Warren Buffett's Berkshire Hathaway is betting on net lease assets with a $377M investment in retail REIT Store Capital Corp. — a move that shows the world’s most famous investor thinks there is still life in the retail real estate sector.
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The real estate mogul's company took a 9.8% stake in Scottsdale, Arizona-based Store Capital Corp. Monday, sending its stock soaring 11%. The REIT primarily leases retail properties to mom-and-pop retailers, and avoids the sectors that have seen their market eaten up by e-commerce, such as fashion, media and electronics, Bloomberg reports.
Its tenants tend to be preschool facilities, health clubs, dine-in movie theaters and pet care sites. Tenants cover the costs of running the property.
Store Capital CEO Christopher Volk told Bloomberg that Berkshire Hathaway had been studying the REIT since 2014, occasionally holding conversations with management. He said 10 days ago, Buffett’s deputy investment manager, Ted Weschler, called the company to suggest a deal because the share price had fallen to an attractive level.
Buffett has previously told investors in his famous shareholder letters that real estate can be a good hedge against inflation and is a better store of value than gold and bonds.
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