building an intelligent portfolio of … an intelligent portfolio of durable income ... i am now in...

BUILDING AN INTELLIGENT PORTFOLIO OFDURABLE INCOME

Durability implies that a company can take a financial punch and come back

swinging. It also implies that the company’s earnings stream is predictable and can be

relied upon over a series of years.

If you are already a REIT investor, you know that dividend payments represent the

proxy for durable income. Many of you are reading this newsletter because you are

seeking predictable and uninterrupted income that can grow faster over time.

The dependability of dividends is a big reason why investors own REITs and that’s

also the reason that I spend considerable time researching the REIT universe, always

looking for clues regarding dividend safety.

There are many ways to examine durability and one of the best methods is to look

for consistent profit margins over time. By paying close attention to net profit margins

or adjusted funds from operations, I have been able to predict a number of REITs that

had a negative impact to earnings.

For example, Wheeler Real Estate (WHLR) recently cut its monthly dividend

payout from $0.035 to $0.0175. That’s big cut for this shopping center REIT that now

has a yield of around 8%, down from 12%. Clearly WHLR’s annual $0.42 per share

payout was not sustainable as I explained in a recent article, “Wheeler is beginning to

claw out of the hole and provide sustainable profits; the game of "catch-up" is causing

Mr. Market to scream "sucker yield."

Other examples where I predicted unsafe dividend payouts were American Realty

Capital Properties (ARCP) and Campus Crest (CCG). Similar to WHLR, these two

REITs were paying out too much dividend income and by analyzing the historic

margins (i.e. payout ratio) I was able to forecast the painful dividend cuts beforehand.

It’s important to always ask yourself these questions:

• Can this REIT be as profitable as it used to be, or as profitable as its competitors?

• How much can this REIT grow over the next 2 to 5 years?

• How does this REIT’s dividend compare with the peer group?

W W W . F O R B E S N E W S L E T T E R S . C O M

IN THIS ISSUE:DURABLE INCOME PORTFOLIO . 1

REITS ON MY RADAR . 5

THE FOUR MOST IMPORTANT

LETTERS IN RETIREMENT . 6

SECTOR REVIEW: DATA CENTERS . 8

PREFERRED REITS . 11

REITS THAT PAY MONTHLY . 12

INTELLIGENT INVESTOR REIT LAB . 14

E D I TO R , B R A D T H OM A S

A P R I L 2 0 1 5

APRIL 2015 | FORBES REAL ESTATE INVESTOR

• How safe is the REIT’s balance sheet and how much

leverage does it have compared with the �peer group?

• How much Insider buying?

• Has the REIT ever cut its dividend? Why?

THE DURABLE INCOME PORTFOLIOAs many of you know, my newsletter is aimed to assist

REIT investors with selecting quality REIT securities that

reap the highest returns. I’m not a market timer so I’m not

providing you with REIT picks where you will get rich

quick. I consider myself a value investor so, like a farmer,

my goal is to assist you with planting the “REIT” seeds so

you can watch your crops grow.

As you begin to build a durable income portfolio, it’s

important to think “long-term” and set your goals and

investment expectations around two principles: Find REITs

with above-average price appreciation potential and safe

and growing dividends, and buy them at attractive prices.

As my charter subscribers know, my newsletter is just

around two years old and it has taken me this long to build

and “seed” a diversified investment portfolio. As a result, I

now own 23 REITs that provide me with adequate

diversification, solid dividend income, and sound share

price appreciation potential. I recently added a few new

REITs, including HCP (HCP), Chatham Lodging (CLDT),

Medical Properties Trust (MPW), and Preferred

Apartment Communities (APTS). By adding these new

REITs, I am now in a better position to demonstrate

portfolio performance measurable to other indexes.

Also, this Durable Income Portfolio is now adequately

diversified with 23 REITs and my goal is to build it to

around 30 companies. My largest position in the portfolio is

Realty Income (O)—8% exposure—and I own five other

REITs with more than 5% exposure: W.P. Carey (WPC),

Omega Healthcare Investors (OHI), Healthcare Trust of

America (HTA), Ventas (VTR) and Digital Realty (DLR).

See below for the complete Durable Income Portfolio.

As you can see, the average dividend yield for the

portfolio is 4.73% and the year-to-date total return is

5.14%. Keep in mind that I did not purchase all of these

Durable Income Por!olio Ticker Sector % Div-Yld YTD TRPreferred Apt. APTS APT 1.40% 6.40 20.22United Development UDF CM 2.00% 9.20 -2.89Digital Realty DLR DC 6.00% 5.00 2.99HCP, Inc. HCP HC 2.50% 5.30 -3.61Medical Proper!es Trust MPW HC 2.50% 5.80 10.45Physicians Realty DOC HC 3.50% 5.10 6.99Health Care REIT HCN HC 5.00% 4.20 4.57Ventas, Inc. VTR HC 6.00% 4.30 2.83Healthcare Trust of America HTA HC 6.00% 4.00 7.72Omega Healthcare Investors OHI HC 6.50% 5.30 4.1Chatham Lodging CLDT HOTEL 2.50% 3.90 6.49Host Hotels & Resorts HST HOTEL 3.00% 3.70 -8.62STAG Industrial STAG IND 3.75% 5.50 0.49Chambers Street CSG IND 3.75% 6.40 -1.49Taubman Centers TCO MALL 3.50% 2.80 5.38Gramercy Property Trust GPT NNN 3.50% 2.70 6.81Lexington Realty LXP NNN 5.40% 6.50 -5.37W.P. Carey WPC NNN 6.00% 5.40 1.03Realty Income O NNN 8.00% 4.20 12.45Brixmor Property Group BRX SC 4.20% 3.30 8.74Retail Opportunity Investment ROIC SC 5.00% 3.70 10.48Kimco Realty KIM SC 5.00% 3.50 10.34Extra Space EXR SS 5.00% 2.70 18.04

Total 100.0% 4.73 5.14Bold denotes small-cap REIT

% %


securities on January 1. As I mentioned, I started building

the portfolio almost two years ago so I have some attractive

entry prices with much higher dividend yields being paid.

For example, my best 12 REIT picks generated an

average of 42.8% share price appreciation using dollar

cost-averaged data. My best pick is Gramercy Property

Trust (GPT), which has grown from my purchase price of

$4.19 to $7.37 or a gain of 76%. HTA was my next best

performer, up 43% from $20.25 (split-adjusted) to $29.02.

Above is a snapshot of the durable dozen picks.

One of the tools that you should be using is the REIT

Lab (at the end of the newsletter). Within this universe of

REITs that I research you will see that I provide valuable

analytics that can assist you with selecting the safest and

most reliable income-payers. All of these REITs are

categorized according to sectors.

My strategy for the Durable Income Portfolio is strate-

gically aimed to provide you with (1) safe income, (2)

growing income and (3) above average share price apprecia-

tion. If it weren’t for share price appreciation, I would have

built the durable income portfolio on day one (May, 2013);

however, it was important for me to not only benefit from

durable income but also from stocks bought with a margin

of safety, after all, these reap the highest returns.

In the REIT Lab I have categorized the list of REITs

based upon a SWAN (sleep well at night) ranking or a

SALSA (steady and lasting share appreciation) ranking.

The primary differentiator here is that a SWAN REIT has

an almost impeccable history of durability. In other words,

the SWANs have been time-tested, as they have persevered

under pressure. When you think of a SWAN, think of it as

a “blue chip.” See the pie chart for a comparison between

SWAN and SALSA.

Also in the REIT Lab you will see that I have

categorized the REITs based upon various sectors. For a

REIT investor today, there are an increasing number of

opportunities available and I will continue to add more

sector names when I add more REITs to the Research Lab.

Some of the sectors are too small (i.e. clean energy or

infrastructure) so I lump them into the “diversified” category.

As I said, my goal is to build a healthy mix of income

and growth and one of my secrets is utilizing an “anchor

& buoy” model whereby I attempt to over-weight

long-term leases with medium- and short-term one’s.

Long-term leases consist of triple net REITs like Realty

Income, health care REITs like Ventas, and industrial REITs

like STAG. Now we all know that the long-term leases have

been exposed to more trading volatility as a result of their

“bond-look-alike” characteristics, so while their dividend

income is the highest, the trading volatility is also highly sen-

sitive to rising rates. As a result, I would not recommend

buying a truckload today; wait for the sale.

So my “anchor” to the Durable Income Portfolio

consists of 62.4% long-term leased REITs: triple net REITs

(22.9%), health care REITs (32%) and industrial REITs

(7.5%). The balance of the portfolio (37.6%) is weighted

with the following: shopping center REITs (14.2%),

lodging REITs (5.5%), self-storage REITs (5.0%), mall

25% 29% 30% 36% 36% 37% 37% 40% 41% 42% 43%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

TCO VTR EXR DOC ROIC DLR OHI KIM O HCN HTA GPT

Top 12 Best Performers Based on Share Price Growth


REITs (3.5%), data center REITs (6.0%), apartment REITs

(1.4%), and commercial mortgage REITs (2.0%).

Now, as I consider my ideal Durable Income Portfolio I

would like to maintain a healthier balance of around 50%

long-term leased REITs versus 62.4% today (the above

chart has color-coded the long-term leased composition).

The reason that I have an out-sized share of exposure to

health care and triple net is because I was able to pick up

some really good deals when these sectors sold off last year

and in late 2013.

In addition to the above-referenced purchases I am

considering selling Chambers Street Group (CSG). My

weighed average price basis is $7.60 per share and I have

been waiting on the share price to get to $8.00 before

dumping this one (currently shares are trading at $7.94).

I’ll let you know when I liquidate that position but it

should hopefully be soon.

As mentioned, my objective is to create more buoy

opportunities—these REITs should perform best during

periods of rising rates. I have recently added new lodging

REITs (CLDT and HOST) and I would like to add another

name. Also, I would like to add another data center REIT to

compliment my SWAN pick, Digital Realty (DLR). The

apartment and self-storage sectors are somewhat frothy today,

but I will continue looking for opportunities when they arise.

Unfortunately I missed the train with Hannon

Armstrong (HASI) and CorEnergy (CORR) but I will

continue to monitor these names for better entry points.

I’m not going to load up on too many small cap names

though; I typically maintain around 10% to 15% in

small-cap ($1 billion or less market cap) REIT exposure

and I’m within that range now.

I hate that I missed Hannon Armstrong; perhaps I

should have listened to my instincts. HASI shares are up

more than 29% since I wrote about the company on

February 13, leaving me no desirable margin of safety today.

It’s important to spot the big fish before Mr. Market

does. More importantly, don’t look at yield alone until

you’ve analyzed the safety of the dividend, the ability for

the dividend to grow, and the overall merit of the REIT

security. In the REIT Lab you will find a Dividend Chart,

which should help you spot stocks that are most likely to

boost their dividend on a regular basis.

Finally, always remember to diversify. By employing

diversification correctly, you can reduce risk without

sacrificing returns. Ultimately it’s diversifying that provides

the insurance that if one REIT gets clobbered (i.e. ARCP or

CCG) the one bad apple won’t spoil the whole portfolio.

Hopefully by following the principles of value

investing—buying stocks cheap—the Durable Income

Portfolio will produce more winners than losers and we

can all sleep well at night.

Hannon Armstrong (HASI)


I hope you find the new Durable Income Portfolio

valuable. For me the next step is the fun part. With 23

REITs in the portfolio I can now begin to focus on

portfolio management, my true passion and more of an art

than a science. Obviously since I call it the durable income

portfolio my objectives for asset allocation are plain and

simple: minimize risk (dividend safety) and maximize

returns (dividend growth).

As you know, active portfolio management requires a

skillset beyond the law of averages—if that’s what you

want, there are plenty of ETFs that can do that job. More

importantly, my portfolio should be distinguished for both

generating steady and reliable returns while also

controlling risk.

It’s a balancing act but because of my underlying focus

on risk management, I believe that I can succeed. Not to

bore you with my attraction to Benjamin Graham, but I

consider myself the true value investor for the REIT sector,

hence my title, The Intelligent REIT Investor. As Howard

Marks said, “great investing requires both generating

returns and controlling risk. And recognizing risk is an

absolute prerequisite for controlling it.”

Each month I plan to provide you with a few “REITs on

my Radar.” As noted, the Durable Income Portfolio has 23

REITs and around 62% categorized as long-term leased

and 38% considered mid- to short-term leased. My goal is

to reduce the exposure in net lease by around 12% so that

the portfolio has an equal balance of short and

medium/long leases.

One way I can reduce exposure in the net lease sector is

to sell Chambers Street (CSG). Shares are trading at $7.94

and my purchases were all made under that mark ($7.91,

$7.67 and $7.34). I have been disappointed with this REIT

but the performance is obviously weak: 1-year total return

of 9.73% and 2-year total return of negative 10.55%. Now

that CEO Jack Cuneo has retired I feel less convinced that

the share price will result in positive news. CSG has traded

below the peer group for almost two years (11.3x P/FFO)

and I’m not convinced that hanging on longer will meet

my objectives. I plan to punch the exit button when shares

hit $8.00.

Selling CSG will result in 3.75% of capital that I can

deploy in other REIT securities and I would like to add a

few more REITs to get to at least 25 REITs.

As you know, I recently purchased shares in HCP

(HCP), Chatham Lodging (CLDT), Medical Properties Trust

(MPW) and Preferred Apartment Communities (APTS).

Here are a few other REITs that I have on my radar:

Hannon Armstrong (HASI): I missed the train. HASI is

up more than 14% in March as shares are now trading at

$18.93, far below my target price of $17.00. I regret that I

waited on this $520 million market cap company as my

dividend yield then (March 1) was 6.3%. The current yield

is 5.5%. I will continue to monitor this clean energy REIT

hoping for a better margin of safety.

CorEnery (CORR): Perhaps another early miss.

CORR has returned around 10.5% year-to-date and the

shares are trading at $7.17, closer to my fair value target

of 7.30. Like HASI, CORR is a small-cap with a market

cap of $333 million, so my exposure will be limited.

This REIT is interesting because it looks more like a

utility than a REIT. Last year the IRS allowed

energy-infrastructure assets to be ruled a viable model,

which is why CORR is the first infrastructure REIT. The

valuation (12.6x) is reasonable and the 7.3% dividend

yield is attractive.

The Durable Income Portfolio has one data center REIT,

Digital Realty (DLR) that represents 6% of concentration.

Due to mispricing, I was able to purchase DLR at a very

low valuation. I don’t plan to sell the shares as the

dividends are reliable. However, I would like to find

another data center REIT that compliments the blue chip

thesis of DLR. CyrusOne (CONE) looks to be a likely

candidate. CONE’s trading at $32.60 with a dividend yield

of 3.8%. The company recently increased its dividend by

50% without sacrificing coverage.

There are notable risks to owning CONE: (1) small cap

risk ($1.2 billion market cap, excluding OP units), (2)

geographic risk—only 25 properties with more than 50%

revenue in Texas, (3) B+ rated balance sheet (size is the

only hurdle). I’m a buyer at $30.00 and that translates to a

dividend yield of 4.2%.

As mentioned, I recently added Chatham Lodging and

Host Hotels & Resorts (HST) to the Durable Income

Recent BUYs Ticker Purchase Price

HCP, Inc. HCP 43.00Chatham Lodging CLDT 30.85Medical Proper�es MPW 15.20Preferred Apartnent APTS 10.95

REITS ON MY RADAR


Portfolio; combined that’s 5.5% exposure in the lodging

sector. I am considering adding one more lodging REIT to

the mix and Hersha Hospitality (HT) appears to be a

leading candidate. Shares are trading at $6.87, close to my

target price of $6.62. Hersha is now trading at a multiple of

12.4x with a dividend yield of 4.1%.

One final REIT on my radar is Blackstone Mortgage

(BXMT). This commercial mortgage REIT is much

larger ($1.66 billion in market cap) than the smaller

commercial mortgage REIT that I already own, UDF

Properties (UDF), which has a $550 million market

cap. I have been monitoring BXMT and Starwood

Property Trust (STWD) for a while and BXMT is closer

to my buy range. BXMT shares are trading at $ 28.43

and my fair value price is $26.00. BXMT’s current

dividend yield is 7.3%. The Durable Income Portfolio

has 2% allocation in mortgage REITs and my goal is to

bump that to 10%.

REIT: THE FOUR MOST IMPORTANT LETTERS IN RETIREMENTThe catastrophic financial crisis of 2008 exposed the

susceptibility of the retirement system. Many Americans saw thevalue of their hard-earned nest eggs plunge when the latest recession sparked a landslide that destroyed trillions of dollars ofhousehold wealth.

In the difficult years since then, the slow recovery battered median family income and made it more challenging to save for retirement. However, more recently, as theeconomic recovery has accelerated, one segment that has shownenduring vitality is commercial real estate.

It's easy to criticize REIT performance during the last recession. However, one must remember that the financial collapse, which was only paralleled by the Great Depression, sawthe end of Lehman Bros and Bear Sterns with the near collapse ofCitigroup and AIG. The financial markets were in utter turmoiland there was no certainty that any REIT would have access to the capital; most cut dividends as a matter of precaution.

So with many public REITs, management teams had to chooseto be proactive in order to access capital in order to survive. Thatperiod served as a tipping point for many REIT executives, bankersand investors and excessive leverage was no longer an industrystandard.

Since the recovery REITs have made significant headway retooling balance sheets and preparing for rising rates. As partof necessary risk management practices, these companies have

also streamlined portfolios tending to focus on select demographics with higher barrier to entry characteristics. Theresults have been rewarding as REITs have become much morestable dividend payers with many boosting dividends with ahigh degree of predictability.

Just within my personal REIT portfolio I have witnessedsound growth as a result of improved operating fundamentals.A snapshot of the REITs I own (with dividends paid since2010), can be found on the next page.

Most all of these REITs have maintained a steady record of

REITs on the RADAR Ticker Sector 1-Yr TR Div-Yld Current Fair ValueHannon Armstrong HASI Diversified 26.45 5.5 18.93 17.00CorEnergy CORR Diversified 17.16 7.3 7.17 7.30CyrusOne CONE Data Center 54.35 3.8 32.6 30.00Hersha Hospitality HT Lodging 23.34 0.1 6.87 6.62Blackstone Mortgage BXMT C-Mortgage -2.27 7.3 28.43 26.00


dividend growth since the Great Recession. Below is a chart thatcompares the average dividend growth for REITs that I own thathave at least five years of operating performance. The average dividend growth for these stocks is 21% per year.

In addition, low supply has created a healthy opportunity forREIT investors to take advantage of new supply, scarce across all ofthe property types owned by REITs. So, even though the economyis improving, new supply of high quality commercial real estate isstill below historical levels.

FOUR ESSENTIAL REIT BENEFITS It’s important to recognize that REITs provide four important

investment benefits that have held up well over time and are relatively simple to explain: diversification, dividend income, inflation protection and long-term performance.

DIVERSIFICATION I’m sure you’ve all heard someone say “don't put all your eggs in

one basket” – that's one of the oldest rules of investing, particularlyduring periods of heightened economic and financial uncertainty.And REITs provide important diversification benefits for retirement portfolios.

The most common way of looking at diversification is the correlation between asset classes: During the 20-year period fromthe end of 1991 to year-end 2011, REITs showed low-to-moderatecorrelation with large-cap, small-cap and international stocks aswell as U.S. and international bonds. For example, large-cap andsmall-cap equities were 80% correlated, while large-cap equitiesand equity REITs were only 56% correlated. So, diversifying alarge-cap portfolio with REITs, for example, is more effective thandiversifying it with small-cap stocks.

Owning REITs help to reduce the risk of overall portfoliolosses in volatile markets because they do not always move intandem with other equities. A key portfolio benefit of diversification is the potential to increase long-term returnswithout taking on additional risk.

DIVIDEND INCOME When people think of REITs they often think of

dividends. There's a reason that many financial advisors consider REITs to be well suited for income investors as wellas long-term investors. Equity REITs generate a consistentstream of cash mainly by collecting rents from the multipletenants occupying the properties they manage, and by law,

Annual Dividends Paid per ShareREIT Name Ticker 2010 2011 2012 2013 2014 2015

Realty Income O 1.72 1.74 1.78 2.18 2.19 2.28Digital Realty DLR 2.02 2.72 2.92 3.12 3.32 3.44Ventas, Inc. VTR 2.14 2.3 2.48 2.73 2.96 3.16Healthcare Trust HTA na na na 1.15 1.16 1.18STAG Industrial STAG na na 1.07 1.2 1.29 1.36Chambers Street CSG na na na na 0.5 0.51Gramercy Property GPT 0 0 0 0 0.15 0.21Retail Opportunity ROIC 0.26 0.43 0.56 0.61 0.65 0.66Health Care REIT HCN 2.76 2.88 2.98 3.09 3.21 3.31Omega Healthcare OHI 1.42 1.59 1.73 1.9 2.06 2.17Lexington Realty LXP 0.41 0.47 0.55 0.61 0.68 0.69Kimco Realty KIM 0.66 0.73 0.78 0.85 0.92 0.97W.P. Carey WPC 2.03 2.19 2.44 3.39 3.69 3.86Physicians Realty DOC na na na na 0.9 0.9United Development UDF na na na na 1.64 1.65Extra Space EXR 0.4 0.56 0.85 1.45 1.81 2.03Taubman Centers TCO 1.68 1.76 1.85 2 2.16 2.2Host Hotels HST 0.04 0.14 0.3 0.46 0.69 0.81Source: FAST Graphs

3.7% 5.6% 6.1% 8.0% 8.1% 8.9% 11.1% 11.8% 14.3% 22.5% 39.9% 40.0%

97.0%

0.0%

50.0%

100.0%

150.0%

HCN TCO O KIM VTR OHI LXP DLR WPC ROIC EXR GPT HST

Average Dividend Increase Over 5 Years

they must pay out at least 90% of their taxable income annually as dividends to shareholders (most payout 100%).

This high dividend payout requirement means a larger share ofREIT investment returns come from dividends when comparedwith other stocks. REIT dividend yields have historically been agood deal higher than the average yield of the S&P 500 Index. Infact, over the long-term, nearly two-thirds of REIT total returnshave come from dividends.

Dividends do make a difference for long-term retirement savings. For investors with a longer time horizon to retirement, dividends can be reinvested to generate future returns, while inlater years they can provide a steady income stream to help meetexpenses in retirement.

An original $10,000 investment in REITs at the end of 1991would have grown to $79,387 over 20 years if dividends had beenreinvested. If dividends had been taken as income, the investmentwould have paid out $19,698 in dividends and delivered another$23,609 in growth, for a total value of $43,307.

INFLATION PROTECTION People are living longer. A key concern for financial advisors is

how to ensure enough income to meet expenses over a retirementperiod that could last for decades. The dilemma for retirees is thatit can be tough to stay ahead of inflation with fixed-income securities, while equities—the traditional inflation hedge—are usually trimmed back to minimize investment risk. This is especially true today, when interest rates are historically low.

REITs provide a natural hedge against inflation in ways thatmatch up well with investor needs. Commercial real estate rentsand values tend to increase when prices do, which supports REITdividend growth, providing retirement investors with reliableincome even during inflationary periods.

A practical way of measuring the inflation protection provided by REIT dividends is to directly compare REIT dividend growth with inflation. In all but two of the last 20

years, REITs' dividends have outpaced inflation as measuredby the Consumer Price Index.

PERFORMANCE REITs essentially are a hybrid investment, embodying aspects of

fixed-income investments—with their consistent, strong dividends— and equities—with their ability to produce long-termcapital appreciation through effective management of the corporation.

This combination of characteristics has historically providedREIT investors with appreciably higher total returns—stock priceappreciation plus dividends—than most other equities and bonds.REIT total return performance over the past 20 years has outstripped the performance of the S&P 500 Index, the BarclaysU.S. Aggregate Bond Index and other major equity and fixed-income indices, as well as the rate of inflation.

REIT total return comparisons with other investments hold up wellover most investment horizons over the past 40 years. For example,U.S. equity REITs as represented by the FTSE NAREIT All EquityREIT Index have outpaced the S&P 500, the NASDAQ Composite, theDow Jones Industrial and the Russell 2000 indices over the last 1-, 3-,5-, 10-, 15-, 20-, 25-, 30-, 35-, and 40-year periods ended June 30, 2014.Such a performance record should not be dismissed.

REITs belong in a long-term retirement saving and investmentplan. There is no single right answer on what constitutes an appropriate allocation to REITs or to any other asset class. But thereis plenty of data to suggest that including REITs in a portfolio benefits investors in a number of ways compared with portfoliosthat do not include REITs. I generally recommend around 10% to20% in REIT exposure (again, based upon risk tolerance).

Allocations depend on the circumstances, investment objectivesand time horizons for a particular investor, as well as the judgmentof professional financial advisors. However, the four key investmentattributes of REITs—diversification, dividend income, inflationprotection and long-term performance—are a good starting pointfor discussing where REITs fit into a long- term investment plan.

PAGE 8 APRIL 2015 | FORBES REAL ESTATE INVESTOR

SECTOR REVIEW: DATA CENTERS Today the U.S. data center REIT sector consists of five companies

with a combined market capitalization of around $16 billion.Equinix (EQIX) is likely to be added to the growing list as soon as itobtains a private letter ruling (or PLR) from the IRS. See next pagefor how these REITs compare based on market capitalization.

Excluding Equinix, Digital Realty (DLR) has the largest global presence, with a 10-year track record primarily focusedupon large wholesale customers, including Equinix. Digital iscurrently the largest data center REIT with a $9 billion cap.DuPont Fabros (DFT) is the other data center REIT that hashistorically focused on large wholesale customers. Note that

Equinix does not compete for wholesale data center customers. On a case by case basis, CoreSite Realty (COR), CyrusOne

(CONE) and QTS Realty Trust (QTS) could compete withEquinix, but certainly not when it comes to customers interested ina global network covering all of the Tier 1 network routes.

QTS Realty has a C3 cloud and managed services businessinitiative; CyrusOne has had success with its focus on Fortune1000 enterprise clients, while CoreSite has focused on connecting its data centers to multiple networks and exchangesto attract customers that need data center space for performance-sensitive applications.

Source: NAREIT and FAST Graphs


The scale of Platform Equinix is a competitive advantagewhen it comes to competing with its smaller publicly tradeddata center REIT peers. I plan to begin research on Equinix andas soon as the company has been converted to a REIT, I willadd to my Research Lab.

LOOKING TO INCREASE DATA CENTER EXPOSURE As you review the companies in my Durable Income

Portfolio you can see that I have only one data center REIT inthe basket. Digital Realty has been a terrific holding and I planto maintain a stake (currently 6%) in the portfolio. However, Iwould like to find another Data Center REIT to complimentDigital in order to expand my total data center concentrationlevel to around 10%.

As I review the list or prospects I become fixated onCyrusOne. I recently added the Ohio-based REIT to myResearch Lab and what impressed me the most about CONE isthe strong revenue growth, up 20% during the fourth quarterof 2013. Also, CONE’s FFO and AFFO were up 32% and 43%respectively, over the fourth quarter of 2013.

One of the biggest bright spots for CyrusOne is the recentlyannounced 50% dividend increase. Annualized dividends paidjumped from $0.84 per share in 2014 to $1.26 per share in2015. This big boost follows a 31% increase in the dividendpayout from 2013.

One key differentiator for CONE is its development business. CyrusOne is unique from the other data center REITsin that the company's capital allocation strategies are


development-centric. While many peers, including DigitalRealty, have become less fixated on development, CyrusOne hasconsistently demonstrated that it can deploy capital in a manner that generates outsized returns.

Since the first quarter of 2013, it has invested almost $400 million into the business, which is a 46% increase in overallinvestment. Yet, it has been able to consistently deliver development yields between 16% and 19% during this peri-od. Obviously, that translates into robust dividend growth.Page 9 shows a snapshot of CONE’s dividend yield comparedwith the peer group.

CONE’s total debt-to-total capitalization was 28.8% as ofDecember 31. The company's net debt of $636.7 millionincreased by approximately $98 million over third quarter 2014,primarily driven by continued investments of capital and devel-opment activity. The company's net leverage as of fourth quarter2014 remained relatively low, at 3.6x annualized fourth-quarter2014 adjusted EBITDA. As of the end of the fourth quarter ithad $351.5 million of available liquidity—enough fundingcapacity for the next two years. Secured debt is under 2%, animportant consideration for seeking investment-grade status.

I view CONE as a unique offering that can grow much morerapidly due to its size and development platform. The latestdividend boost proves it is serious about rewarding shareholders, and I expect to see that continue. As I began toexamine this REIT more closely, it became evident that it offers

a uniquely positioned platform that could be the prize for oneof the bigger fish. Would Digital, for example, ante up enoughto own a high-quality REIT like Cyrus? Or maybe Mr. Marketis thinking the same thing?

CONE’s funding plan for two years is locked in, andshould not likely involve new equity. Also, there's enoughland inventory for the company to quadruple in size. Inother words, CyrusOne's expansion pipeline is highly predictable, and should support cash flow growth rates inexcess of the peer group.

MY RECOMMENDATION: I'm not pulling the triggernow. I'm going to wait for a $30.00 entry price. Here's a snapshot of the company's 30-day trading history.

When reviewing the REIT preferred landscape, I could find

no compelling opportunities that warranted a change to

the portfolio. The positions in the portfolio have done well

and the portfolio continues to generate a solid yield, as it

has been designed to do.

Rather than shuffle positions within the portfolio when

no clear opportunities have arisen—especially as the

capital markets begin to factor in the potential for an

interest rate hike and its implications on yields—this

month's preferred section will be a spotlight on the data-

center REIT sector, following on the review of CyrusOne.

Specifically, this month the spotlight will focus on

the three data-center REITs that have issued preferred

stock: Digital Realty, CoreSite Realty and DuPont

Fabros Technology.

As the above snapshot shows, the data-center sector is,

arguably, one of the cheapest sectors in terms of P/FFO

and to a degree, yield. The yield on the common shares,

however, pales in comparison to the yield available in these

REITs preferred shares.

Readers have seen these shares in the newsletter

historically, most recently last month when the swap from

CoreSite to DuPont Fabros was recommended. The swap

also led to reader questions regarding the potential call of

the DuPont Series A preferred beginning in October of this

year. Given where DuPont preferreds trade, and the

trajectory of interest rates, the Series A should not be called

due to the economics of the call (market demanded yield is

similar to the dividend rate on the preferred). That said,

there are options in the DuPont name as well as data-center

REITs generally. The portfolio does include the Digital Realty

Series H, so exposure to Digital Realty and diversification

should be factored into a decision involving the sector.

The portfolio continues to produce a yield close to 7%,

which has been one of the objectives. Diversification is also

strong, with the largest sector exposure being to shopping

center REITs with an approximate 18% exposure across

eight REITs. While it is tempting to add additional mortgage

REIT preferred stocks to the portfolio, the uncertainty

surrounding interest rates, mortgage rates and prepayment

rates has served to limit exposure to the sector.

The portfolio is, in my opinion, performing as expected

and has a solid foundation to continue adding yield to

investors' portfolios. Opportunities to add names outright

or on swap will continue to be assessed and explored in the

coming months.


Company Mkt CapNo. of Prop P/B P/FFO

FFO Payoiut

FFO/sh Growth Div Yld

Debt / EBITDA

Mtg Debt / Tot Debt

Debt / RE

AssetsDigital Realty Trust Inc 9,212,027,582$ 131 3.3 13.5 64.0% 4% 4.89% 5.9 8% 57%DuPont Fabros Technology Inc 2,278,431,642$ 11 3.0 14.5 49.8% 28% 4.26% 3.9 11% 40%Coresite Realty 1,105,282,863$ 16 5.3 22.9 29.8% 22% 2.89% 2.5 0% 34%Average 3.85 16.94 48% 18.0% 4.0% 4.12 6% 44%

April 2015 Spotlight - Datacenter REIT Preferred - Fundamental Snapshot

Company Mkt CapNo. of Prop P/B P/FFO

FFO Payoiut

FFO/sh Growth Div Yld

Debt / EBITDA

Mtg Debt / Tot Debt

Debt / RE

AssetsDigital Realty Trust Inc 9,212,027,582$ 131 3.3 13.5 64.0% 4% 4.89% 5.9 8% 57%DuPont Fabros Technology Inc 2,278,431,642$ 11 3.0 14.5 49.8% 28% 4.26% 3.9 11% 40%Coresite Realty 1,105,282,863$ 16 5.3 22.9 29.8% 22% 2.89% 2.5 0% 34%Average 3.85 16.94 48% 18.0% 4.0% 4.12 6% 44%

April 2015 Spotlight - Datacenter REIT Preferred - Fundamental SnapshotREIT Name Security Series Symbol Par Px Strip Px CY SY Call Date YTC RankDigital Realty Trust Inc DLR 7 E DLRpE $25.00 $25.75 $25.69 6.79% 6.80% 9/15/2016 4.71% PreferredDigital Realty Trust Inc DLR 6 5/8 F DLRpF $25.00 $25.84 $25.78 6.42% 6.43% 4/5/2017 4.90% PreferredDigital Realty Trust Inc DLR 5 7/8 G DLRpG $25.00 $24.05 $24.00 6.10% 6.12% 4/9/2018 7.24% PreferredDigital Realty Trust Inc DLR 7 3/8 H DLRpH $25.00 $27.27 $27.21 6.77% 6.79% 3/26/2019 4.88% PreferredDuPont Fabros Technology Inc DFT 7 7/8 A DFTpA $25.00 $25.90 $25.45 7.56% 7.70% 10/15/2015 3.13% PreferredDuPont Fabros Technology Inc DFT 7 5/8 B DFTpB $25.00 $26.20 $25.76 7.29% 7.41% 3/15/2016 4.28% PreferredCoresite Realty COR 7 1/4 A CORpA $25.00 $26.48 $26.05 6.88% 6.99% 12/12/2017 5.66% PreferredAverage 25.93$ 25.71$ 6.83% 6.89% 4.97%

April 2015 Spotlight - Datacenter REIT Preferred

THE PREFERRED REIT PICKS


REIT Name Sector Symbol Par Px CY SY Call Dt YTC RankCAMPUS CREST COMMUNITIES INC Apartments CCGpA $25 $25.66 7.79% 7.88% 2/9/2017 7.07% PreferredAPARTMENT INVT & MGMT CO -A Apartments AIVpA $25 $27.40 6.27% 6.33% 5/16/2019 4.57% PreferredDIGITAL REALTY TRUST INC Data Center DLRpH $25 $27.67 6.67% 6.77% 3/26/2019 4.85% PreferredDUPONT FABROS TECHNOLOGY Data Center DFTpA $25 $25.80 7.62% 7.71% 10/15/2015 4.01% PreferredSTAG INDUSTRIAL INC Diversified STAGpB $25 $25.60 6.46% 6.55% 4/16/2018 6.12% PreferredPS BUSINESS PARKS INC/CA Diversified PSBpR $25 $26.13 6.58% 6.67% 10/15/2015 1.60% PreferredEPR PROPERTIES Diversified EPRpF $25 $26.05 6.33% 6.40% 10/12/2017 5.08% PreferredINVESTORS REAL ESTATE TRUST Diversified IRETpB $25 $26.31 7.51% 7.63% 8/7/2017 5.98% PreferredNORTHSTAR REALTY FINANCE Diversified NRFpC $25 $26.24 8.45% 8.49% 10/11/2017 6.93% PreferredUMH PROPERTIES INC Diversified UMHpA $25 $26.08 7.88% 7.90% 5/26/2016 4.06% PreferredVORNADO REALTY TRUST Diversified VNOpL $25 $24.31 5.55% 5.61% 1/25/2018 6.80% PreferredVENTAS INC Health Care VTRB $25 $25.32 5.38% 5.38% 3/7/2018 4.91% Sr UnsecuredLASALLE HOTEL PROPERTIES Hotels LHOpH $25 $25.90 7.17% 7.26% 1/24/2016 3.42% PreferredASHFORD HOSPITALITY TRUST Hotels AHTpE $25 $27.00 8.37% 8.48% 4/18/2016 3.25% PreferredPEBBLEBROOK HOTEL TRUST Hotels PEBpC $25 $25.84 6.27% 6.33% 3/18/2018 5.49% PreferredPEBBLEBROOK HOTEL TRUST Hotels PEBpB $25 $26.72 7.51% 7.60% 9/21/2016 4.32% PreferredSUN COMMUNITIES INC Manufactured Homes SUIpA $25 $26.67 6.70% 6.77% 11/14/2017 4.97% PreferredEQUITY LIFESTYLE PROPERTIES Manufactured Homes ELSpC $25 $26.30 6.39% 6.48% 9/7/2017 4.89% PreferredCAPSTEAD MORTGAGE CORP Mortgage CMOpE $25 $24.89 7.53% 7.63% 5/13/2018 8.02% PreferredCORPORATE OFFICE PROPERTIES Office OFCpL $25 $26.85 6.84% 6.92% 6/27/2017 4.26% PreferredSL GREEN REALTY CORP Office SLGpI $25 $26.26 6.19% 6.25% 8/10/2017 4.68% PreferredEQUITY COMMONWEALTH Office EQCpE $25 $25.87 7.03% 7.07% 5/15/2016 4.88% PreferredHUDSON PACIFIC PROPERTIES IN Office HPPpB $25 $26.16 8.01% 8.14% 12/10/2015 4.28% PreferredALEXANDRIA REAL ESTATE EQUIT Office AREpE $25 $26.39 6.13% 6.19% 3/15/2017 4.17% PreferredBRANDYWINE REALTY TRUST Office BDNpE $25 $26.85 6.47% 6.54% 4/11/2017 4.06% PreferredPENN REAL ESTATE INVEST TST Regional Malls PEIpB $25 $26.32 7.00% 7.00% 10/11/2017 5.06% PreferredTAUBMAN CENTERS INC Regional Malls TCOpK $25 $25.62 6.10% 6.18% 3/15/2018 5.77% PreferredCBL & ASSOCIATES PROPERTIES Regional Malls CBLpD $25 $26.12 7.07% 7.18% 3/30/2015 -32.35% PreferredTAUBMAN CENTERS INC Regional Malls TCOpJ $25 $25.90 6.29% 6.38% 8/14/2017 5.56% PreferredGENERAL GROWTH PROPERTIES Regional Malls GGPpA $25 $26.23 6.07% 6.15% 2/13/2018 4.95% PreferredREGENCY CENTERS CORP Shopping Centers REGpF $25 $26.79 6.25% 6.33% 2/16/2017 4.05% PreferredEXCEL TRUST INC Shopping Centers EXLpB $25 $26.50 7.64% 7.74% 1/31/2017 5.20% PreferredURSTADT BIDDLE - CLASS A Shopping Centers UBPpF $25 $27.23 6.59% 6.64% 10/24/2017 4.14% PreferredKIMCO REALTY CORP Shopping Centers KIMpH $25 $26.10 6.62% 6.69% 8/30/2015 0.30% PreferredKITE REALTY GROUP TRUST Shopping Centers KRGpA $25 $25.90 7.93% 7.96% 12/7/2015 3.01% PreferredCEDAR REALTY TRUST INC Shopping Centers CDRpB $25 $26.34 6.87% 6.90% 5/22/2017 4.74% PreferredINLAND REAL ESTATE CORP Shopping Centers IRCpB $25 $25.70 6.64% 6.64% 10/16/2019 5.73% PreferredDDR CORP Shopping Centers DDRpK $25 $25.85 6.04% 6.09% 4/9/2018 5.30% PreferredAMERICAN REALTY CAPITAL PROP Single Tenant ARCPP $25 $23.50 7.13% 7.13% 1/3/2019 8.48% PreferredNATIONAL RETAIL PROPERTIES Single Tenant NNNpD $25 $26.44 6.27% 6.27% 2/23/2017 3.48% PreferredREALTY INCOME CORP Single Tenant OpF $25 $26.81 6.19% 6.19% 2/15/2017 2.80% PreferredPUBLIC STORAGE Storage PSApY $25 $27.01 5.91% 5.98% 3/17/2019 4.52% PreferredCUBESMART Storage CUBEpA $25 $27.00 7.15% 7.23% 11/2/2016 3.22% PreferredTERRENO REALTY CORP Warehouse/Industr TRNOpA $25 $26.78 7.17% 7.29% 7/19/2017 4.77% PreferredMONMOUTH REAL ESTATE INV COR Warehouse/Industr MNRpB $25 $26.42 7.48% 7.50% 6/7/2017 5.25% Preferred

Average $26.20 6.83% 6.90% 3.92%Prior Month $26.29 6.76% 6.82% 3.93%

Intelligent REIT Investor – Preferred Stock Por!olio

THE REITS THAT PAY MONTHLY Each month I include a list of REITs That Pay Monthly.

Many of you like investing in monthly dividend stocks and I

plan to continue to provide an expanded list of such REITs.

In this month's portfolio there are 18 REITs, including

two Canadian REITs: WPT Industrial (TSX:WIR.U)

(OTCQX:WPTIF), the only Canadian REIT that focuses

exclusively on U.S. industrial real estate and Agellan

Commercial Real Estate Investment Trust (TSX:

ACR.UN), a diversified REIT that invests in select urban

markets in the U.S. and Canada.

There are about 50 Canadian REITs—all equity-

focused—with a combined market cap of around $66

billion. Still relatively small compared with U.S. equity

REITs, but certainly worth researching. Look for more

coverage of Canadian REITs in the future, especially since a

majority of these REITs pay monthly.

Page 13 includes a list of REITs that Pay Monthly. Note, I

have included a dividend safety column that is color-coded

(similar to the REIT Lab charts). I have graded each REIT

based on a scale from 0 to 10. Using dividend safety

metrics, Realty Income (rated 10) is the safest REIT and

Gladstone (LAND) and Wheeler (WHLR) are the riskiest.

The Intelligent REIT Investor’s Preferred Stock Portfolio

REITs That Pay Monthly Ticker Div Safety (1-10) Price Tot-Cap P/FFO Div-YldGladstone Land Corpora!on LAND 0 12.18 0.094 27.4 3.40Wheeler Real Estate Investment WHLR 0 2.40 0.018 na 8.80Independence Realty Trust IRT 1 9.68 0.309 11.9 7.40Orchid Island Capital ORC 2 13.73 0.230 na 15.70Armour Residen!al ARR 2 3.21 1.134 na 15.0Whitestone REIT WSR 3 16.07 0.367 12.3 7.10Gladstone Commercial Corpora!on GOOD 3 18.80 0.398 12.1 8.00New York REIT NYRT 4 10.32 1.673 22.0 4.50Inalnd Real Estate Corpora!on IRC 4 10.90 1.095 11.2 5.20United Development Funding UDF 5 17.98 0.551 11.2 9.10Agellan Commercial ACR.UN-TSX 5 7.35 0.173 7.4 8.40Chatham Lodging Trust CLDT 6 30.29 1.160 12.5 4.00STAG Industrial STAG 6 24.65 1.591 16.0 5.50EPR Proper!es EPR 6 60.81 3.469 14.0 6.00Chambers Street Group CSG 6 7.95 1.883 11.3 6.40WPT Industrial WIR.U-TSX 6 11.90 0.220 11.3 5.90LTC Proper!es LTC 9 45.41 1.614 16.8 4.50Realty Income O 10 52.56 11.826 19.3 4.30Source: SNL Financial as of 3/25.2015


Note: WHLR recently cut its dividend by over 50%.

Many of these REITs are small-caps so proceed with

caution. I typically don’t like to exceed 2% exposure in a

small-cap REIT and I target around 5% exposure in bigger

mid-cap names.

I often preach about staying away from “sucker yields,”

those securities that offer high yields that are too good to

be true. It’s critical that you examine all of the prospective

REIT’s fundamentals before purchasing, so you don’t

become the “sucker.” One good recent example is WHLR.

As I mentioned, the company was forced to cut its

dividend as a result of a dividend payout that it could not

sustain. I would also be careful with mortgage REITs that

are exposed to higher leverage. Unless you are an active

trader, I would avoid these volatile companies.

In terms of valuation, I think EPR Properties (EPR) has

one of the most desirable dividends on the list. Shares are

trading at $60.81 with a P/FFO multiple of 14x. The

current dividend yield is 6%. I also find United

Development Funding (UDF) attractive with a current yield

of 9.1%.

0.018 0.094 0.173 0.220 0.230 0.309 0.367 0.398 0.551 1.095 1.134 1.160 1.591 1.614 1.673 1.883 3.469

11.826

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

WHLR LAND ACR.UN-TSX WIR.U-TSX ORC IRT WSR GOOD UDF IRC ARR CLDT STAG LTC NYRT CSG EPR O

Based on Market Capitaliza!on (in $US billions)

In January I transitioned my REIT picking model into a

simpler model in which I combined the SALSA and SWAN

portfolios. The purpose for the change is to provide you with a

better template to assist you filtering out the good, bad and ugly.

By merging the REITs I have essentially created a “REIT

Lab” that provides accurate statistics that should enable

you to manage your REIT investments. I’m still using the

SWAN and SALSA labeling methodology and as a

reminder: SWAN is an acronym for “sleeping well at night”

and this “best in class” label is one in which I measure

REITs based on an exceptional track record for managing

risk. Most of the SWANs have never cut a dividend and

most have increased their dividend very consistently.

The SALSA REITs represent all others that I include in

my research lab and these companies are differentiated

for providing steady growth and rising income. There are

more SALSA REITs to BUY today as many of the SWAN

REITs are trading at higher valuations. I suggest you keep

this list handy as I anticipate more volatility when the

market reacts positively to economic data that suggests

rates will be rising. We have already seen how REITs react

in this environment and you should consider these

sell-off signs catalysts for opportunity.

You will see that I have continued to increase my research

lab and in April there are 75 REITs in my coverage universe.

Keep in mind that even though a REIT may be removed

from the list it does not mean that I will not add it back in

the future. I have to be selective with the companies that I

spend researching and I want to invest my time wisely and

not get distracted by more speculative alternatives.

There are around 200 U.S. equity and mortgage REITs

and my goal is to provide you with REITs that have the

best return characteristics and the safest dividend. For

that reason, I decided to provide you with the most

“actionable” opportunities.

KEEP IN MIND The first chart is a master list that I call The Intelligent REIT

Investor’s Universe. I have categorized these companies as

either a SWAN or SALSA and every REIT has a correspond-

ing fair value price. I also include recommendations for each

security and provide the words “strong buy” and “buy” to

provide more clarity as to the strength behind my picks.

I recently added a color coding feature to the REIT Lab

that should assist you in determining the risk characteristics.

A dark green color represents a lower risk REIT based on val-

uation and a dark red color represents a higher risk REIT

again, based on valuation. I also sorted the list of REITs (with

the sectors) based on the most expensive to the cheapest. The

color coding should help you better identify these companies.

The Dividend Labs ranks the 75 REITs based on

dividend safety. I have included data columns such as 2013

FFO per share and 2014 dividends paid. I also included

dividend growth rates. The color-coding will assist in

identifying the safest REITs based on dividend metrics.

The final chart is a recap of the 75 REITs with other

relevant data. There’s a lot of data in this chart as I'm always

trying to assist you with due diligence.

THE INTELLIGENT INVESTOR REIT LAB


3.40 4.00 4.30 4.50 4.50 5.20 5.50 5.90 6.00 6.40 7.10 7.40 8.00 8.40 8.80 9.10

15.0 15.70

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

LAND CLDT O NYRT LTC IRC STAG WIR.U-TSX EPR CSG WSR IRT GOOD ACR.UN-TSX WHLR UDF ARR ORC

Based on Dividend Yield

The Intelligent REIT Investor UniverseTicker

Market Capitaliza!on

($M)*Closing

Price ($)*Dividend

Yield (%)*

Dividend Growth Rate

(%)‡ Ex-Dividend DateFFO Payout

(%)1Price/ FFO

(x)1

Total Debt/ Total

Capitaliza!on (%)1

Number of Proper!es (actual)1

Occupancy Rate (%)1

1-Yr Total Return (%)*

3-Yr Total Return (%)*

Residen!alPreferred Apt Communi!es (APTS) APTS SALSA 240.5 3/20/2015 10.95 6.39 6.67 3/11/2015 64.00 9.1 51.06 20 NA 45.04 78.19Home Proper!es (HME) HME SALSA 4,154.5 3/20/2015 71.89 4.23 4.29 2/12/2015 62.93 14.1 35.57 121 94.20 25.91 38.08American Campus Communi!es (ACC) ACC SWAN 4,904.4 3/20/2015 43.76 3.47 5.56 2/5/2015 52.05 14.2 39.83 163 97.70 24.90 10.27AvalonBay (AVB) AVB SWAN 23,746.5 3/20/2015 179.83 2.78 8.41 3/27/2015 65.91 23.2 23.39 251 NA 44.29 42.64Equity Residen!al (EQR) EQR SWAN 29,733.2 3/20/2015 81.73 2.70 25.00 3/19/2015 57.47 20.6 28.45 389 95.10 47.16 49.10Essex Property Trust Inc. (ESS) ESS SWAN 15,666.0 3/20/2015 240.55 2.39 7.44 3/27/2015 56.77 22.6 27.12 243 NA 48.74 77.23Single Family Residen!al Starwood Waypint Residen!al (SWAY) SWAY SALSA 1,000.8 3/20/2015 26.45 2.12 NA 3/27/2015 51.85 24.4 64.17 11,417 83.80 -3.84 NAManufactured HousingSun Communi!es (SUI) SUI SALSA 3,810.5 3/20/2015 71.27 3.65 3.17 3/27/2015 130.00 30.2 36.03 217 92.60 69.55 94.99Shopping Centers Inland Retal (IRC IRC SALSA 1,102.5 3/20/2015 10.98 5.19 0.00 3/27/2015 57.00 11.0 38.79 159 93.40 10.76 47.21Excel Trust (EXL) EXL SALSA 910.4 3/20/2015 14.35 5.02 2.94 3/27/2015 116.67 22.3 46.64 41 93.90 22.06 36.13Retail Opportunity Investment (ROIC) ROIC SALSA 1,730.8 3/20/2015 18.55 3.67 6.67 3/12/2015 76.19 20.0 31.36 61 97.60 32.94 75.50BrixMor (BRX) BRX SALSA 8,030.6 3/20/2015 27.01 3.33 NM 4/1/2015 46.51 14.4 44.18 521 92.80 32.40 NADiversified Developers (DDR) DDR SALSA 6,956.7 3/20/2015 19.33 3.57 14.81 3/10/2015 70.45 20.9 42.85 415 95.70 23.36 43.68Weingarten Realty Investors (WRI) WRI SALSA 4,574.5 3/20/2015 37.19 3.71 6.56 3/5/2015 63.73 17.1 29.49 234 95.40 33.42 62.00Kimco Realty Corp. (KIM) KIM SWAN 11,444.9 3/20/2015 27.74 3.46 7.14 4/1/2015 59.21 16.5 28.84 NA NA 33.62 60.85Regency Centers Corp. (REG) REG SWAN 6,579.5 3/20/2015 69.90 2.78 1.62 2/19/2015 60.26 20.4 24.12 315 95.90 46.69 74.23WP Glicher (WPG) WPG SALSA 3,157.9 3/20/2015 17.06 2.58 NA 3/4/2015 54.35 9.4 42.20 97 92.70 NA NAUrstadt Biddle (UBA) UBA SWAN 794.9 3/20/2015 23.47 4.35 0.99 12/31/2014 106.25 24.5 22.29 73 96.00 21.90 41.41Urban Edge (UR) UE SALSA 2,367.0 3/20/2015 23.85 3.35 NA 3/12/2015 NA NA NA NA NA NA NAFederal Realty (FRT) FRT SWAN 10,261.2 3/20/2015 149.44 2.33 11.54 3/18/2015 76.99 29.5 20.39 95 95.60 38.18 66.78MallGeneral Growth Proper!es (GGP GGP SALSA 27,448.6 3/20/2015 31.00 2.19 23.08 4/13/2015 NA NA 38.86 133 96.20 46.69 95.74Simon Property Group (SPG) SPG SWAN 61,342.9 3/20/2015 197.34 2.84 8.33 2/11/2015 52.63 18.4 23.93 367 NA 34.83 59.53Tanger Factory Outlet Centers (SKT) SKT SWAN 3,466.1 3/20/2015 36.29 2.65 6.67 1/28/2015 60.00 23.1 27.96 45 98.00 7.64 31.95Taubman Centers Inc. (TCO) TCO SWAN 5,098.8 3/20/2015 80.53 2.81 8.00 3/18/2015 100.00 35.4 22.21 18 96.00 28.28 28.95Self StorageExtra Space Storage Inc. (EXR) EXR SALSA 8,056.7 3/20/2015 69.22 2.72 17.50 3/12/2015 75.81 23.6 24.86 828 NA 50.88 174.48Sovran Self Storage (SSS) SSS SALSA 3,457.0 3/20/2015 97.23 3.09 28.30 1/14/2015 62.96 20.2 21.14 497 NA 38.33 121.08Public Storage (PSA) PSA SWAN 34,409.6 3/20/2015 199.12 2.81 0.00 3/12/2015 64.52 21.3 0.18 2,546 NA 22.59 59.97Triple NetNa!onal Retail Proper!es (NNN) NNN SWAN 5,604.0 3/20/2015 42.29 3.97 3.70 1/28/2015 75.00 17.6 23.23 2,054 98.60 33.39 82.09Realty Income Corp. (O) O SWAN 12,073.6 3/20/2015 53.65 4.24 0.69 3/30/2015 85.83 18.6 30.69 4,327 98.00 38.27 62.89Spirit Realty (SRC) SRC SALSA 5,042.4 3/20/2015 12.26 5.55 22.69 3/27/2015 83.13 14.9 47.19 2,364 98.40 18.58 NAEPR Proper!es (EPR) EPR SALSA 3,524.0 3/20/2015 61.78 5.88 8.24 3/27/2015 77.73 13.1 31.21 233 99.00 24.08 62.65Lexington Realty (LXP) LXP SALSA 2,439.8 3/20/2015 10.39 6.54 13.33 3/27/2015 68.00 11.0 43.51 222 96.40 0.46 34.56STORECapital (STOR) STOR SALSA 2,713.2 3/20/2015 23.55 4.25 NA 3/27/2015 0.00 16.9 34.03 947 100.00 NA NAAgree Realty (ADC) ADC SALSA 602.0 3/20/2015 34.17 5.27 4.88 3/27/2015 75.44 13.6 28.51 209 98.60 16.87 76.72Gramercy Property Trust (GPT) GPT SALSA 1,385.7 3/20/2015 29.48 0.68 NM 3/27/2015 70.00 34.5 25.24 132 99.00 40.08 180.17W. P. Carey Inc. (WPC) WPC SWAN 7,375.3 3/20/2015 70.82 5.38 9.30 3/27/2015 94.95 17.7 35.47 787 98.60 20.75 80.95Data SectorCyrusOne (CONE) CONE SALSA 1,259.6 3/20/2015 32.60 3.87 31.25 3/25/2015 NA NA 28.78 25 88.00 54.35 NADigital Realty Trust Inc. (DLR) DLR SWAN 9,264.2 3/20/2015 68.28 4.98 NA 3/11/2015 0.00 11.8 31.32 131 93.20 44.58 9.68Healthcare Healthcare Trust of America (HTA) HTA SWAN 3,632.4 3/20/2015 29.02 4.00 0.87 3/25/2015 87.88 20.4 29.01 299 92.00 36.14 NAHCP Inc. (HCP) HCP SWAN 19,585.6 3/20/2015 42.44 5.33 3.81 2/5/2015 77.86 15.7 32.16 1,196 NA 23.24 21.26Ventas Inc. (VTR) VTR SWAN 24,393.5 3/20/2015 73.73 4.29 8.97 3/4/2015 68.10 15.5 33.55 1,484 NA 30.33 46.61BioMed Realty (BMR) BMR SALSA 4,734.3 3/20/2015 23.24 4.48 6.38 3/27/2015 71.43 15.4 38.25 109 89.40 23.17 42.07Omega Healthcaree Investors (OHI) OHI SWAN 5,637.6 3/20/2015 40.67 5.31 8.33 3/27/2015 76.47 14.4 32.30 505 NA 32.35 131.31Health Care REIT (HCN) HCN SWAN 27,653.0 3/20/2015 79.13 4.17 3.92 2/6/2015 92.44 22.0 29.19 1,303 NA 45.33 67.11Alexandria Reeal Estate (ARE) ARE SALSA 7,377.7 3/20/2015 102.42 2.89 5.88 3/27/2015 83.72 25.8 35.16 184 96.10 47.25 54.76Physicians Realty (DOC) DOC SALSA 1,247.4 3/20/2015 17.76 5.07 25.00 1/21/2015 118.42 21.8 19.46 87 94.60 42.52 NAMedical Proper!es Trust (MPW) MPW SALSA 3,176.4 3/20/2015 15.22 5.78 5.00 3/10/2015 140.00 23.0 48.01 172 NA 29.95 94.24CareTrust (CTRE) CTRE SALSA 429.6 3/20/2015 13.61 4.70 NA 3/27/2015 0.00 12.8 48.18 102 NA NA NASabra Healthcare (SABR) SBRA SALSA 2,015.1 3/20/2015 34.02 4.59 14.71 2/11/2015 72.22 14.1 36.10 160 NA 33.85 145.78LTC Proper!es (LTC) LTC SWAN 1,615.7 3/20/2015 45.46 4.49 0.00 3/19/2015 79.69 16.9 15.21 160 NA 28.32 72.26Office / IndustrialMonmouth Real Estate (MNR) MNR SALSA 657.8 3/20/2015 11.32 5.30 0.00 2/12/2015 107.14 19.8 32.69 87 96.30 28.33 41.65STAG Industrial (STAG) STAG SALSA 1,588.8 3/20/2015 24.62 5.48 -34.00 6/26/2015 NA NA 27.92 248 94.90 14.89 116.80Chambers Street (CSG) CSG SALSA 1,881.2 3/20/2015 7.94 6.42 -39.71 6/26/2015 90.00 14.4 41.96 131 98.30 9.73 NAHughwoods Proper!es (HIW) HIW SALSA 4,329.0 3/20/2015 46.59 3.65 0.00 2/13/2015 57.43 15.0 32.56 285 91.30 29.29 63.16Prologis (PLD) PLD SALSA 23,262.5 3/20/2015 44.39 3.24 17.86 3/16/2015 58.93 19.2 28.75 2,885 95.30 13.96 38.35Vornado Realty (VNO) VNO SALSA 21,321.4 3/20/2015 113.44 2.22 0.00 1/29/2015 59.84 24.1 30.49 272 NA 30.90 64.10Boston Proper!es (BXP) BXP SALSA 22,170.9 3/20/2015 144.73 1.80 0.00 3/27/2015 51.59 25.5 29.67 159 91.70 35.58 55.97Corporate Office Proper!es (COPT) OFC SALSA 2,872.5 3/20/2015 30.75 3.58 0.00 3/27/2015 80.88 20.9 39.10 174 92.40 25.85 44.66WPT Industrial (WIR.U) WIR.U-TSXSALSA 220.4 3/20/2015 11.90 5.88 0.00 3/27/2015 67.27 10.5 75.89 42 99.10 33.35 NALodging/ HotelPebblebrook (PEB) PEB SALSA 3,524.8 3/20/2015 49.15 2.52 43.75 3/27/2015 53.49 26.5 18.93 35 82.00 48.69 127.71Chatham Lodging (CLDT) CLDT SALSA 1,181.5 3/20/2015 30.85 3.89 14.29 3/27/2015 NA NA 35.72 130 NA 53.59 169.36SoTHERELY Hotels (SOHO) SOHO SALSA 81.7 3/20/2015 7.73 3.62 62.50 3/11/2015 36.11 10.4 72.40 12 63.40 27.97 189.74LaSalle Hotels (LHO) LHO SALSA 4,612.5 3/20/2015 40.85 3.67 33.93 3/27/2015 64.66 17.4 18.39 45 77.20 31.84 56.56Xenia Hotels (XHR) XHR SALSA 2,689.4 3/20/2015 24.09 3.82 NA 3/27/2015 NA NA NA NA NA NA NAHersha Hoteks (HT) HT SALSA 1,366.0 3/20/2015 6.87 4.08 16.67 3/27/2015 58.33 14.6 35.88 51 81.30 23.34 50.90RLJ Lodging (RLJ) RLJ SALSA 4,331.0 3/20/2015 32.77 4.03 46.34 3/27/2015 NA NA 25.88 146 NA 26.49 101.48Host Hotels & Resorts HST SALSA 16,453.3 3/20/2015 21.72 3.68 66.67 3/27/2015 50.00 14.9 17.97 140 NA 12.23 42.85Cheasapeake Lodging CHSP SALSA 1,900.3 3/20/2015 34.52 4.06 15.38 3/27/2015 78.95 24.5 20.34 20 75.50 38.75 118.48OtherCorEnergy (CORR) CORR SALSA 327.7 3/20/2015 7.03 7.40 4.00 2/11/2015 162.50 20.3 23.16 NA NA 17.16 -4.57Iron Mountain (IRM) IRM SALSA 8,119.3 3/20/2015 38.65 4.92 NA 3/4/2015 NM 34.5 36.47 1,094 NA 65.71 90.46Hannon Armstrong (HASI) HASI SALSA 518.1 3/20/2015 18.93 5.49 57.14 3/26/2015 NA NA 61.50 NA NA 34.92 NAAramda Hoffler (AHH) AHH SALSA 274.1 3/20/2015 10.93 6.22 0.00 3/30/2015 80.00 11.9 48.75 28 95.70 12.41 NAMortgage REITsUnited Development Funding (UDF) UDF SALSA 545.6 3/20/2015 17.81 9.21 0.30 3/11/2015 NA NA NA NA NA NA NABlackstone Mortgage (BXMT) BXMT SALSA 1,656.6 3/20/2015 28.43 7.32 85.19 3/27/2015 NA NA 63.58 NA NA 4.68 60.53Starwood (STWD) STWD SALSA 5,479.0 3/20/2015 24.51 7.83 4.35 3/27/2015 NA NA 47.31 NA NA 12.16 80.06#NAME? ‡ Year-over-year growth as of the most recent quarter ended. 1Data as of most recent quarter ended.

Source: SNL Financial

NA equals data not available and NM signifies non-meaningful data


The Intelligent REIT Investor’s Universe


Ticker Dividend Safety (1-10) 2012 FFO /

Share

2013 FFO/ share 2014 FFO /

share

2012 Dividends

Paid

2013 Dividends

Paid

2014Q3 Annualized

2014 Dividends

Paid^

2012-2013 Dividend Growth

2013-2014 Divdend Gowth

Residen!alPreferred Apt Communi!es (APTS) APTS 3 SALSA 0.57 0.00 0.63 0.53 0.59 0.1600 0.6400 12.38 8.47Home Proper!es (HME) HME 5 SALSA 4.13 4.37 4.33 2.64 2.80 0.7300 2.9200 6.06 4.29American Campus Communi!es (ACC) ACC 7 SWAN 1.95 2.22 2.42 1.35 1.42 0.3800 1.5200 5.00 5.82AvalonBay (AVB) AVB 7 SWAN 5.32 5.05 7.25 3.80 4.18 1.1600 4.6400 9.93 8.85Equity Residen!al (EQR EQR 8 SWAN 3.11 2.35 3.15 1.58 1.97 0.5000 2.0000 13.89 23.58Essex Property Trust Inc. (ESS) ESS 9 SWAN 6.71 7.59 7.89 4.34 4.73 1.3000 5.2000 8.99 6.13Single Family Residen!alStarwood Waypoint Residen!al (SWAY) SWAY 5 NA NA -0.05 NA NA 0.0000 0.0000 NA NA

Sun Communi!esSun Communi!es (SUI) SUI 7 SALSA 3.05 3.11 3.06 2.52 2.52 0.6500 2.6000 0.00 2.38Shopping CentersInland Retal (IRC IRC 4 SALSA 0.96 0.95 0.95 0.57 0.57 0.1425 0.5700 0.00 0.00Excel Trust (EXL) EXL 4 SALSA 0.74 0.92 0.71 0.65 0.67 0.1750 0.7000 3.86 4.09BrixMor (BRX) BRX 5 SALSA NA 1.44 1.80 NA 0.00 0.2000 0.8000 NA NMDiversified Developers (DDR) DDR 5 SALSA 1.06 1.13 1.00 0.44 0.53 0.1550 0.6200 19.32 14.29Weingarten Realty Investors (WRI) WRI 5 SALSA 1.82 1.81 2.06 1.16 1.22 0.3250 1.3000 5.17 6.56Retail Opportunity Investment (ROIC) ROIC 6 SALSA 0.75 1.07 0.85 0.53 0.60 0.1600 0.6400 13.21 6.67Kimco Realty Corp. (KIM) KIM 6 SWAN 1.25 1.35 1.45 0.76 0.84 0.2250 0.9000 10.53 7.14Regency Centers Corp. (REG) REG 6 SWAN 2.47 2.62 2.90 1.85 1.85 0.4700 1.8800 0.00 1.62WP Glimcher (WPG) WPG 6 SALSA NA NA 1.57 NA NA 0.2500 1.0000 NA NAUrban Edge (UR) UE 6 SALSA NA NA NA NA NA NA NA NA NAUrstadt Biddle (UBA) UBA 8 SWAN 1.08 0.95 1.06 0.99 1.00 0.2525 1.0100 1.01 1.00Federal Realty (FRT) FRT 9 SWAN 4.31 4.41 4.79 2.80 2.97 0.7800 6.07 8.08MallGeneral Growth Proper!es (GGP GGP 6 SALSA NA NA NA 0.41 0.48 0.1500 0.6000 17.07 25.00Taubman Centers Inc. (TCO) TCO 8 SWAN 3.21 3.65 3.11 1.85 2.00 0.5400 2.1600 8.11 8.00Simon Property Group (SPG) SPG 9 SWAN 7.98 8.85 8.90 4.10 4.65 1.3000 5.2000 13.41 10.75Tanger Factory Outlet Centers (SKT) SKT 10 SWAN 1.63 1.94 1.82 0.83 0.89 0.2400 0.9600 6.63 6.78Self StorageExtra Space Storage Inc. (EXR) EXR 7 SALSA 1.59 1.96 2.52 0.85 1.45 0.4700 1.8800 70.59 24.83Sovran Self Storage (SSS) SSS 7 SALSA 3.14 3.72 4.09 1.80 2.02 0.6800 2.7200 12.22 34.65Public Storage (PSA) PSA 9 SWAN 6.31 7.53 7.98 4.40 5.15 1.4000 5.6000 17.05 8.74Triple NetAgree Realty (ADC) ADC 5 SALSA 2.03 2.10 2.18 1.60 1.63 0.4300 1.7200 1.87 4.29Spirit Realty (SRC) SRC 6 SALSA 0.57 0.54 0.61 0.00 0.67 0.1663 0.6650 NM -0.29EPR Proper!es (EPR) EPR 6 SALSA 3.59 4.13 4.04 2.95 3.65 0.8550 3.4200 23.61 -6.80Lexington Realty (LXP) LXP 6 SALSA 0.91 0.88 1.05 0.53 0.60 0.1700 0.6800 14.29 11.67STORECapital (STOR) STOR 6 SALSA NA NA 1.26 NA NA NA NA NA NAGramercy Property Trust (GPT) GPT 7 SALSA -1.88 0.08 0.44 0.00 0.00 0.1400 NA NMNa!onal Retail Proper!es (NNN) NNN 10 SWAN 1.77 1.91 2.09 1.56 1.60 0.4200 1.6800 2.56 3.12Realty Income Corp. (O) O 10 SWAN 1.96 2.41 2.58 1.77 2.15 0.5484 2.1935 21.21 2.06W. P. Carey Inc. (WPC) WPC 10 SWAN 2.47 2.78 4.56 2.35 3.18 0.9000 3.6000 35.61 13.36Data SectorCyrusOne (CONE) CONE 6 SALSA NA NA NA 0.00 0.48 0.2100 NM 53.76Digital Realty Trust Inc. (DLR) DLR 9 SWAN 4.44 4.74 5.04 2.87 3.07 0.8300 3.3200 6.97 6.51Healthcare CareTrust (CTRE) CTRE 2 SALSA NA NA NA NA NA 0.0000 0.0000 NA NAPhysicians Realty (DOC) DOC 5 SALSA NA NA 0.38 NA 0.18 0.2250 0.9000 NA 400.00Medical Proper!es Trust (MPW) MPW 5 SALSA 0.81 0.83 0.63 0.80 0.80 0.2100 0.8400 0.00 5.00SABRA Healthcare SBRA 6 SALSA 1.40 1.55 1.62 1.32 1.36 0.3800 3.03 11.03BioMed Realty (BMR) BMR 7 SALSA 1.23 1.47 1.55 0.85 0.94 0.2500 1.0000 11.24 6.38Healthcare Trust of America (HTA) HTA 8 SWAN 0.82 1.27 1.30 1.11 1.15 0.2875 1.1500 3.58 0.22Alexandria Reeal Estate (ARE) ARE 8 SALSA 4.31 4.33 4.42 2.02 2.49 0.7200 2.8800 23.27 13.25HCP Inc. (HCP) HCP 9 SWAN 2.72 2.95 3.00 2.00 2.10 0.5450 2.1800 5.00 3.81Omega Healthcaree Investors (OHI) OHI 9 SWAN 2.06 2.56 2.71 1.69 1.86 0.5100 2.0400 10.06 8.60LTC Proper!es (LTC) LTC 9 SWAN 2.26 2.29 2.55 1.79 1.91 0.5100 2.0400 6.42 7.09Ventas Inc. (VTR) VTR 10 SWAN 3.48 4.09 4.29 2.48 2.74 0.7250 2.9000 10.28 8.41Health Care REIT (HCN) HCN 10 SWAN 3.09 3.32 3.82 2.96 3.06 0.7950 3.1800 3.38 3.92Office / IndustrialSTAG Industrial (STAG) STAG 6 SALSA NA NA NA 1.06 1.37 0.3250 1.3000 29.25 -6.57Chambers Street (CSG) CSG 6 SALSA 0.35 0.59 0.64 0.60 0.66 0.1260 0.5040 9.83 -23.52WPT Industrial (WIR.U) WIR.U-TSX 6 SALSA NA 0.66 1.00 NA 0.42 0.1749 NA 66.59Monmouth Real Estate (MNR) MNR 7 SALSA 0.66 0.63 0.57 0.60 0.60 0.1500 0.6000 0.00 0.00Highwoods Proper!es (HIW) HIW 7 SALSA 2.70 2.81 2.90 1.70 1.70 0.4250 1.7000 0.00 0.00Vornado Realty (VNO) VNO 7 SALSA 4.39 3.41 4.83 3.76 2.92 0.7300 2.9200 5.80 0.00Corporate Office Proper!es (COPT) OFC 7 SALSA 2.13 2.40 1.69 1.24 1.10 0.2750 1.1000 -11.11 0.00Prologis (PLD) PLD 8 SALSA 1.19 1.73 1.75 1.12 1.12 0.3300 1.3200 0.00 17.86Boston Proper!es (BXP) BXP 8 SWAN 4.90 4.91 5.26 2.20 2.60 0.6500 2.6000 18.18 0.00Lodging/ HotelSoTHERELY Hotels (SOHO) SOHO 3 SALSA 0.30 0.40 1.15 0.09 0.14 0.0500 0.2000 55.56 46.43Xenia Hotels (XHR) XHR 5 SALSA NA NA NA NA NA NA NA NA NALaSalle Hotel (LHO) LHO 5 SALSA 1.97 2.21 2.48 0.62 0.88 0.3750 1.5000 41.94 48.86Chatham Lodging (CLDT) CLDT 6 SALSA NA NA NA 0.75 0.97 0.2400 0.9600 29.33 -5.15Host Hotels & Resorts HST 6 SALSA 1.04 1.26 1.57 0.26 0.42 0.1500 61.54 47.62RLJ Lodging (RLJ) RLJ 6 SALSA NA NA NA 0.65 0.82 0.2200 27.13 15.24Cheasapeake Lodging (CHSP) CHSP 6 SALSA 1.51 1.69 1.87 0.86 0.96 0.3000 11.63 20.83Pebblebrook (PEB) PEB 7 SALSA 1.09 1.36 1.89 0.48 0.60 0.2300 0.9200 25.00 41.67Hersha Hotels (HT) HT 7 SALSA 0.32 0.34 0.43 0.24 0.24 0.0600 0.2600 0.00 4.17OtherCorEnergy (CORR) CORR 4 SALSA 0.60 0.59 0.56 0.44 0.38 0.1300 0.5200 -14.77 37.07Iron Mountain (IRM) IRM 6 SALSA NA NA 2.55 NA NA 0.2700 1.0800 NA NAAramda Hoffler (AHH) AHH 6 SALSA NA 0.62 0.80 NA 0.24 0.1600 0.6400 NA 166.67Hannon Armstrong (HASI) HASI 7 SALSA NA NA NA NA 0.20 0.2200 NA 340.00Mortgage REITsUnited Development Funding (UDF) UDF 5 SALSA NA NA NA 1.74 1.74 0.4101 1.6404 -0.27 8.21Blackstone Mortgage (BXMT) BXMT 6 SALSA NA NA NA 20.00 0.27 0.4800 1.9200 NM 607.41Starwood (STWD) STWD 6 SALSA NA NA NA 1.76 1.90 0.4800 1.9200 2.27 5.56#NAME? ‡ Year-over-year growth as of the most recent quarter ended. ^Based on annualized third quarter total dividends paid. NA equals data not available and NM signifies non-meaningful data


The Intelligent REIT Investor’s Dividend Lab

CONTINUED ON NEXT PAGE

Ticker

Residen!alPreferred Apt Communi!es (APTS) APTS 3 SALSA 0.57 0.00 0.63 0.53 0.59 0.1600 0.6400 12.38 8.47Home Proper!es (HME) HME 5 SALSA 4.13 4.37 4.33 2.64 2.80 0.7300 2.9200 6.06 4.29American Campus Communi!es (ACC) ACC 7 SWAN 1.95 2.22 2.42 1.35 1.42 0.3800 1.5200 5.00 5.82AvalonBay (AVB) AVB 7 SWAN 5.32 5.05 7.25 3.80 4.18 1.1600 4.6400 9.93 8.85Equity Residen!al (EQR EQR 8 SWAN 3.11 2.35 3.15 1.58 1.97 0.5000 2.0000 13.89 23.58Essex Property Trust Inc. (ESS) ESS 9 SWAN 6.71 7.59 7.89 4.34 4.73 1.3000 5.2000 8.99 6.13Single Family Residen!al

SWAY 5 NA NA -0.05 NA NA 0.0000 0.0000 NA NA

Sun Communi!esSun Communi!es (SUI) SUI 7 SALSA 3.05 3.11 3.06 2.52 2.52 0.6500 2.6000 0.00 2.38Shopping CentersInland Retal (IRC IRC 4 SALSA 0.96 0.95 0.95 0.57 0.57 0.1425 0.5700 0.00 0.00Excel Trust (EXL) EXL 4 SALSA 0.74 0.92 0.71 0.65 0.67 0.1750 0.7000 3.86 4.09BrixMor (BRX) BRX 5 SALSA NA 1.44 1.80 NA 0.00 0.2000 0.8000 NA NMDiversified Developers (DDR) DDR 5 SALSA 1.06 1.13 1.00 0.44 0.53 0.1550 0.6200 19.32 14.29Weingarten Realty Investors (WRI) WRI 5 SALSA 1.82 1.81 2.06 1.16 1.22 0.3250 1.3000 5.17 6.56Retail Opportunity Investment (ROIC) ROIC 6 SALSA 0.75 1.07 0.85 0.53 0.60 0.1600 0.6400 13.21 6.67Kimco Realty Corp. (KIM) KIM 6 SWAN 1.25 1.35 1.45 0.76 0.84 0.2250 0.9000 10.53 7.14Regency Centers Corp. (REG) REG 6 SWAN 2.47 2.62 2.90 1.85 1.85 0.4700 1.8800 0.00 1.62WP Glimcher (WPG) WPG 6 SALSA NA NA 1.57 NA NA 0.2500 1.0000 NA NAUrban Edge (UR) UE 6 SALSA NA NA NA NA NA NA NA NA NAUrstadt Biddle (UBA) UBA 8 SWAN 1.08 0.95 1.06 0.99 1.00 0.2525 1.0100 1.01 1.00Federal Realty (FRT) FRT 9 SWAN 4.31 4.41 4.79 2.80 2.97 0.7800 6.07 8.08MallGeneral Growth Proper!es (GGP GGP 6 SALSA NA NA NA 0.41 0.48 0.1500 0.6000 17.07 25.00Taubman Centers Inc. (TCO) TCO 8 SWAN 3.21 3.65 3.11 1.85 2.00 0.5400 2.1600 8.11 8.00Simon Property Group (SPG) SPG 9 SWAN 7.98 8.85 8.90 4.10 4.65 1.3000 5.2000 13.41 10.75Tanger Factory Outlet Centers (SKT) SKT 10 SWAN 1.63 1.94 1.82 0.83 0.89 0.2400 0.9600 6.63 6.78Self StorageExtra Space Storage Inc. (EXR) EXR 7 SALSA 1.59 1.96 2.52 0.85 1.45 0.4700 1.8800 70.59 24.83Sovran Self Storage (SSS) SSS 7 SALSA 3.14 3.72 4.09 1.80 2.02 0.6800 2.7200 12.22 34.65Public Storage (PSA) PSA 9 SWAN 6.31 7.53 7.98 4.40 5.15 1.4000 5.6000 17.05 8.74Triple NetAgree Realty (ADC) ADC 5 SALSA 2.03 2.10 2.18 1.60 1.63 0.4300 1.7200 1.87 4.29Spirit Realty (SRC) SRC 6 SALSA 0.57 0.54 0.61 0.00 0.67 0.1663 0.6650 NM -0.29EPR Proper!es (EPR) EPR 6 SALSA 3.59 4.13 4.04 2.95 3.65 0.8550 3.4200 23.61 -6.80Lexington Realty (LXP) LXP 6 SALSA 0.91 0.88 1.05 0.53 0.60 0.1700 0.6800 14.29 11.67STORECapital (STOR) STOR 6 SALSA NA NA 1.26 NA NA NA NA NA NAGramercy Property Trust (GPT) GPT 7 SALSA -1.88 0.08 0.44 0.00 0.00 0.1400 NA NMNa!onal Retail Proper!es (NNN) NNN 10 SWAN 1.77 1.91 2.09 1.56 1.60 0.4200 1.6800 2.56 3.12Realty Income Corp. (O) O 10 SWAN 1.96 2.41 2.58 1.77 2.15 0.5484 2.1935 21.21 2.06W. P. Carey Inc. (WPC) WPC 10 SWAN 2.47 2.78 4.56 2.35 3.18 0.9000 3.6000 35.61 13.36Data SectorCyrusOne (CONE) CONE 6 SALSA NA NA NA 0.00 0.48 0.2100 NM 53.76Digital Realty Trust Inc. (DLR) DLR 9 SWAN 4.44 4.74 5.04 2.87 3.07 0.8300 3.3200 6.97 6.51Healthcare CareTrust (CTRE) CTRE 2 SALSA NA NA NA NA NA 0.0000 0.0000 NA NAPhysicians Realty (DOC) DOC 5 SALSA NA NA 0.38 NA 0.18 0.2250 0.9000 NA 400.00Medical Proper!es Trust (MPW) MPW 5 SALSA 0.81 0.83 0.63 0.80 0.80 0.2100 0.8400 0.00 5.00SABRA Healthcare SBRA 6 SALSA 1.40 1.55 1.62 1.32 1.36 0.3800 3.03 11.03BioMed Realty (BMR) BMR 7 SALSA 1.23 1.47 1.55 0.85 0.94 0.2500 1.0000 11.24 6.38Healthcare Trust of America (HTA) HTA 8 SWAN 0.82 1.27 1.30 1.11 1.15 0.2875 1.1500 3.58 0.22Alexandria Reeal Estate (ARE) ARE 8 SALSA 4.31 4.33 4.42 2.02 2.49 0.7200 2.8800 23.27 13.25HCP Inc. (HCP) HCP 9 SWAN 2.72 2.95 3.00 2.00 2.10 0.5450 2.1800 5.00 3.81Omega Healthcaree Investors (OHI) OHI 9 SWAN 2.06 2.56 2.71 1.69 1.86 0.5100 2.0400 10.06 8.60LTC Proper!es (LTC) LTC 9 SWAN 2.26 2.29 2.55 1.79 1.91 0.5100 2.0400 6.42 7.09Ventas Inc. (VTR) VTR 10 SWAN 3.48 4.09 4.29 2.48 2.74 0.7250 2.9000 10.28 8.41Health Care REIT (HCN) HCN 10 SWAN 3.09 3.32 3.82 2.96 3.06 0.7950 3.1800 3.38 3.92Office / IndustrialSTAG Industrial (STAG) STAG 6 SALSA NA NA NA 1.06 1.37 0.3250 1.3000 29.25 -6.57Chambers Street (CSG) CSG 6 SALSA 0.35 0.59 0.64 0.60 0.66 0.1260 0.5040 9.83 -23.52WPT Industrial (WIR.U) 6 SALSA NA 0.66 1.00 NA 0.42 0.1749 NA 66.59Monmouth Real Estate (MNR) MNR 7 SALSA 0.66 0.63 0.57 0.60 0.60 0.1500 0.6000 0.00 0.00Highwoods Proper!es (HIW) HIW 7 SALSA 2.70 2.81 2.90 1.70 1.70 0.4250 1.7000 0.00 0.00Vornado Realty (VNO) VNO 7 SALSA 4.39 3.41 4.83 3.76 2.92 0.7300 2.9200 5.80 0.00Corporate Office Proper!es (COPT) OFC 7 SALSA 2.13 2.40 1.69 1.24 1.10 0.2750 1.1000 -11.11 0.00Prologis (PLD) PLD 8 SALSA 1.19 1.73 1.75 1.12 1.12 0.3300 1.3200 0.00 17.86Boston Proper!es (BXP) BXP 8 SWAN 4.90 4.91 5.26 2.20 2.60 0.6500 2.6000 18.18 0.00Lodging/ HotelSoTHERELY Hotels (SOHO) SOHO 3 SALSA 0.30 0.40 1.15 0.09 0.14 0.0500 0.2000 55.56 46.43Xenia Hotels (XHR) XHR 5 SALSA NA NA NA NA NA NA NA NA NALaSalle Hotel (LHO) LHO 5 SALSA 1.97 2.21 2.48 0.62 0.88 0.3750 1.5000 41.94 48.86Chatham Lodging (CLDT) CLDT 6 SALSA NA NA NA 0.75 0.97 0.2400 0.9600 29.33 -5.15Host Hotels & Resorts HST 6 SALSA 1.04 1.26 1.57 0.26 0.42 0.1500 61.54 47.62RLJ Lodging (RLJ) RLJ 6 SALSA NA NA NA 0.65 0.82 0.2200 27.13 15.24Cheasapeake Lodging (CHSP) CHSP 6 SALSA 1.51 1.69 1.87 0.86 0.96 0.3000 11.63 20.83Pebblebrook (PEB) PEB 7 SALSA 1.09 1.36 1.89 0.48 0.60 0.2300 0.9200 25.00 41.67Hersha Hotels (HT) HT 7 SALSA 0.32 0.34 0.43 0.24 0.24 0.0600 0.2600 0.00 4.17OtherCorEnergy (CORR) CORR 4 SALSA 0.60 0.59 0.56 0.44 0.38 0.1300 0.5200 -14.77 37.07Iron Mountain (IRM) IRM 6 SALSA NA NA 2.55 NA NA 0.2700 1.0800 NA NAAramda Hoffler (AHH) AHH 6 SALSA NA 0.62 0.80 NA 0.24 0.1600 0.6400 NA 166.67Hannon Armstrong (HASI) HASI 7 SALSA NA NA NA NA 0.20 0.2200 NA 340.00Mortgage REITsUnited Development Funding (UDF) UDF 5 SALSA NA NA NA 1.74 1.74 0.4101 1.6404 -0.27 8.21Blackstone Mortgage (BXMT) BXMT 6 SALSA NA NA NA 20.00 0.27 0.4800 1.9200 NM 607.41Starwood (STWD) STWD 6 SALSA NA NA NA 1.76 1.90 0.4800 1.9200 2.27 5.56#NAME? ‡ Year-over-year growth as of the most recent quarter ended. 1Data as of most recent quarter ended.

^Based on annualized third quarter total dividends paid. NA equals data not available and NM signifies non-meaningful data


THE FAIR VALUE LAB Ticker SWAN/SALSA Price Previous FV Current FV Difference B/H/S Comments

Residen"alEssex Property Trust Inc. (ESS) ESS SWAN 240.55 170.00 175.00 37% SELL High Quality Assets / Too ExpensiveAvalonBay (AVB) AVB SWAN 179.83 150.00 155.00 16% HOLD Best in Class / Expensive NowEquity Residen!al (EQR) EQR SWAN 81.73 65.00 72.00 14% HOLD Best in Class / Expensve NowAmerican Campus Communi!es (ACC) ACC SWAN 43.76 39.00 39.00 12% HOLD con!nuing to reduce total debt and secured debt / wai!ngHome Proper!es (HME) HME SALSA 71.89 60.00 64.00 11% HOLD redevelop B and C quality assets..good performancePreferred Apt Communi!es (APTS) APTS SALSA 10.95 10.00 10.00 9% RECENT BUY FFO per share for full year 2015 to range between $1.11 and $1.19Singe Family Residen"al Starwood Waypoint (SWAY) SWAY SALSA 26.45 na 24.00 10% BUY shares moving away from bo"omManufactured HousingSun Communi!es (SUI) SUI SALSA 71.27 na 60.00 19% HOLD 1-Year Total Return 54%...tap the brakesShopping CentersFederal Realty (FRT) FRT SWAN 149.44 120.00 120.00 25% HOLD Extremely expensiveUrban Edge (UR) UE SALSA 23.85 na 20.00 19% HOLD New coverageRegency Centers Corp. (REG) REG SWAN 69.90 58.00 60.00 17% HOLD Necessity-proof tenants Weingarten Realty Investors (WRI) WRI SALSA 37.19 31.50 32.00 16% HOLD Focused mgt team / strong insider alignment / 6% div boostRetail Opportunity Investment (ROIC) ROIC SALSA 18.55 16.00 16.00 16% HOLD Fortress Balance Sheet..Strong Dividend GrowthUrstadt Biddle (UBA) UBA SWAN 23.47 na 20.40 15% HOLD Expensive..solid dividend fundamnatalsDiversified Developers (DDR) DDR SALSA 19.33 17.00 17.00 14% HOLD Unstable management team (at least for now)Kimco Realty Corp. (KIM) KIM SWAN 27.74 22.00 25.00 11% BUY My Top S/C pick - Excellent mgt team (CEO Re!ring)Excel Trust (EXL) EXL SALSA 14.35 13.00 13.00 10% BUY Best in class and fundamentals prove itBrixMor (BRX) BRX SALSA 27.01 24.00 25.00 8% RECENT BUY Moved price to $25..I bought shares recentlyInland Retal (IRC) IRC SALSA 10.98 10.75 10.75 2% STRONG BUY Price fell 8% in 30 days…good BUY price..pays monthlyWP Glicher (WPG) WPG SALSA 17.06 15.00 17.00 0% STRONG BUY Move FV to $17 … Cheap MallSimon Property Group (SPG) SPG SWAN 197.34 150.00 175.00 13% HOLD Monitoring MAC offerGeneral Growth Proper!es (GGP) GGP SALSA 31.00 25.00 28.00 11% BUY High quality por'olio / Look for pullbackTaubman Centers Inc. (TCO) TCO SWAN 80.53 72.00 74.00 9% BUY Steady dividend historyTanger Factory Outlet Centers (SKT) SKT SWAN 36.29 32.00 34.00 7% BUY Fortress Balance sheet and desirable brandSelf StorageExtra Space Storage Inc. (EXR) EXR SALSA 69.22 57.00 60.00 15% HOLD I Own Now / Buy on Share Price weaknessSovran Self Storage (SSS) SSS SALSA 97.23 na 85.00 14% HOLD Prefer EXR (be"er fundamentals)Public Storage (PSA PSA SWAN 199.12 na 175.00 14% HOLD Like the PreferredsTriple NetSTORECapital (STOR) STOR SALSA 23.55 18.50 20.00 18% HOLD Solid Q4 - Looking for dividend increaseNa!onal Retail Proper!es (NNN) NNN SWAN 42.29 37.00 37.00 14% HOLD very predictable dividend history / strong balance sheetAgree Realty (ADC) ADC SALSA 34.17 28.00 30.00 14% HOLD Solid Q4 - Need higher dividend thoughEPR Proper!es (EPR) EPR SALSA 61.78 55.00 55.00 12% HOLD Look for Pullback (CEO re!ring)Realty Income Corp. (O) O SWAN 53.65 46.50 48.00 12% HOLD best in class - fortress balance sheet - moved to $48 FVSpirit Realty (SRC) SRC SALSA 12.26 11.00 11.00 11% HOLD Look for Pullback (President resigned?) Gramercy Property Trust (GPT) GPT SALSA 29.48 na 27.00 9% BUY 4 for 1 split ..strong growth…looking for div boostW. P. Carey Inc. (WPC) WPC SWAN 70.82 67.00 68.00 4% BUY solid Q4 - growth very goodLexington Realty (LXP) LXP SALSA 10.39 12.00 12.00 -13% STRONG BUY LXP should begin to move in-line with peer P/FFOData SectorCyrusOne (CONE) CONE SALSA 32.60 na 30.00 9% BUY Look for pullback..compliments DLR Digital Realty Trust Inc. (DLR) DLR SWAN 68.28 65.00 65.00 5% BUY Solid Performance / Recent dividen increaseHealthcare Sabra Health Care (SBRA) SBRA SALSA 34.02 na 27.27 25% HOLD Wait for pullbackCareTrust (CTRE) CTRE SALSA 13.61 10.00 11.00 24% HOLD Small Cap Risk / One Tenant RiskAlexandria Reeal Estate (ARE) ARE SALSA 102.42 85.00 87.00 18% HOLD Strong Por'olio and Soung Mgt teamBioMed Realty (BMR) BMR SALSA 23.24 20.00 20.00 16% HOLD Weak performance / HoldHealthcare Trust of America (HTA) HTA SWAN 29.02 25.00 25.00 16% HOLD Solid Q4 - price fell 7% last 30 days -s!ll soundly valuedPhysicians Realty (DOC) DOC SALSA 17.76 15.00 15.75 13% HOLD Buying more on share weaknessLTC Proper!es (LTC) LTC SWAN 45.46 42.00 42.00 8% BUY Price down 7.2% in 30 days..ge*ng closerOmega Healthcaree Investors (OHI) OHI SWAN 40.67 38.00 38.00 7% BUY Pending Merger / Steady Divdend GrowthHealth Care REIT (HCN) HCN SWAN 79.13 65.00 75.00 6% BUY Fitch ups ra!ng from BBB to BBB+ Ventas Inc. (VTR) VTR SWAN 73.73 70.00 70.00 5% BUY Best in CEO with durable income historyMedical Proper!es Trust (MPW) MPW SALSA 15.22 14.00 14.50 5% RECENT BUY Solid Q4 - moved to $14.50HCP Inc. (HCP) HCP SWAN 42.44 43.00 43.00 -1% RECENT BUY weakness in ManorCare exposure - STRONG BUY nowOffice/IndustrialBoston Proper!es (BXP) BXP SWAN 144.73 120.00 120.00 21% SELL Expensive Vornado Realty (VNO) VNO SALSA 113.44 100.00 95.00 19% SELL Expensive and Toys R Us overhangCorporate Office Proper!es (COPT) OFC SALSA 30.75 25.00 26.00 18% HOLD Could be right when price makes sensePrologis (PLD) PLD SALSA 44.39 38.00 38.00 17% HOLD Expensive Monmouth Real Estate (MNR) MNR SALSA 11.32 10.00 10.00 13% HOLD Solid earnings results…s!ll need be"er div coverageSTAG Industrial (STAG) STAG SALSA 24.62 22.00 22.00 12% HOLD Solid Q4.. Look for PullbackWPT Industrial (WIR.U) SALSA 11.90 na 11.00 8% BUY Canadian REIT / Nice yieldHighwoods Proper!es (HIW) HIW SALSA 46.59 44.00 44.00 6% BUY Never cut dividend in Great RecessionChambers Street (CSG) CSG SALSA 7.94 8.68 8.68 -9% STRONG BUY Lagging sector/ CEO re!ringLodging/ HotelXenia Hotels (XHR) XHR SALSA 24.09 na 18.00 34% HOLD Untested..Wai!ng on performancePebblebrook (PEB) PEB SALSA 49.15 40.00 42.00 17% HOLD Strong growth / Need a PullbackCheaspeake Lodging (CHSP) CHSP SALSA 34.52 na 29.50 17% HOLDLaSalle Hotel (LHO) LHO SALSA 40.85 na 35.00 17% HOLDSoTHERELY Hotels (SOHO) SOHO SALSA 7.73 7.00 7.00 10% BUY Snall Cap Risk / Limit Concetra!onHost Hotels & Resorts (HST) HST SALSA 21.72 na 20.22 7% RECENT BUY Purchase on share price weaknessRLJ Lodging (RLJ) RLJ SALSA 32.77 na 31.00 6% BUYHersha Hotels (HT) HT SALSA 6.87 na 6.62 4% STRONG BUY Small cap but reliable mgt teamChatham Lodging (CLDT) CLDT SALSA 30.85 28.00 30.00 3% RECENT BUY Recent 25% Dividend IncreaseOtherHannon Armstrong (HASI) HASI SALSA 18.93 na 17.00 11% BUY Looking for be"er entry priceCorEnergy (CORR) CORR SALSA 7.03 6.50 6.67 5% BUY Small Cap Risk / My Underdog PickAramda Hoffler (AHH) AHH SALSA 10.93 10.00 10.50 4% BUY Small Cap Risk / Limit ExposureIron Mountain (IRM) IRM SALSA 38.65 39.00 39.00 -1% STRONG BUY Down 9% in last 30 days…Good entry priceMortgage REITsStarwood (STWD) STWD SALSA 24.51 20.00 22.00 11% HOLD Complex- worth owning but higher riskBlackstone Mortgage (BXMT) BXMT SALSA 28.43 26.00 26.00 9% HOLD Buying more on share weaknessUnited Development Funding (UDF) UDF SALSA 17.81 16.70 16.70 7% STRONG BUY Buying more on share weakness

The Intelligent REIT Investor’s Fair Value Lab


CONTINUED ON NEXT PAGE

THE FAIR VALUE LAB Ticker SWAN/SALSA Price Current FV Difference B/H/S Comments

Residen"alEssex Property Trust Inc. (ESS) ESS SWAN 240.55 170.00 175.00 37% SELL High Quality Assets / Too ExpensiveAvalonBay (AVB) AVB SWAN 179.83 150.00 155.00 16% HOLD Best in Class / Expensive NowEquity Residen!al (EQR) EQR SWAN 81.73 65.00 72.00 14% HOLD Best in Class / Expensve NowAmerican Campus Communi!es (ACC) ACC SWAN 43.76 39.00 39.00 12% HOLD con!nuing to reduce total debt and secured debt / wai!ngHome Proper!es (HME) HME SALSA 71.89 60.00 64.00 11% HOLD redevelop B and C quality assets..good performancePreferred Apt Communi!es (APTS) APTS SALSA 10.95 10.00 10.00 9% RECENT BUY FFO per share for full year 2015 to range between $1.11 and $1.19Singe Family Residen"al Starwood Waypoint (SWAY) SWAY SALSA 26.45 na 24.00 10% BUY shares moving away from bo"omManufactured HousingSun Communi!es (SUI) SUI SALSA 71.27 na 60.00 19% HOLD 1-Year Total Return 54%...tap the brakesShopping CentersFederal Realty (FRT) FRT SWAN 149.44 120.00 120.00 25% HOLD Extremely expensiveUrban Edge (UR) UE SALSA 23.85 na 20.00 19% HOLD New coverageRegency Centers Corp. (REG) REG SWAN 69.90 58.00 60.00 17% HOLD Necessity-proof tenants Weingarten Realty Investors (WRI) WRI SALSA 37.19 31.50 32.00 16% HOLD Focused mgt team / strong insider alignment / 6% div boostRetail Opportunity Investment (ROIC) ROIC SALSA 18.55 16.00 16.00 16% HOLD Fortress Balance Sheet..Strong Dividend GrowthUrstadt Biddle (UBA) UBA SWAN 23.47 na 20.40 15% HOLD Expensive..solid dividend fundamnatalsDiversified Developers (DDR) DDR SALSA 19.33 17.00 17.00 14% HOLD Unstable management team (at least for now)Kimco Realty Corp. (KIM) KIM SWAN 27.74 22.00 25.00 11% BUY My Top S/C pick - Excellent mgt team (CEO Re!ring)Excel Trust (EXL) EXL SALSA 14.35 13.00 13.00 10% BUY Best in class and fundamentals prove itBrixMor (BRX) BRX SALSA 27.01 24.00 25.00 8% RECENT BUY Moved price to $25..I bought shares recentlyInland Retal (IRC) IRC SALSA 10.98 10.75 10.75 2% STRONG BUY Price fell 8% in 30 days…good BUY price..pays monthlyWP Glicher (WPG) WPG SALSA 17.06 15.00 17.00 0% STRONG BUY Move FV to $17 … Cheap MallSimon Property Group (SPG) SPG SWAN 197.34 150.00 175.00 13% HOLD Monitoring MAC offerGeneral Growth Proper!es (GGP) GGP SALSA 31.00 25.00 28.00 11% BUY High quality por'olio / Look for pullbackTaubman Centers Inc. (TCO) TCO SWAN 80.53 72.00 74.00 9% BUY Steady dividend historyTanger Factory Outlet Centers (SKT) SKT SWAN 36.29 32.00 34.00 7% BUY Fortress Balance sheet and desirable brandSelf StorageExtra Space Storage Inc. (EXR) EXR SALSA 69.22 57.00 60.00 15% HOLD I Own Now / Buy on Share Price weaknessSovran Self Storage (SSS) SSS SALSA 97.23 na 85.00 14% HOLD Prefer EXR (be"er fundamentals)Public Storage (PSA PSA SWAN 199.12 na 175.00 14% HOLD Like the PreferredsTriple NetSTORECapital (STOR) STOR SALSA 23.55 18.50 20.00 18% HOLD Solid Q4 - Looking for dividend increaseNa!onal Retail Proper!es (NNN) NNN SWAN 42.29 37.00 37.00 14% HOLD very predictable dividend history / strong balance sheetAgree Realty (ADC) ADC SALSA 34.17 28.00 30.00 14% HOLD Solid Q4 - Need higher dividend thoughEPR Proper!es (EPR) EPR SALSA 61.78 55.00 55.00 12% HOLD Look for Pullback (CEO re!ring)Realty Income Corp. (O) O SWAN 53.65 46.50 48.00 12% HOLD best in class - fortress balance sheet - moved to $48 FVSpirit Realty (SRC) SRC SALSA 12.26 11.00 11.00 11% HOLD Look for Pullback (President resigned?) Gramercy Property Trust (GPT) GPT SALSA 29.48 na 27.00 9% BUY 4 for 1 split ..strong growth…looking for div boostW. P. Carey Inc. (WPC) WPC SWAN 70.82 67.00 68.00 4% BUY solid Q4 - growth very goodLexington Realty (LXP) LXP SALSA 10.39 12.00 12.00 -13% STRONG BUY LXP should begin to move in-line with peer P/FFOData SectorCyrusOne (CONE) CONE SALSA 32.60 na 30.00 9% BUY Look for pullback..compliments DLR Digital Realty Trust Inc. (DLR) DLR SWAN 68.28 65.00 65.00 5% BUY Solid Performance / Recent dividen increaseHealthcare Sabra Health Care (SBRA) SBRA SALSA 34.02 na 27.27 25% HOLD Wait for pullbackCareTrust (CTRE) CTRE SALSA 13.61 10.00 11.00 24% HOLD Small Cap Risk / One Tenant RiskAlexandria Reeal Estate (ARE) ARE SALSA 102.42 85.00 87.00 18% HOLD Strong Por'olio and Soung Mgt teamBioMed Realty (BMR) BMR SALSA 23.24 20.00 20.00 16% HOLD Weak performance / HoldHealthcare Trust of America (HTA) HTA SWAN 29.02 25.00 25.00 16% HOLD Solid Q4 - price fell 7% last 30 days -s!ll soundly valuedPhysicians Realty (DOC) DOC SALSA 17.76 15.00 15.75 13% HOLD Buying more on share weaknessLTC Proper!es (LTC) LTC SWAN 45.46 42.00 42.00 8% BUY Price down 7.2% in 30 days..ge*ng closerOmega Healthcaree Investors (OHI) OHI SWAN 40.67 38.00 38.00 7% BUY Pending Merger / Steady Divdend GrowthHealth Care REIT (HCN) HCN SWAN 79.13 65.00 75.00 6% BUY Fitch ups ra!ng from BBB to BBB+ Ventas Inc. (VTR) VTR SWAN 73.73 70.00 70.00 5% BUY Best in CEO with durable income historyMedical Proper!es Trust (MPW) MPW SALSA 15.22 14.00 14.50 5% RECENT BUY Solid Q4 - moved to $14.50HCP Inc. (HCP) HCP SWAN 42.44 43.00 43.00 -1% RECENT BUY weakness in ManorCare exposure - STRONG BUY nowOffice/IndustrialBoston Proper!es (BXP) BXP SWAN 144.73 120.00 120.00 21% SELL Expensive Vornado Realty (VNO) VNO SALSA 113.44 100.00 95.00 19% SELL Expensive and Toys R Us overhangCorporate Office Proper!es (COPT) OFC SALSA 30.75 25.00 26.00 18% HOLD Could be right when price makes sensePrologis (PLD) PLD SALSA 44.39 38.00 38.00 17% HOLD Expensive Monmouth Real Estate (MNR) MNR SALSA 11.32 10.00 10.00 13% HOLD Solid earnings results…s!ll need be"er div coverageSTAG Industrial (STAG) STAG SALSA 24.62 22.00 22.00 12% HOLD Solid Q4.. Look for PullbackWPT Industrial (WIR.U) WIR.U-TSX SALSA 11.90 na 11.00 8% BUY Canadian REIT / Nice yieldHighwoods Proper!es (HIW) HIW SALSA 46.59 44.00 44.00 6% BUY Never cut dividend in Great RecessionChambers Street (CSG) CSG SALSA 7.94 8.68 8.68 -9% STRONG BUY Lagging sector/ CEO re!ringLodging/ HotelXenia Hotels (XHR) XHR SALSA 24.09 na 18.00 34% HOLD Untested..Wai!ng on performancePebblebrook (PEB) PEB SALSA 49.15 40.00 42.00 17% HOLD Strong growth / Need a PullbackCheaspeake Lodging (CHSP) CHSP SALSA 34.52 na 29.50 17% HOLDLaSalle Hotel (LHO) LHO SALSA 40.85 na 35.00 17% HOLDSoTHERELY Hotels (SOHO) SOHO SALSA 7.73 7.00 7.00 10% BUY Snall Cap Risk / Limit Concetra!onHost Hotels & Resorts (HST) HST SALSA 21.72 na 20.22 7% RECENT BUY Purchase on share price weaknessRLJ Lodging (RLJ) RLJ SALSA 32.77 na 31.00 6% BUYHersha Hotels (HT) HT SALSA 6.87 na 6.62 4% STRONG BUY Small cap but reliable mgt teamChatham Lodging (CLDT) CLDT SALSA 30.85 28.00 30.00 3% RECENT BUY Recent 25% Dividend IncreaseOtherHannon Armstrong (HASI) HASI SALSA 18.93 na 17.00 11% BUY Looking for be"er entry priceCorEnergy (CORR) CORR SALSA 7.03 6.50 6.67 5% BUY Small Cap Risk / My Underdog PickAramda Hoffler (AHH) AHH SALSA 10.93 10.00 10.50 4% BUY Small Cap Risk / Limit ExposureIron Mountain (IRM) IRM SALSA 38.65 39.00 39.00 -1% STRONG BUY Down 9% in last 30 days…Good entry priceMortgage REITsStarwood (STWD) STWD SALSA 24.51 20.00 22.00 11% HOLD Complex- worth owning but higher riskBlackstone Mortgage (BXMT) BXMT SALSA 28.43 26.00 26.00 9% HOLD Buying more on share weaknessUnited Development Funding (UDF) UDF SALSA 17.81 16.70 16.70 7% STRONG BUY Buying more on share weakness

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