Options Trade – Healthpeak Properties Inc (PEAK)

I am looking at a lot of the REIT categories right now due to the market sell off – but fear we may be heading into a recession. Retailers are falling all over themselves, lowering guidance and complaining about huge inventories – so I can’t buy Retail REITs yet. I know from my own experience at work that nobody is ever coming back to the office, so Commercial Real Estate REITs are out as well.

I already own Sabra Health Care REIT Inc (SBRA) – which cranks out a nice quarterly dividend of 8.55% and has held up nicely during the market sell-off. Based on SBREs performance, I would love to add a higher quality Health Care REIT like Healthpeak Properties Inc (PEAK) to my income portfolio, so I pulled the trigger on the following trade:

• Sold: 10 July 15, 2022 Puts
• Strike Price: $23.00
• *Premium Collected: $500.00

If I am forced to buy the 1000 shares, my entry price will be about $22.50 per share – over a 37.5% discount to PEAKs Morningstar Fair Value of $36.00 per share – providing a comfortable Margin of Safety.  PEAK pays a 4.04% dividend – not as good as SBRA’s dividend, but I feel they have a much better asset base and a good growth story – looking at this as a long term holding.

*Excludes transaction costs.