CXW $12.5 6$18.9 0-33.5 %SALSASTRON G S PEC B UY Essenti al Properti es R ealty EPRT$13.4 4$19.0 0-29.3 %SALSASTRON G B UY Federal Realty In vestm ent FRT $80.4 4$120.6 0-33.3 %SWANSTRON G B UY Ir on M ounta in IR M$25.7 0$36.0 0-28.6 %SALSASTRON G S PEC B UY Ladder C apita lLADR$8.2 1$15.7 5-47.9 %SALSASTRON G S PEC B UY LTC P roperti es LTC $37.5 2$43.2 0-13.1 %SWANSTRON G B UY Nati onal R eta il P roperti es NNN $32.5 6$47.5 0-31.5 %SWANSTRON G B UY Spirit R ealty Capita lSRC$29.7 5$47.5 0-37.4 %SALSASTRON G S PEC B UY Venta sVTR$36.7 6$54.0 0-31.9 %SWANSTRON G S PEC B UY

STRONG SPECULATIVE/BUY WATCH LIST

Name Ticker28-May-20Current V alue Variance SWAN|SALSA B|H|S Broadmark R ealty BRMK $8.61 $11.25 -23.5% SALSA SPEC BUY Camden P roperty CPT $92.5 5$81.0 014.3 %SALSABUY ( WATCH) CyrusOn eCON E$73.5 4$63.6 515.5 %SWANBUY ( WATCH) Digital R ealty DLR $146.05 $120.00 21.7 %SWANBUY ( WATCH) Easte rly Go vernment Properti es DEA $25.3 6$20.0 026.8 %SALSABUY ( WATCH) Farmland P artn ers FPI $6.90 $8.10 -14.8% SALSA SPEC BUY Gladstone L and LAND $14.67 $11.70 25.4% SALSA BUY (WATCH) Gl obal Medical R EIT GM RE $11.2 5$10.3 58.7 %SALSASPEC B UY KKR R eal Esta te F inance KREF $16.3 7$17.7 8-7.9 %SALSASPEC B UY QTS R ealty QTS $66.68 $50.00 33.4% SALSA BUY (WATCH) Simon P roperty Gr oup SPG $59.7 5$125.00-52.2 %SWANSPEC B UY Sto re C apital STOR $20.1 3$28.5 0-29.4 %SWANSPEC B UY The GE O Gr oup GE O$12.3 8$18.0 0-31.2 %SALSASPEC B UY WPT I ndustr ial WPTIF $11.9 6$14.4 0-16.9 %SALSASPEC B UY

42 | FORBES REAL ESTATE INVESTOR | JUNE 2020 REIT PREFERRED STOCK & BOND TRACKER

Cur rent YTD P erformanc e Mar ke t Rec en t Percent o f Per iod Annu al Tic ker Company Type of Is sue Next C all D ate Yie ld Fre quency (Pr ice) Cap ( $B) Pri ce Par V alu e Coupo n Pay me nt Pay me nt Residenti al m REIT s NL Y-D Annaly C apital St andard 5/26/2020 7.7% Quarterly -5.6% 8.86 $24. 26 97% 7. 50% $0. 47 $1. 88 NL Y-F Annaly C apital Fi xed-to-Fl oat 9/30/2022 8.0% Quarterly -16.2% 8.86 $21. 67 87% 6. 95% $0. 43 $1. 74 NL Y-G Annaly C apital Fi xed-to-Fl oat 3/31/2023 7.7% Quarterly -16.6% 8.86 $21. 07 84% 6. 50% $0. 41 $1. 63 NL Y-I Annaly C apital Fi xed-to-Fl oat 6/30/2024 7.8% Quarterly -16.5% 8.86 $21. 70 87% 6. 75% $0. 42 $1. 69 AG NCM AGNC I nvestment Fi xed-to-Fl oat 4/15/2024 7.5% Quarterly -11.4% 7.21 $22. 83 91% 6. 88% $0. 43 $1. 72 AGN CN AGNC I nvestment Fi xed-to-Fl oat 10/15/2022 7.5% Quarterly -10.6% 7.21 $23. 19 93% 7. 00% $0. 44 $1. 75 AG NCO AGNC I nvestment Fi xed-to-Fl oat 10/15/2024 7.3% Quarterly -12.9% 7.21 $22. 35 89% 6. 50% $0. 41 $1. 63 AG NCP AGNC I nvestment Fi xed-to-Fl oat 4/15/2025 7.1% Quarterly -- 7.21 $21. 43 86% 6. 13% $0. 38 $1. 53 NRZ -A New R esidential Fi xed-to-Fl oat 8/15/2024 9.3% Quarterly -23.6% 3.01 $20. 19 81% 7. 50% $0. 47 $1. 88 NRZ -B New R esidential St andard 8/15/2024 9.5% Quarterly -27.4% 3.01 $18. 82 75% 7. 13% $0. 45 $1. 78 NRZ -C New R esidential St andard 2/15/2025 9.0% Quarterly -- 3.01 $17. 62 70% 6. 38% $0. 40 $1. 59 CI M-A Chimera I nvestment St andard 10/30/2021 9.1% Quarterly -17.1% 1.59 $21. 86 87% 8. 00% $0. 50 $2. 00 CI M-B Chimera I nvestment Fi xed-to-Fl oat 3/30/2024 10.7% Quarterly -30.2% 1.59 $18. 68 75% 8. 00% $0. 50 $2. 00 CI M-C Chimera I nvestment Fi xed-to-Fl oat 9/30/2025 10.6% Quarterly -29.4% 1.59 $18. 32 73% 7. 75% $0. 48 $1. 94 CI M-D Chimera I nvestment Fi xed-to-Fl oat 3/30/2024 10.7% Quarterly -29.2% 1.59 $18. 63 75% 8. 00% $0. 50 $2. 00 TW O-A Two H arbors Fi xed-to-Fl oat 04/27/2027 9.3% Quarterly -21.3% 1.25 $21. 85 87% 8. 13% $0. 51 $2. 03 TW O-B Two H arbors Fi xed-to-Fl oat 07/27/2027 9.4% Quarterly -26.2% 1.25 $20. 26 81% 7. 63% $0. 48 $1. 91 TW O-C Two H arbors Fi xed-to-Fl oat 01/27/2025 9.3% Quarterly -25.3% 1.25 $19. 51 78% 7. 25% $0. 45 $1. 81 TW O-D Two H arbors Fi xed-to-Fl oat 5/26/2020 9.0% Quarterly -14.6% 1.25 $21. 63 87% 7. 75% $0. 48 $1. 94 TW O-E Two H arbors Fi xed-to-Fl oat 5/26/2020 8.8% Quarterly -16.0% 1.25 $21. 25 85% 7. 50% $0. 47 $1. 88 PM T-A PennyMac M ortgage Fi xed-to-Fl oat 3/15/2024 9.0% Quarterly -15.4% 1.11 $22. 45 90% 8. 13% $0. 51 $2. 03 PM T-B PennyMac M ortgage Fi xed-to-Fl oat 6/15/2024 9.2% Quarterly -17.4% 1.11 $21. 65 87% 8. 00% $0. 50 $2. 00 NY MTM New Y ork M ortgage Fi xed-to-Fl oat 1/15/2025 10.7% Quarterly -27.2% 0.79 $18. 38 74% 7. 88% $0. 49 $1. 97 NY MTN New Y ork M ortgage Fi xed-to-Fl oat 10/15/2027 10.6% Quarterly -24.7% 0.79 $18. 93 76% 8. 00% $0. 50 $2. 00 NY MTO New Y ork M ortgage St andard 5/26/2020 10.4% Quarterly -24.6% 0.79 $18. 87 75% 7. 88% $0. 49 $1. 97 NY MTP New Y ork M ortgage St andard 5/26/2020 10.0% Quarterly -22.4% 0.79 $19. 42 78% 7. 75% $0. 48 $1. 94 MF A-B MFA F inancial St andard 5/26/2020 11.8% Quarterly -38.6% 0.78 $15. 85 63% 7. 50% $0. 47 $1. 88 MF A-C MFA F inancial Fi xed-to-Fl oat 3/31/2025 11.6% Quarterly -- 0.78 $14. 05 56% 6. 50% $0. 41 $1. 63 MF O MFA F inancial Bo nd 4/15/2017 10.2% Quarterly -24.9% 0.78 $19. 70 79% 8. 00% $0. 50 $2. 00 AR R-C Armour R esidential St andard 1/28/2025 8.0% Monthly -- 0.51 $21. 92 88% 7. 00% $0. 15 $1. 75 CM O-E Capstead M ortgage St andard 5/26/2020 8.3% Quarterly -10.3% 0.49 $22. 65 91% 7. 50% $0. 47 $1. 88 IV R-A Invesco M ortgage St andard 5/26/2020 10.1% Quarterly -26.1% 0.54 $19. 16 77% 7. 75% $0. 48 $1. 94 IV R-B Invesco M ortgage Fi xed-to-Fl oat 12/27/2024 10.6% Quarterly -32.1% 0.54 $18. 25 73% 7. 75% $0. 48 $1. 94 IV R-C Invesco M ortgage Fi xed-to-Fl oat 9/27/2027 10.4% Quarterly -32.1% 0.54 $18. 04 72% 7. 50% $0. 47 $1. 88 EF C-A Ellington F inancial Fi xed-to-Fl oat 10/30/2024 9.0% Quarterly -25.6% 0.44 $18. 85 75% 6. 75% $0. 42 $1. 69 RC B Ready C apital Bo nd 7/30/2022 9.6% Quarterly -38.3% 0.33 $16. 18 65% 6. 20% $0. 39 $1. 55 DX -B Dynex C apital St andard 5/26/2020 8.0% Quarterly -6.0% 0.30 $23. 77 95% 7. 63% $0. 48 $1. 91 DX -C Dynex C apital Fi xed-to-Fl oat 4/15/2025 7.8% Quarterly -- 0.30 $22. 10 88% 6. 90% $0. 43 $1. 73 AJ XA Great A jax Bo nd 4/30/2022 8.1% Quarterly -18.1% 0.19 $22. 43 90% 7. 25% $0. 45 $1. 81 AN H-A Anworth M ortgage St andard 5/26/2020 9.5% Quarterly -13.7% 0.15 $22. 75 91% 8. 63% $0. 54 $2. 16 AN H-B Anworth M ortgage Co nvertible 1/25/2012 8.6% Quarterly -18.5% 0.15 $18. 16 73% 6. 25% $0. 39 $1. 56 AN H-C Anworth M ortgage St andard 5/26/2020 9.2% Quarterly -18.7% 0.15 $20. 62 82% 6. 75% $0. 48 $1. 91 CH MI-A Cherry H ill Mortgage St andard 8/17/2022 9.0% Quarterly -10.8% 0.15 $22. 86 91% 8. 20% $0. 51 $2. 05 CH MI-B Cherry H ill Mortgage Fi xed-to-Fl oat 4/15/2024 9.7% Quarterly -17.9% 0.15 $21. 30 85% 8. 25% $0. 52 $2. 06 AI -B Arlington A sset St andard 5/12/2022 10.2% Quarterly -20.5% 0.09 $17. 15 69% 7. 00% $0. 44 $1. 75 AI -C Arlington A sset Fi xed-to-Fl oat 3/30/2024 11.7% Quarterly -17.7% 0.09 $17. 67 71% 8. 25% $0. 52 $2. 06 AI C Arlington A sset Bo nd 3/15/2018 8.2% Quarterly -11.5% 0.09 $21. 25 85% 6. 75% $0. 44 $1. 75 AI W Arlington A sset Bo nd 5/1/2016 7.4% Quarterly -8.0% 0.09 $22. 50 90% 6. 63% $0. 41 $1. 66 MI TT-A AG M ortgage St andard 5/26/2020 19.3% Quarterly -58.1% 0.08 $10. 70 43% 8. 25% $0. 52 $2. 06 MI TT-B AG M ortgage St andard 5/26/2020 20.0% Quarterly -60.6% 0.08 $10. 00 40% 8. 00% $0. 50 $2. 00 MI TT-C AG M ortgage Fi xed-to-Fl oat 9/17/2024 20.4% Quarterly -62.9% 0.08 $9. 80 39% 8. 00% $0. 50 $2. 00

Commercial m REIT s ST AR -D iStar I nc St andard 10/08/2002 8.3% Quarterly -5.4% 0.91 $24. 20 97% 8. 00% $0. 50 $2. 00 ST AR -G iStar I nc St andard 12/19/2008 8.3% Quarterly -9.6% 0.91 $23. 05 92% 7. 65% $0. 48 $1. 91 ST AR -I iStar I nc St andard 03/01/2009 8.4% Quarterly -12.9% 0.91 $22. 20 89% 7. 50% $0. 47 $1. 88 ABR -A Arbor R ealty St andard 2/1/2018 8.5% Quarterly -7.2% 0.94 $24. 40 98% 8. 25% $0. 52 $2. 06 ABR -B Arbor R ealty St andard 5/9/2018 8.1% Quarterly -6.7% 0.94 $23. 98 96% 7. 75% $0. 48 $1. 94 ABR -C Arbor R ealty St andard 2/25/2019 8.5% Quarterly -6.1% 0.94 $25. 00 100% 8. 50% $0. 53 $2. 13 JC AP-B Jergian C apital St andard 1/26/2023 7.4% Quarterly -12.6% 0.28 $23. 50 94% 7. 00% $0. 44 $1. 75 XAN -C Exantas C apital Fi xed-to-Fl oat 7/30/2024 20.5% Quarterly -59.7% 0.07 $10. 51 42% 8. 63% $0. 54 $2. 16

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43 | FORBES REAL ESTATE INVESTOR | JUNE 2020

Cur rent YTD P erformanc e Mar ke t Rec en t Percent o f Per iod Annu al Tic ker Company Type of Is sue Next C all D ate Yie ld Fre quency (Pr ice) Cap ( $B) Pri ce Par V alu e Coupo n Pay me nt Pay me nt Of fice BXP- B Boston P roperties St andard 5/26/2020 5.2% Quarterly -1.7% 13.31 $25. 06 100% 5. 25% $0. 33 $1. 31 VN O-K Vornado R ealty St andard 5/26/2020 5.9% Quarterly -4.0% 6.98 $24. 21 97% 5. 70% $0. 36 $1. 43 VN O-L Vornado R ealty St andard 5/26/2020 5.9% Quarterly -9.6% 6.98 $22. 79 91% 5. 40% $0. 34 $1. 35 VN O-M Vornado R ealty St andard 12/13/2022 5.8% Quarterly -11.4% 6.98 $22. 64 91% 5. 25% $0. 33 $1. 31 EQC -D Equity C ommonwealth St andard 5/26/2020 5.9% Quarterly -2.1% 4.07 $27. 65 111% 6. 50% $0. 41 $1. 63 SL G-I SL G reen St andard 5/26/2020 6.3% Quarterly 1.1% 3.26 $25. 70 103% 6. 50% $0. 41 $1. 63 OP INI Office P roperties Bo nd 5/26/2021 6.2% Quarterly -8.0% 1.23 $23. 90 96% 5. 88% $0. 37 $1. 47 CI O-A City O ffice St andard 10/4/2021 7.7% Quarterly -16.0% 0.44 $21. 50 86% 6. 63% $0. 41 $1. 66 AH H-A Armada H offler St andard 6/18/2024 8.3% Quarterly -23.9% 0.48 $20. 40 82% 6. 75% $0. 42 $1. 69

Data C enter DL R-C Digital R ealty St andard 5/15/2021 6.3% Quarterly -0.9% 38.37 $26. 11 104% 6. 63% $0 .41 $1. 66 DL R-J Digital R ealty St andard 8/7/2022 5.1% Quarterly -0.1% 38.37 $25. 74 103% 5. 25% $0 .33 $1. 31 DL R-I Digital R ealty St andard 8/24/2020 6.2% Quarterly -0.9% 38.37 $25. 59 102% 6. 35% $0 .40 $1. 59 DL R-G Digital R ealty St andard 5/26/2020 5.7% Quarterly 1.2% 38.37 $25. 70 103% 5. 88% $0 .37 $1. 47 QT S-A QTS R ealty St andard 3/15/2023 6.6% Quarterly -0.7% 4.08 $27. 00 108% 7. 13% $0 .45 $1. 78 QT S-B QTS R ealty Co nvertible 7/20/2023 4.3% Quarterly 17.1% 4.08 $150. 00 150% 6. 50% $1 .63 $6. 50

Net L ease VER -F Ve reit St andard 5/26/2020 6.7% Monthly -1.9% 5.89 $25. 02 100% 6. 70% $0 .14 $1. 68 NNN -F National R etail St andard 10/11/2021 5.5% Quarterly -1.9% 5.44 $23. 50 94% 5. 20% $0. 33 $1. 30 SR C-A Spirit R ealty St andard 10/3/2022 6.3% Quarterly -7.6% 2.93 $23. 90 96% 6. 00% $0. 38 $1. 50 EPR -C EPR P roperties St andard 5/26/2020 8.0% Quarterly -8.3% 2.46 $17. 90 72% 5. 75% $0. 36 $1. 44 EPR -E EPR P roperties St andard 5/26/2020 8.8% Quarterly -43.7% 2.46 $25. 49 102% 9. 00% $0 .56 $2. 25 EPR -G EPR P roperties St andard 11/30/2022 8.4% Quarterly -33.3% 2.46 $17. 19 69% 5. 75% $0. 36 $1. 44 GN L-A Global N et L ease St andard 9/12/2022 7.7% Quarterly -33.4% 1.23 $23. 60 94% 7. 25% $0. 45 $1. 81 GN L-B Global N et L ease St andard 11/26/2024 7.8% Quarterly -10.7% 1.23 $21. 95 88% 6. 88% $0. 43 $1. 72 AF INP American F inance St andard 8/24/2020 9.4% Quarterly -14.4% 0.82 $20. 00 80% 7. 50% $0. 47 $1. 88 -2 0.8% Shopping C ente r FR T-C Federal R ealty St andard 9/29/2022 5.0% Quarterly -2.0% 6.01 $25. 22 101% 5. 00% $0 .31 $1. 25 KI M-L Ki mco St andard 8/16/2022 5.3% Quarterly -6.5% 4.85 $24. 06 96% 5. 13% $0. 32 $1. 28 KI M-M Ki mco St andard 12/20/2022 5.4% Quarterly -6.1% 4.85 $24. 33 97% 5. 25% $0. 33 $1. 31 SI TC-A SITE C enters St andard 6/5/2022 8.0% Quarterly -24.0% 1.11 $19. 90 80% 6. 38% $0. 40 $1. 59 SI TC-K SITE C enters St andard 5/26/2020 7.9% Quarterly -22.2% 1.11 $19. 72 79% 6. 25% $0. 39 $1. 56 BF S- D Saul C enters St andard 1/23/2023 7.2% Quarterly -20.7% 0.71 $20. 90 84% 6. 13% $0. 38 $1. 50 BF S- E Saul C enters St andard 9/17/2024 7.3% Quarterly -22.3% 0.71 $20. 65 83% 6. 00% $0. 38 $1. 50 UB P-K Urstadt B iddle St andard 10/1/2024 7.1% Quarterly -19.4% 0.49 $20. 60 82% 5. 88% $0. 37 $1. 47 UB P-H Urstadt B iddle St andard 9/18/2022 7.4% Quarterly -19.5% 0.49 $20. 99 84% 6. 25% $0. 39 $1. 56 SR G-A Seritage G rowth St andard 12/14/2022 12.2% Quarterly -45.3% 0.30 $14. 30 57% 7. 00% $0. 44 $1. 75 CDR -C Cedar R ealty St andard 8/24/2022 12.4% Quarterly -43.4% 0.07 $13. 12 52% 6. 50% $0. 41 $1. 63

In dustr ial RE XR- A Rexford I ndustrial St andard 8/16/2021 5.8% Quarterly -0.9% 4.84 $25. 40 102% 5. 88% $0 .37 $1. 47 RE XR- B Rexford I ndustrial St andard 11/13/2022 5.7% Quarterly 0.2% 4.84 $25. 95 104% 5. 88% $0 .37 $1. 47 RE XR- C Rexford I ndustrial St andard 9/20/2024 5.6% Quarterly -1.6% 4.84 $25. 35 101% 5. 63% $0 .35 $1. 41 ST AG -C Stag I ndustrial St andard 3/17/2021 6.5% Quarterly -0.6% 4.00 $26. 46 106% 6. 88% $0 .43 $1. 72 PSB- W PS B usiness P arks St andard 10/20/2021 5.1% Quarterly -1.9% 3.65 $25. 30 101% 5. 20% $0 .33 $1. 30 PSB- X PS B usiness P arks St andard 9/21/2022 5.1% Quarterly -2.0% 3.65 $25. 57 102% 5. 25% $0 .33 $1. 31 PSB- Y PS B usiness P arks St andard 12/7/2022 5.1% Quarterly -0.7% 3.65 $25. 50 102% 5. 20% $0 .33 $1. 30 PSB- Z PS B usiness P arks St andard 11/4/2024 5.0% Quarterly -4.7% 3.65 $24. 48 98% 4. 88% $0. 30 $1. 22 LX P-C Lexington R ealty Co nvertible 11/16/2009 3.2% Quarterly -10.1% 2.65 $51. 13 102% 6. 50% $0 .41 $1. 63 MN R-C Monmouth R eal Estate St andard 9/15/2021 6.2% Quarterly -0.2% 1.26 $24. 87 99% 6. 13% $0. 38 $1. 53 PL YM -A Plymouth I ndustrial St andard 12/31/2022 7.4% Quarterly -3.0% 0.23 $25. 50 102% 7. 50% $0 .47 $1. 88

Ma ll SPG -J Simon P roperty St andard 10/15/2027 6.7% Quarterly -15.7% 17.41 $62. 05 62% 8. 38% $1. 05 $4. 19 TC O-J Taubman C enters St andard 5/26/2020 6.8% Quarterly -7.9% 2.58 $23. 95 96% 6. 50% $0. 41 $1. 63 TC O-K Taubman C enters St andard 5/26/2020 6.6% Quarterly -6.0% 2.58 $23. 79 95% 6. 25% $0. 39 $1. 56 WP G-H Washington P rime St andard 5/26/2020 27.8% Quarterly -68.8% 0.12 $6. 74 27% 7. 50% $0. 47 $1. 88 WP G-I Washington P rime St andard 5/26/2020 26.0% Quarterly -66.0% 0.12 $6. 60 26% 6. 88% $0. 43 $1. 72 PEI -B Pennsylvania R EIT St andard 5/26/2020 26.1% Quarterly -64.8% 0.09 $7. 06 28% 7. 38% $0. 46 $1. 84 PEI -C Pennsylvania R EIT St andard 1/27/2022 30.5% Quarterly -68.3% 0.09 $5. 90 24% 7. 20% $0. 45 $1. 80 PEI -D Pennsylvania R EIT St andard 9/15/2022 28.6% Quarterly -68.8% 0.09 $6. 02 24% 6. 88% $0. 43 $1. 72 CB L-D CBL & A ssociates St andard 5/26/2020 233.4% Quarterly -84.0% 0.05 $0. 79 3% 7. 38% $0. 46 $1. 84 CB L-E CBL & A ssociates St andard 5/26/2020 233.3% Quarterly -84.9% 0.05 $0. 71 3% 6. 63% $0. 41 $1. 66

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44 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Cu rrent YTD P erformanc e Ma rket Re cent Percent o f Pe riod An nual Tic ker Company Type of Is sue Next C all D ate Yi eld Fr eque nc y (Pr ice) Cap ( $B) Pr ice Par V alu e Co upon Pa yme nt Pa yme nt Ho tel/Lodging SH O-E Sunstone H otels St andard 3/11/2021 7.1% Quarterly -6.4% 1.90 $24. 35 97% 6. 95% $0. 43 $1. 74 SH O-F Sunstone H otels St andard 5/17/2021 6.7% Quarterly -6.1% 1.90 $24. 15 97% 6. 45% $0. 40 $1. 61 RLJ -A RLJ L odging Co nvertible -- 8.8% Quarterly -22.6% 1.72 $22. 23 89% 7. 80% $0. 49 $1. 95 PEB- C Pebblebrook H otels St andard 3/18/2018 7.5% Quarterly -14.8% 1.80 $21. 64 87% 6. 50% $0. 41 $1. 63 PEB- D Pebblebrook H otels St andard 6/9/2021 7.4% Quarterly -17.8% 1.80 $21. 49 86% 6. 38% $0. 40 $1. 60 PEB- E Pebblebrook H otels St andard 3/4/2018 7.9% Quarterly -20.9% 1.80 $20. 10 80% 6. 38% $0. 40 $1. 60 PEB- F Pebblebrook H otels St andard 5/25/2021 7.4% Quarterly -17.2% 1.80 $21. 27 85% 6. 30% $0. 39 $1. 58 IN N-D Summit H otel P roperties St andard 6/28/2021 9.0% Quarterly -30.3% 0.65 $18. 00 72% 6. 45% $0. 40 $1. 61 IN N-E Summit H otel P roperties St andard 11/13/2022 9.0% Quarterly -31.9% 0.65 $17. 37 69% 6. 25% $0. 39 $1. 56 HT -C Hersha H ospitality St andard 3/6/2018 14.2% Quarterly -52.1% 0.20 $12. 11 48% 6. 88% $0. 43 $1. 72 HT -D Hersha H ospitality St andard 5/31/2021 13.8% Quarterly -52.8% 0.20 $11. 75 47% 6. 50% $0. 41 $1. 63 HT- E Hersha H ospitality St andard 11/7/2021 13.9% Quarterly -53.4% 0.20 $11. 66 47% 6. 50% $0. 41 $1. 63 BH R-D Braemar H otels a nd R esortsSt andard 11/20/2023 14.5% Quarterly -47.1% 0.11 $14. 25 57% 8. 25% $0. 52 $2. 06 AH T-F Ashford H ospitality St andard 7/15/2021 25.6% Quarterly -67.2% 0.07 $7. 20 29% 7. 38% $0. 46 $1. 84 AH T-G Ashford H ospitality St andard 10/18/2021 25.4% Quarterly -66.0% 0.07 $7. 26 29% 7. 38% $0. 46 $1. 84 AH T-H Ashford H ospitality St andard 8/25/2022 25.1% Quarterly -66.1% 0.07 $7. 46 30% 7. 50% $0. 47 $1. 88 AH T-I Ashford H ospitality St andard 11/17/2022 25.0% Quarterly -65.4% 0.07 $7. 51 30% 7. 50% $0. 47 $1. 88 SO HOO Southerly H otels St andard 10/15/2022 25.3% Quarterly -70.7% 0.04 $7. 79 31% 7. 88% $0. 49 $1. 97 SO HOB Southerly H otels St andard 8/23/2021 25.8% Quarterly -70.6% 0.04 $7. 76 31% 8. 00% $0. 50 $2. 00 SO HON Southerly H otels St andard 4/18/2024 27.5% Quarterly -71.0% 0.04 $7. 50 30% 8. 25% $0. 52 $2. 06

Single F amily R enta l AMH -D American H omes 4 R ent Sta ndard 5/24/2021 6.3% Quarte rly -0.9% 7.60 $25. 95 104% 6. 50% $0 .41 $1. 63 AM H-E American Homes 4 R ent St andard 6/29/2021 6.1% Quarterly 1.0% 7.60 $26. 17 105% 6. 35% 0. 396875 $1. 59 AM H-F American Homes 4 R ent St andard 4/24/2022 5.8% Quarterly -3.9% 7.60 $25. 15 101% 5. 88% $0 .37 $1. 47 AM H-G American Homes 4 R ent St andard 7/17/2022 5.9% Quarterly -4.6% 7.60 $24. 91 100% 5. 88% $0 .37 $1. 47 AM H-H American Homes 4 R ent St andard 9/19/2023 6.0% Quarterly -1.4% 7.60 $26. 25 105% 6. 25% $0 .39 $1. 56

Health C are DH CN I Diversified H ealthcare Bo nd 8/1/2017 7.4% Quarterly -23.6% 0.92 $18. 90 76% 5. 63% $0. 35 $1. 41 DH CN L Diversified H ealthcare Bo nd 2/18/2021 8.4% Quarterly -27.9% 0.92 $18. 65 75% 6. 25% $0. 39 $1. 56

St orage PSA- B Public S torage St andard 1/20/2021 5.3% Quarterly -0.7% 35.23 $25. 64 103% 5. 40% $0 .34 $1. 35 PSA- C Public S torage St andard 5/21/2021 5.0% Quarterly 0.2% 35.23 $25. 76 103% 5. 13% $0 .32 $1. 28 PSA- D Public S torage St andard 7/1/2021 4.9% Quarterly -0.2% 35.23 $25. 42 102% 4. 95% $0 .31 $1. 24 PSA- E Public S torage St andard 10/14/2021 4.9% Quarterly -0.9% 35.23 $25. 25 101% 4. 90% $0 .31 $1. 23 PSA- F Public S torage St andard 6/2/2022 4.9% Quarterly 0.8% 35.23 $26. 22 105% 5. 15% $0 .32 $1. 29 PSA- G Public S torage St andard 8/9/2022 4.8% Quarterly 0.7% 35.23 $26. 05 104% 5. 05% $0 .32 $1. 26 PSA- H Public S torage St andard 3/11/2024 5.1% Quarterly -0.5% 35.23 $27. 54 110% 5. 60% $0 .35 $1. 40 PSA- I Public S torage St andard 9/12/2024 4.7% Quarterly 0.9% 35.23 $25. 98 104% 4. 88% $0 .31 $1. 22 PSA- V Public S torage St andard 9/20/2017 5.3% Quarterly 0.8% 35.23 $25. 44 102% 5. 38% $0 .34 $1. 35 PSA- W Public S torage St andard 1/16/2018 5.1% Quarterly 0.9% 35.23 $25. 52 102% 5. 20% $0 .33 $1. 30 PSA- X Public S torage St andard 3/13/2018 5.1% Quarterly 0.9% 35.23 $25. 54 102% 5. 20% $0 .33 $1. 30 NS A-A National S torage St andard 10/11/2022 5.7% Quarterly -0.9% 2.05 $26. 38 106% 6. 00% $0 .38 $1. 50

Manufactu red H ousing UM H- B UMH P roperties St andard 10/20/2020 8.0% Quarterly -3.1% 0.51 $25. 10 100% 8. 00% $0 .50 $2. 00 UM H- C UMH P roperties St andard 7/26/2022 7.1% Quarterly -9.0% 0.51 $23. 79 95% 6. 75% $0. 42 $1. 69 UM H- D UMH P roperties St andard 1/22/2023 6.8% Quarterly -6.8% 0.51 $23. 31 93% 6. 38% $0. 40 $1. 60

Ap artments MA A-I Mi d-America St andard 10/1/2026 3.5% Quarterly -10.5% 13.43 $61. 21 122% 8. 50% $0 .53 $2. 13 IR ET-C Investors R eal E state St andard 10/2/2022 6.4% Quarterly -1.7% 0.92 $25. 70 103% 6. 63% $0 .41 $1. 66 BR G-A Bluerock G rowth St andard 10/21/2020 8.9% Quarterly -10.4% 0.15 $23. 28 93% 8. 25% $0. 52 $2. 06 BR G-C Bluerock G rowth St andard 7/19/2021 8.3% Quarterly -12.1% 0.15 $23. 00 92% 7. 63% $0. 48 $1. 91 BR G-D Bluerock G rowth St andard 10/13/2021 8.1% Quarterly -13.7% 0.15 $22. 03 88% 7. 13% $0. 45 $1. 78

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45 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Cu rrent YTD P erformanc e Ma rket Re cent Percent o f Pe riod An nual Tic ker Company Type of Is sue Next C all D ate Yi eld Fr eque nc y (Pr ice) Cap ( $B) Pr ice Par V alu e Co upon Pa yme nt Pa yme nt Di versified/Other CL NY-G Colony C apital St andard 5/26/2020 12.2% Quarterly -38.8% 0.98 $15. 37 61% 7. 50% $0. 47 $1. 88 CL NY-H Colony C apital St andard 5/26/2020 11.5% Quarterly -35.4% 0.98 $15. 45 62% 7. 13% $0. 45 $1. 78 CL NY-I Colony C apital St andard 6/5/2022 11.8% Quarterly -37.2% 0.98 $15. 18 61% 7. 15% $0. 45 $1. 79 CL NY-J Colony C apital St andard 9/22/2022 11.7% Quarterly -36.3% 0.98 $15. 23 61% 7. 13% $0. 45 $1. 78 GOOD M Gladstone C ommercial St andard 5/25/2021 7.3% Monthly -6.7% 0.65 $24. 00 96% 7. 00% $0. 15 $1. 75 GOO DN Gladstone C ommercial St andard 10/4/2024 7.8% Monthly -15.3% 0.65 $22. 35 89% 6. 63% $0. 15 $1. 75 BPYU P Brookfield P roperties R St andard 2/13/2018 10.1% Quarterly -37.3% 0.60 $15. 74 63% 6. 38% $0. 40 $1. 60 LA NDP Gladstone L and St andard 9/30/2018 6.2% Quarterly -1.0% 0.31 $25. 53 102% 6. 38% $0 .40 $1. 60 FP I-B Farmland P artners Co nvertible 9/30/2021 6.4% Quarterly -6.9% 0.21 $23. 34 93% 6. 00% $0. 38 $1. 50 PW -A Power R EIT St andard 2/28/2019 7.2% Quarterly -0.9% 0.04 $27. 00 108% 7. 75% $0 .48 $1. 94

ETFs & CEFs PF FR InfraCap R EIT P referred -- -- 7.0% Monthly -1 7.7% -- $20. 70 -- -- $0.12 $1.44 JR S Nuveen R eal E state I ncome -- -- 10.0% Quart erl y -2 8.6% -- $7. 58 -- -- $0.19 $0.76 RNP C&S R EIT P referred & In come -- -- 8.0% Monthly -2 1.5% -- $18. 68 -- -- $0.12 $1.49

REIT GLOSSARY 1031 Exchange or Like-Kind Exchange: The tax-deferred necessary to maintain a REIT’s properties and its exchange of real property for another of similar characteristics revenue stream (i.e., leasing commissions and tenant under U.S. Internal Revenue Code Section 1031. To qualify, the improvement allowances in commercial properties or new seller has (1) 45 days from the sale of the relinquished property paint and carpeting in apartment units); (2) “straight-lined” to formally identify replacement properties that must be similar rents included in revenue; and (3) FAS 141 adjustment. in nature to the property that was sold and (2) 180 days from the Development-related expenditures are excluded from this sale of the relinquished property to complete the purchase and analysis because they are not considered a recurring expense. exchange. The property seller cannot exchange real property for The AFFO calculation june also be called cash available for common shares or operating partnership units (OP units) in a distribution (CAD), or funds available for distribution REIT, because the assets are not of like kind. (FAD). The intent is to produce a cash-based measure of recurring earnings after debt services and regular capital Accrual Accounting: An accounting method that recognizes reserves. It is a financial measure of the REIT’s ability to revenue and expenses when they are incurred, rather than when cover the dividend. cash is exchanged. For example, property taxes are typically paid in one or perhaps two payments in the course of a year Balloon Payment: The lump sum required to pay off (depending on jurisdiction), but for accounting purposes june the principal balance on a debt instrument at the end of be accrued and recognized as a monthly expense. its term.

Adjusted Funds From Operations (AFFO): A measure of a real Book Value: Calculated as the book cost less depreciation, estate company’s cash flow generated by operations; it is th e book value is the carrying value of an asset on the balance considered a closer measure of economic profitability than funds sheet of the company. It is not a reflection of market value, from operations (FFO). AFFO is calculated by subtracting from although impairments to book value june be incurred if the FFO both (1) normalized recurring expenditures that are market value is below the book value. Except in rare circum - capitalized by the REIT and then amortized, but which are stances, book value is not raised for increases in ma rket value.

46 | FORBES REAL ESTATE INVESTOR | JUNE 2020 Breakpoint: In retail lease, the breakpoint is the sales revenue Funds From Operations (FFO): The most commonly accepted threshold above which the tenant pays a predetermined per - and reported measure of REIT operating performance. The centage of sales (i.e., 5% of sales over a $1 million breakpoint). NAREIT white paper is considered the recognized standard for calculating FFO. A simple example is as follows: GAAP net Building Classifications: Building classifications usually income + GAAP real estate depreciation and amortization- refer to Class A, B, and C properties and locations. gains on real estate (in GAAP net income) + losses on real estate Classifications are subjective. Class A buildings generally (in GAAP net income) +/- adjustments for non-controlling feature superior construction and finish and are well partnerships + impairments = funds from operations. located. These buildings typically command the highest rental rates in their submarket. The lower classes of General Partnership: A partnership in which each partner has buildings are progressively less desirable due to age, unlimited liability with respect to partnership debts and also has location or construction. Rents decline as the class of the influence over the business operation property declines. A property can be described as a Class A building in a Class B location or vice versa. NAREIT (National Association of Real Estate Investment Trusts): The primary trade organization of the REIT industry. Capital Improvement: Typically, a non-leasing capital Typically pronounced “nay-reet.” investment that improves the competitive positioning of the property or appreciably extends its useful life. Unlike capital Net Operating Income (NOI): One of the primary income expenditures, capital improvements typically have a metrics in the commercial real estate and REIT industry. NOI is prospective return on investment (i.e., adding or upgrading calculated by subtracting operating expenses (for example, the common area amenities of an apartment property, property tax, property insurance, maintenance expenditures, modernizing the façade at a shopping center). and utilities) from property-derived gross income (typically rent and tenant reimbursements of expenses). NOI does not include Carrying Costs: Expenses such as property taxes, interest depreciation, income tax, or financing expenses. and leasing costs associated with the retention of an asset under development. Such costs are usually capitalized into Triple Net Lease: The term “triple net” is drawn from a lease the cost basis of the asset. being (1) net of operating expenses, (2) net of insurance premiums and (3) net of property taxes. This arrangement is Debt-To-Total Market Capitalization: The percentage of commonplace in industrial and retail assets. Leases can be the total market capitalization of the REIT—long-term debt double net (tenant pays operating expense and insurance) or plus value of outstanding shares at market price—that single net (operating expense only), but these are rare. consists of the long-term debt portion; used to measure the degree of leverage of the REIT. Source: Wells Fargo Research

47 | FORBES REAL ESTATE INVESTOR | JUNE 2020 FORBES REAL ESTATE INVESTOR TERMS Some of you have asked me about various terms used through - prospective company’s market price must be at least 5% or out the newsletter so I’ve included a summary of definitions that below our Fair Value Price (also our Target Price) to be I hope you find helpful. considered a BUY. In other words, while we june like a SWAN stands for “sleep well at night” and that is our way of company’s fundamentals and prospects for profitability, we will describing a blue chip investment. In order for a company to be not issue a BUY rating unless it is at least within our price target. labeled a SWAN it must meet certain tests of quality such as SELL recommendations: As you know, we do not have many dividend safety, conservative debt metrics, diversification and other SELL ratings but if we do include a SELL it means that either the attributes in which we measure the durability of the dividend. company is grossly overpriced or that the fundamentals are SALSA stands for “safe and lasting seeking alpha” and this is poor, or a combination of both. our way of describing a REIT that is not a SWAN. We generally TRIM recommendations: We recently added TRIM to our list do not include a REIT in the REIT Lab if it is not safe. For as a result of the fact that many higher quality REITs have example, we once included UDF and Wheeler Real Estate become somewhat pricey. We did not want to use the SELL term Investment in the REIT Lab but we decided to discontinue as we thought it would spark a complete liquidation of the coverage after these companies failed to deliver sound results. security in question. BUY recommendations: As you will see in our REIT Lab, we HOLD recommendations: Using process of elimination, if the decided to modify our recommendations such that a prospective REIT is not a BUY, SELL or TRIM, it is a HOLD.

Disclosure: I am long these 72 REITs: ACC, APLE, AVB, BHR, BPY, BRG, BRX, BXMT, CCI, CIO, CLDT, CONE, CORR, CTRE, CUBE, CXP, DEA, DLR, DOC, EPR, EQIX, ESS, EXR, FRT, GDS, GEO, GMRE, GPT, HASI, HT, HTA, INN, IRET, IRM, JCAP, KIM, KREF, KRG, LADR, LAND, LMRK, LTC, MPW, NNN, NXRT, O, OFC, OHI, OUT, PEB, PEI, PK, PSB, PTTTS, QTS, RHP, RLJ, ROIC, SBRA, SKT, SPG, STAG, STOR, TCO, TRTX, UBA, UNIT, VER, VICI, VNQ, VTR, WPC.

48 | FORBES REAL ESTATE INVESTOR | JUNE 2020