Many thanks for that and excellent helps my understanding :)

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Chris60

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11/09/24

12:42

Post #: 75626887
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Originally posted by eigenvalue: ↑

With respect to REITs, people refer to net lease agreements, rather than operating and non-operating leases. A triple N (not triple A) lease typically implies that the tenant is responsible for the following three outgoings: property taxes; building insurance; and maintenance costs. Under a quadruple net lease agreement, the tenant would also be responsible for structural repairs.

Both DXC and WPR share a large number of the same tenants. For WPR, they have VEA and Chevron as tenants. DXC has VEA and Chevron for 52% of their tenants (as a percentage of income). It’s highly doubtful that the lease agreements differ across the two REITs for these two clients.WPR has recently specifically reported that 90% of income is based on triple net leases. DXC only occasionally makes reference to net leases, but does not provide much details (double N or triple N?).

In the DXC PDS (going back to 2017 when the name was different), it is stated that all of the leases were triple net leases. I suspect DXC and WPR have essentially the same sort of exposure to net leases. The DXC PDS also states that tenant is responsible for site remediation costs (p. 13). The WPR PDS states the same thing (also on their page 13). Neither DXC nor WPR are on the hook for environmental damage.

The main difference between DXC and WPR is that WPR is internally managed. Therefore, the management costs are somewhat lower (.31% for WPR versus .65% for the first $500m of property in DXC). Also, DXC shareholders might be subjected to less than great decisions simply to increase assets under management (to grease DXS’s earnings).

The other difference is in the types of properties they own. Pick the state you live in and compare the sites that DXC owns and that WPR owns. Pretty consistently, you’ll notice that WPR owns sites that are in more expensive/attractive suburbs compared to DXC; therefore, you’d expect the cap rate to be lower for WPR than DXC.

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Many thanks for that and excellent helps my understanding

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Many thanks for that and excellent helps my understanding :)

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Many thanks for that and excellent helps my understanding :)

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