Not the most cogent hate mail I ever received…

Most of the comments and e-mails I receive are positive, encouraging and genuinely nice. However, there are always outliers. Here is one hate mail I thought was too brilliant to pass up:

hey dumbass I like how you made a post “dividends are for suckers” and then wrote a whole post on reits saying that you prefer those that paid a higher dividend. Way to contradict yourself loser

The e-mail was signed “Rob,” a perfect name because I truly felt reading it “robbed” me of me time.

In any event, REITs do not pay dividends: they pay a distribution. Before you try to insult someone, at least make sure you understand what the fuck you’re talking about.

Liked it? Take a second to support fscomeau on Patreon!

9 Responses to Not the most cogent hate mail I ever received…

  1. Huckleberry Finn April 11, 2016 at 8:50 am #

    Pretty poor reading comprehension on his part.
    From your “Dividends” article
    An exception

    Every rule has an exception and this one is no different. There is one kind of dividend-paying stock you should not only consider investing in, but devote a significant part of your portfolio to. Technically, they don’t pay dividends, but a distribution. Only a part of your distribution is taxable (sometimes at 0%, when it’s considered a “return of capital!) and in many cases, the company pays no taxes at all. This is the case, for example, for REITS. There are also some weird kind of foreign partnership bizarro thing that benefit from some strange loophole and these things are amazing.

  2. DoubleOhDiv April 11, 2016 at 5:27 pm #

    Hey HF, thanks for snipping that since it gives me a question I wanted to ask:

    Any further details on the “weird kind of foreign partnership bizarro thing”?
    Just curious what an example of this might be.

  3. phil April 12, 2016 at 1:22 am #


  4. Phil April 12, 2016 at 10:49 pm #

    haters gon hate

  5. Timofey April 13, 2016 at 1:36 am #

    So I shouldn’t address you as “hey dumbass” when I contact you?

  6. Huckleberry Finn April 13, 2016 at 9:41 am #

    I had a question on Reits.
    Both FFO and AFFO do not take into account principal payments. So any REIT running close to 100% AFFO payout ratio would make no net principal payments correct? Wouldn’t including principal payments in the AFFO calculation make it a better predictor of ability to pay distributions?

    • F.S. Comeau April 13, 2016 at 1:04 pm #

      Great question. The truth is that every REIT has its own methodology to calculate its AFFO. What is an AFFO anyway? “Adjusted” funds from operations. It can be adjusted in any way they see fit, to be honest.

      That being said, FFO/AFFO do not include principal repayment (i.e. repaying the mortgage). Most REITs have a debt to GBV of 45% to 55%, meaning that if a building is valued at $1M, they have a mortgage of 450k-550k on it. Some of the assumptions when valuing REIT is that they can refinance the mortgage, thus “perpetually” delaying the mortgage repayments. Indeed, if interest rates go up significantly, a REIT can be in significant trouble if its interest rate on its mortgage goes from 4% to 8% for instance. Then again, high interest rate also mean rents will go up faster.

  7. Huckleberry Finn April 13, 2016 at 2:07 pm #

    Thanks FS.
    I think what you are saying is what Morguard reit actively admits to doing. Keeping their debt to GBV actively at 50%.
    So for rising rates….the best reit would be
    1) Shortest lease rapid reset in the market to higher inflated rates
    2) Longest debt terms so low rates locked in for debt
    3) Lowest debt to GBV…

    Hmmm typing that out made me think that Northview Apt Reit (yearly reset on rents), American Hotel Reits (ability to jack up rates any longest debt term) and Granite Reit (23% debt to GBV) would be the best in a rising rate environment.
    Your thoughts?

Leave a Reply