- Berkshire Hathaway takes 9.8% stake in single-tenant REIT
- Landlord has ‘experiential retail’ such as gyms, theaters
Warren Buffett is betting that some types of brick-and-mortar real estate will hold up better than others in the age of Amazon.
His Berkshire Hathaway Inc. took a 9.8 percent stake in Store Capital Corp., sending shares of the real estate investment trust surging Monday. Unlike other retail landlords that have come under pressure as consumers shop more online, Store focuses on what it calls service properties: preschool facilities, health clubs, dine-in movie theaters and pet-care sites. Less than a fifth of its portfolio is invested in traditional retail — and even those it calls “internet resistant,” including furniture stores, hobby and craft centers, and hunting, fishing and camping shops.
“Store doesn’t compete on the beaten path,” said Haendel St. Juste, an analyst at Mizuho Securities USA Inc. “They are targeting more experiential retail, trying to provide a buffer against risk.”
Retail REITs have taken a beating from investors as Amazon.com Inc. and other online sellers make it easier for consumers to buy clothing, toys and other items from their computers or smartphones and not have to step foot into a physical store. Buffett, for his part, has long expressed confidence in property investments to generate income for extended periods of time, and to provide a cushion should the dollar lose value. He has said such bets, whether in buildings or agricultural land, are often safer than gold or bonds.
“Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment,” Buffett wrote in a letter to shareholders in 2012….