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Why Warren Buffett Just Invested in This $2.6 Trillion Industry, and How You Can, Too

June 29, 2017

Why Warren Buffett Just Invested in This $2.6 Trillion Industry, and How You Can, Too

Here’s why net lease real estate could be a smart addition to your portfolio.

June 27, 2017 | by Matthew Frankel | The Motley Fool

Net-lease real estate investment trust Store Capital (NYSE:STOR) recently announced that Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B), the conglomerate led by Warren Buffett, had made a substantial investment in its common stock. Here’s what you need to know about net-lease real estate, why Berkshire may have decided to invest in it, and some companies you can check out if you want to add net-lease real estate to your portfolio.

What is net-lease real estate, and why can it be an attractive investment?

Net-lease real estate is a category of real estate that typically includes freestanding, single-tenant properties. Retail and service businesses are common net-lease tenants, as are certain office, healthcare, and industrial properties, to name a few.

A “net lease” means the property’s tenant is responsible for some of the expenses associated with owning the property, typically taxes, insurance, and maintenance. Net-lease tenants are usually on long-term leases with annual rent “escalators.” This type of lease is attractive from an investor’s perspective because it minimizes tenant turnover, eliminates some of the variable costs of real estate ownership, and produces a steadily growing stream of income.

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John E. Moriarty, ChFC
December 2015
February 3, 2016

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