Recent sale – Harju elektre (HAE1T) / buy – SL green realty  (SLG)

Sold 100 shares of Harju elektre🛠 (HAE1T) for 8,34€/share. Bought 10 shares of SL Green Reality🏢 (SLG) for 63,7$/share. Net result: annual post-tax dividend income +9,2€. Remaining cash +270€.

Yup I decided to sale remaining Harju electric shers after its price was boosted by speculative news about its owned IT start-up. The price wen up by 50% in just few days and yield after tax declined to just 1,4%. With its EPS of 0,25€ P/E reached x33 (!). This was just too much so I pulled the plug. Sale brought me whooping +211% or +565€ profit from purchase price of just 2,65€. This decreased our forward post-tax dividends -11,9€ as company paid 0,14€/share in 2020.

Ok so were did we put all that cash. It went to another REIT I was eyeing for some time. I wanted to own some of that:

Yes the good old NY and its office skyscrapers😎 And the largest landlord in NY office is SL Green that own close to 1 million m2 of offices in Manhattan. And size matters in this business. SLG was at top3 in my Office REIT peer comparison. Since other 2 were out of reach for me this was the rational choice. Company started paying monthly dividends from 2020 March 0,303$/share and paid special dividends at 2020 Dec after sale of one of its properties. With purchase price of 63,7$ after-tax dividends yield 4,0%. That bit lower then Baltic horizon 6,9%, but slightly higher then Reality income 3,3% YOC. Company reported 1,54$/share FFO at 2020Q4. If annualized that’s 6,16$/share FFO. This lands to payout ratio 59% and P/FFO 10,3x. Dividend looks to be safe and share price undervalued. Balance sheet looks more or less ok with leverage 7,7x (5,5-0,4/0,66bn$) and equity ratio 43% (5,5/12,8bn$). Could be slightly better as for a REIT but im ok taking into account its low P/FFO. So this purchase bought us post-tax +21,1€ dividends or net result +9,2€ dividends growing forward estimated dividends to 1.030€ and 270€ remaining cash.

Ok so now I have 3 different REITs: office -SLG, large malls – SPG, single tenant neighbourhood malls – O. Looks like im missing warehouses now, but I think im full in REIT field for now as it makes 18% or 4,3k€ of my portfolio.


  1. I checked SLG, however I decided to skip this stock for this time due to negative free cash flow, but I will keep this in my watchlist and check it once again after new report comes out.

    Anyway, good luck with your investment.


    • Well I wouldnt looks at REIT from free cash flow perspective. RE business is very Capex intense and if they build something most like it will be leveraged with long repayment scedule like 20y or so. Best ratio is FFO and this one looks like has a good ratio with paid dividends.


      • I have different opinion on this, but everyone has different strategies, so in my case I prefer to choose business that give me dividend income and it doesn’t have to be REIT or any other business. That’s why I evaluate them using similar formula.

        At the same time, I agree that you can have different valuation criteria and choose stocks based on that, so good luck with your investment, while I will wait for better results or look for other stocks.


      • Question what do you treat free cash flow? Income from operations – Capex? As mentiones then its not good idea to compare companies like JNJ or PG with a REIT. Its the same to say that its to laveraged with Debt/EBITDA of x7. Different bussineses are evaluated diferently 🙂 For ex. banks have 5-10% equity ratio, as their financial leverage with deposits is what makes this business work.


      • I agree that different businesses are valued differently. However I see businesses that generate free cash flow instead of requiring investments all the time. That might be true that REIT is not for me.

        If you believe, that business that requires investments all the time and doesn’t have cash flow for that and need to raise additional capital all the time is good for you, invest in it. My idea of good business is different.

        And I believe that both of our opinions can be right for different type of investors.

        Free Cash Flow = Cash flow from operations – Capital Expenditures


      • I understand your point, however RE business is a bit different regarding Capex. For ex JNJ or T invest in their existing business, so looking at FCF there is a good ratio, while REIT Capex is the construction of a new RE project, this is not expenses of old project maintainance. If this business would require more Capex for existing object maintainance then it generates cash flow from operations (for RE its NOI as no working capital needed here) then yes that makes the bussiness is a nonesense, but as said in REIT Capex is development of new projects that will generate more cash flow in the future, not a expenses for maintaining existing RE objects.


      • I know that RE needs more capex to generate more income, but it doesn’t mean that Capital Expenditures have to be above Cash Flow from Operations. You can check Y16, 17 and 18 in SLG reports where they managed to generate higher cash flow than Capex. Last year they didn’t manage to do that and for me that is decision to wait until they get again back to situation where they free cash flow is positive as from my point of view that is the only way to guarantee sustained dividends in long term.

        BUT as I said before, your risk tolerance might be different and good luck with your investment in SLG. For ME it is too early to invest into SLG at the moment.


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