In the midst of a mortgage crisis, created by COVID-19, Store Capital (STOR) has reported increased quarterly earnings per share on a year-over-year basis. Store stock initially moved higher on the news, but has since retreated back to pre-earning levels.
According to STOR CEO Christopher Volk, the increased earnings, which came in at $0.26 per share, were driven largely by an increase in the size of STOR’s real estate portfolio, achieved during 2019, and early 2020. The company increased its real estate holdings from $8.0 billion to $9.1 billion over the course of a year.
Volk said STOR has been working to ensure its balance sheet is stable, and the company is able to ride out the current crisis. He stated, “We have fortified our balance sheet with excess liquidity and have modest leverage and no meaningful near-term debt maturities.”
Revenues for Q1 2020 were $177.9 million, which was 13.6% better than Q1 2019. As of March 31, 2020, Store Capital now controls 2,552 properties with 491 distinct customers. Store Capital added 57 properties in the quarter, spending $264.1 million on the purchases.
Addressing the health of tenants in the Store Capital portfolio, Volk commented in the company’s earnings call, “…our portfolio remained extremely healthy, with an occupancy rate of 99.5% and with continued stability in the percentage of net lease contracts rated investment grade and quality based upon our STORE Score Methodology.”
In an investment update to shareholders closer to the outset of the COVID-19 pandemic, and the recent oil crisis, Volk had assured investors the company’s properties were occupied by stable businesses, that should not be overly impacted by either crisis.
Addressing the new properties added to the portfolio during the quarter, Volk stated, “All 57 new assets that we acquired during the quarter are required to deliver unit level financial statements, giving us unit level financial reporting from 98% of the properties in our portfolio.”
Store Capital declared a dividend of $0.35 for the quarter, and currently has a dividend yield of just over 8%, paying $1.40 annually. Volk said the company’s board is monitoring the dividend very closely, and that they will provide an update in June with relevant information that may impact the dividend moving forward.
Store Capital stock now trades at just under $19, after declining from $40 prior to the onset of the COVID-19 pandemic. The stock has recovered from a low of just under $14 at the bottom of its range.
Steven Adams’s personal position in Store Capital: none.
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