Colony Credit Real Estate - CLNC

(Thomas) #1

DIVIDEND YIELD: 11.2%

Along the same lines, let’s look at Colony Credit Real Estate $15.54). Colony Credit is not a mortgage REIT, per se, but it’s similar in concept. It’s a commercial real estate credit REIT focused on originating, acquiring, financing and managing a portfolio of commercial real estate debt.

Essentially, Colony is a real estate lender that is organized as a REIT for tax reasons. REITs pay no corporate income taxes so long as they distribute at least 90% of their net income as dividends.

Colony Credit is a relatively small REIT, at $2.8 billion, with a portfolio valued at $5.5 billion spread across 76 loans.

As a debt investor, Colony is less at risk of any turbulence in the property market than an equity investor. But property prices are looking a little frothy in a lot of markets, and we’re late in the economic expansion. So, volatility in this space cannot be ruled out if the economy starts to cool. At an impressive yield of 11%, you’re at least being richly compensated for that risk