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Own Part of a Vineyard and Harvest Up Dividends

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  • Description

    FBN's Robert Gray uncorks a report on one of the nation’s biggest vineyard owners.

  • Duration 2:54
  • Date

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Rows upon rows of grapes soon to be crushed and made into wine.

Owning a vineyard seems like sweet investment but having to pick Russian firming grapes may take more effort or cash than most investors are willing to finance.

Tom Lewis long dreamt of owning a winery like sterling vineyards.

But the Realty Income -- The real estate.

This fundamentally.

In -- really important in the operation of the business they're booking the revenue and profits.

So if you look in the wine business obviously here -- sterling vineyards.

I really premier vineyards really important to the operations of the business and the same with a psychotic winery so it really fit what we do -- all of the 38 industries that -- in.

Realty Income is a real estate investment trust it avoids paying federal taxes by agreeing to distribute some 90% of its taxable earnings in dividends.

Realty Income bought sterling -- sixteen other vineyards from DI GO three years ago and then -- the same properties back to the drinks giant.

-- than a decade researching the wind business before he found the perfect location to buy into.

Right here in Napa Valley the heart of wine country and here in the valley it's all about the grapes.

These properties are really exceptional if you look last year there are seventeen wine growing regions in California -- which Napa is only one.

And as an example the average price of the -- -- grapes last year wine grapes in California was about 632.

Dollars but for -- about 3300.

Dollars.

Well the Napa grapes are valuable analysts note other reits have tried and failed to break into the wind business.

The industry is fraught with risks running from harsh weather to production problems to pricing pressure from less expensive domestic or imported rivals.

How -- -- succeed where other reits have tried and failed.

Well I think it's first having the right assets again 90% of wind comes from California.

But only 4% comes from the Napa Valley and second is the right -- -- working which was sterling vineyards forty years of success.

And then finally DR -- is the parent which is one of the strongest companies out there in the world we have very steady cash flows from the ones.

And that revenue stream flows through to investors -- dozen times a year Realty Income is paid dividends each month for more than four decades.

DR -- is now the third biggest tenant in realty in -- portfolio.

They're all long term leasing deals but an economic downturn may calls problems financing new deals.

And trouble for existing tenants who rely on consumer spending.

While the vineyards are a profitable portion of the portfolio.

Lewis said they have no interest in adding more vineyards.

He claims they already own the prime locations producing profits that investors will -- -- For years to come.

In Napa Valley Robert Gray Fox Business.

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