Orion Office REIT (ONL) *Realty Income Spin-Off*

[ownyourfuture]

It's been a brutal start.
Shares were issued on November 15 @ $21.30
Currently trading @ $16.60 -22.07%

A couple people on the message board speculate that once they announce the dividend, shares will recover. I sure hope so. As I understand it, it will end up being a taxable transaction & mine are held in a taxable account.

Any thoughts on Orion ?

 

[chassis]

Office space is challenged with the remote working phenomenon. It will take some time (years) to find the new normal in office space demand.

 

[VanWinkle]

Don't hold REITS in a taxable account!!

VW

 

[Montecfo]

2 Thoughts

1. Spins usually sell off in the early going as people dump them and no one knows to buy. Not sure anything about this REIT but it is a familiar pattern.

2. Holding REITS in taxable is not a bad idea as it allows you to take advantage of the QBI deduction.

 

[misanman]

Sorry, I guess this won't help you now, but I dumped ONL shortly after the spin off. Figured Reality Income knew what they were doing.

 

[target2019]

Sorry, I guess this won't help you now, but I dumped ONL shortly after the spin off. Figured Reality Income knew what they were doing.

Ditto.

 

[ownyourfuture]

Don't hold REITS in a taxable account!!

VW

That wasn't the question.......try to keep up.

 

[target2019]

This struck me as unusual. The Virginia Retirement System has ONL as its 2nd largest position.

https://finance.yahoo.com/news/virginia-retirement-systems-et-al-183815762.html

I don't really know how to evaluate that as positive or negative. Time will tell.

 

[ownyourfuture]

This struck me as unusual. The Virginia Retirement System has ONL as its 2nd largest position.

https://finance.yahoo.com/news/virginia-retirement-systems-et-al-183815762.html

I don't really know how to evaluate that as positive or negative. Time will tell.

Interesting.
Thanks

 

[VanWinkle]

That wasn't the question.......try to keep up.

My mistake.....

 

[VanWinkle]

2 Thoughts

1. Spins usually sell off in the early going as people dump them and no one knows to buy. Not sure anything about this REIT but it is a familiar pattern.

2. Holding REITS in taxable is not a bad idea as it allows you to take advantage of the QBI deduction.

From Morningstar:


REITs and REIT funds: Real estate investment trusts are a poor fit for taxable accounts for the reason that I just mentioned. Their income tends to be high and often composes a big share of the returns investors earn from them, as REITs must pay out a minimum of 90% of their taxable income in dividends each year. Moreover, their dividends typically count as nonqualified, meaning that they're taxed at higher ordinary income tax rates versus the lower tax rates that apply to qualified dividends.

 

[Montecfo]

From Morningstar:


REITs and REIT funds: Real estate investment trusts are a poor fit for taxable accounts for the reason that I just mentioned. Their income tends to be high and often composes a big share of the returns investors earn from them, as REITs must pay out a minimum of 90% of their taxable income in dividends each year. Moreover, their dividends typically count as nonqualified, meaning that they're taxed at higher ordinary income tax rates versus the lower tax rates that apply to qualified dividends.

I noticed no discussion of the forever lost QBI deduction. That would be a very good reason to own in a taxable account. So this blurb appears not to reflect the latest law changes. Also not mentioned: REITS that I own have generated large capital gains which are tax favored outside of tax deferred accounts.

But of course the OP never asked for advice on where to hold.

 

[Montecfo]

To the OP: Some further thoughts.

This is a net lease REIT with high profile high quality tenants. It collected 99 percent of rents during the pandemic.

The stock appears to be cheap on an absolute basis and relative to peers. As noted it sold off post-spin and appears to have little to no Wall Street following.

I do find it interesting personally, but suggest you do your own research, talk to your investment advisor, etc.

 

[ownyourfuture]

Things definitely haven't improved. It closed at $14.53 today, down 29% since the spin off. Luckily for me, I only received 43 shares, which amount to 0.06% of my portfolio. I'm just going to let it ride.

 

[jazz4cash]

I put in an order before the market opened today. I only had a few shares. I’m generally satisfied with the whole Vereit experience. It was fun watching the new CEO brinng the company back after prior CEO’s scandal. It did feel like they sold out to O when they were just about to score and spike the ball. They knew what they were doing when they segregated the ONL assets.