Bold Move – Buying ARCP!

This is an unusual post that I’m writing. Since last couple of weeks, American Realty Capital Properties, Inc. (ARCP) has been pummeled a lot and it has rebounded also but it’s still close to its 5 years low. I’ve been thinking about it since it started falling since end of October month, a bitching month many says 🙂 ,when news of accounting issues start pouring out.

ARCP is a real-estate investment trust (REIT) that acquires, owns and operates single-tenant and multi-tenant commercial real estate properties and is world’s largest net lease REIT. It has in total 4,429 properties across 49 states in 94 industries with portfolio occupancy of99.8%, 99.1 million sq footage and total value of $23.8B. 

I’d written about ARCP in the Stocks watch list of October and Monthly Portfolio Update for November.

Now, ARCP has dropped so much that its current dividend yield is 11.12% and currently trading at $8.99closer to its 5 years low of ~$8. I think that current price provides an excellent entry point to investors. As a REIT, it must pay out 90% of its earnings. There are many other (m)REITs that I own: O, NLY, AGNC, OHI, PSEC, and even a REIT ETF from Vanguard: VNQ in my Portfolio, however, I still consider ARCP as a good bet for long-term investors.

Note that ARCP is still not completely out of woods yet and therefore carries a considerable amount of risk, if further issues are uncovered. Also, if the earnings and hence, dividends were to drop precipitously, I would reconsider my decision and might sell.

I’m making a Buffet’esque (BRK.B) move, a bold move for me, to start rolling my snowball faster, and adding another 50 positions on coming Monday.

Full Disclosure – I am long on ARCP.

What are your thoughts about ARCP. Are you going to buy or sell in near future?

Thanks for reading.

6 thoughts on “Bold Move – Buying ARCP!

  1. Indeed a bold move! Applaud for taking a calculated risk. ARCP is still risky to me but, it might work out in the end and pay rich dividends to shareholders.

    1. Ryan,

      Yep. I’m taking a big risk on ARCP and hope that it turns out a good one 🙂 we will see. I own many other REITs and so, I’m not too worried.

      Thanks for stopping by and commenting!

      Best wishes.

  2. Good stuff here. For the most part every DGI blogger that owns ARCP has been selling out of their position or just holding on to those shares. This is the first that I read about a buy. I think your calculated risk will pay off in the coming months and years. After all, at that yield, even with a reduction, you’ll be making some solid dividend income. Thanks for sharing.

    1. Hi DivHut,

      Yep. It is the one of the toughest call that I made in a while, due to high risks involved, but, also high rewards. I could do that as my portfolio is diversified across multiple asset types, with excellent blue chip companies. I know it is not easy for other bloggers and indeed a difficult call since no one knows the depth of the issues in ARCP.

      Hope it work out for me in the long run as Buffet says if the market closes tomorrow, I would still want to sleep soundly and not have to worry about the buy at the first place. Be greedy when others are fearful 🙂

      Thanks for stopping by and commenting. Cheers!

  3. I like the buy PIM…we made the same bold move as you did and bought more shares of ARCP. Like you, we believe it is a calculated risk that should pay off (provided further issues aren’t uncovered).

    In our case, we only took the risk because the reality is that our dividend stocks portfolio is less than 7% of our savings and investments. Our ARCP holding, even after the recent buy, accounts for less than .5% of our savings and investments. Of course we are hoping for a nice recovery story here but if that doesn’t materialize, I think it is still definitely worth the risk to go after the worlds largest net lease REIT.

    AFFJ

    1. Hi AFFJ,

      Good to hear about buying ARCP! At-least, I’m getting some support here 😉

      My portfolio is fairly diversified and ARCP comprises only 1% and so, I do not worry too much about the recent buy.

      Thanks for stopping by and commenting!

      Best wishes.

Leave a Reply