Section seven bonus lecture on common reads and Where to Find Them. Greetings fellow Reed master. Welcome to this bonus section. In the next couple of slides, I'm going to introduce you to some unusual reads that the world has to offer. These uncommon reads are especially selected just for you, and they have the potential to deliver enormous returns. But like always, please practice independent thinking and do your own due diligence before buying into any investments that are recommended.
With that said, Here are the five uncommon reads. Data Center reads, automobile reads, entertainment rates, timber rates, and infrastructure reads. For this bonus lecture, we will only be looking at the first three categories of uncommon reads. Alright, without further ado, let's talk about the first type of uncommon rate. DC reads in shorts. DC stands for data centers, which are basically secured places that store a large cluster of network computer servers.
These computer servers are important it infrastructures used by organizations to store process or distribute large amounts of data. The interesting thing about VC reads is that it sits squarely at the intersection of real estate and technology. The secular trends of cloud computing big data and Internet of Things provides strong demand for this type of reads. Investing in data center reads like digital realty is different than investing in other tech stocks. Rather than placing a bet on CloudFlare Vodafone group or even Google you are betting on the landlords that protect the US It infrastructures of these companies. What this means is that your investment has another layer of safety, not as affected by these specific business risks yet still able to ride on the growth of these tech telecom companies.
Isn't that great news. Other than digital realty what other potential DC reads to look at? Allow me to present to you this Singapore reads called Keppel DC reads listed fairly recently in December 2014. This read invests in income producing data center Real Estate's across Asia Pacific and Europe. Here are four solid reasons why I think this read is worth your consideration. Number one, the read has a big committed sponsor with a proven track record.
The sponsor is called capital telecommunications and transportation in short, capital T and T and one of their Many strengths lies and their industrial knowledge. Capital TMT can build and design DC centers as well as offer customized data center solutions to clients. In addition, capital TNT is a subsidiary of a giant corporation. Capital Corporation Limited, a leading listed company with core businesses in marine infrastructure and property. Having such big names as backing, one can infer that a capital DC reads should not have any trouble rising credit or refinancing debts competitively. Number two.
With the rise in the number of global Internet users and the increasing popularity of e commerce, data creation is bound to grow, especially in the countries where capital DC have their centers located that Moreover, many businesses would prefer to focus resources and attention to their core competencies, then manage them data. hence there is strong incentives for them to outsource their data management to others. All these points to higher earnings prospects for shareholders of capital DC read. Number three, other than earnings prospects there is strong earnings predictability due to the reads weighted average lease of expiry also known as whale to be around eight years as of September 2016. And most of the lease will expire from 2021 onwards, risk or rental renewals are low. And finally, number four, the Reed's net property income, distributable income and distribution per unit have all grown since listing on the exchange.
What is so amazing is that the read achieved all these brilliant results with an aggregate leverage of only 29% which is well below the regulatory average limit for reef In Singapore, this implies that there are more room for growth without the needs to rise more shares. As such, the risk of shared dilution for the sake of future growth is low. Given these four reasons, perhaps it is high time for real investors like yourself to start paying attention to this type of reads. If you are someone who loves cars, then perhaps the next type of read might rattle your engine. Some of the latest rate they hit the market is old automotive properties fleet. Automotive properties focuses on owning and acquiring Canadian automotive dealership properties listed in the Toronto Stock Exchange in July 2016.
The reeds portfolio of 32 properties covers approximately 1.3 million square feet of gross leasable area in various parts of Canada, the retailer LEED tenants is the the Laurie group, the largest automotive dealership company in Canada. car brands like BMW, Jeep, GMC, they are all franchise under their group. But if you are not familiar with cars, you might not understand what a car dealership property is to begin with. So to understand what exactly these properties are, consider them as a place where vehicles both old and new or sold or repaired. A place where vehicle warranty claims are processed and automobile spare parts are stocked and sold. The reasons why this really interests me is because number one, they are dealership properties are located in areas that are specifically zoned for automotive for you to use.
As such, these properties represent a strategic and fundamental part of the automotive manufacturers brand and distribution. Network making it difficult for the tenant to leave. The content here is similar to the stickiness of retail space, making it difficult for retail tenants to jump from one place to another. Number two, the cost of repair and maintenance property insurance and all non structural capital improvements are passed on to the tenants and not borne by the reeds, meaning the distributable income is better protected. Good news for the investors. Number three, the lengthy whale number.
If you think capital DC read has a long will number automotive properties has an even longer number a whopping 14.7 years, implying once again that their income stream is really secured. And number four, prominent investors like Warren Buffett have been purchasing privately owned auto dealership group and automotive retailers. This is because automotive dealerships have shown to be pretty profitable even during recessions, which is precisely what makes this read so intriguing. Despite all the good things mentioned about the street, I am concerned with its unit price volatility. More precisely the factors that caused the unit price to drop below its IPO price back in December 2015. The reason for the drop, I couldn't quite pinpoint, perhaps it has something to do with oil prices.
Because I'm not too familiar with the car dealership industry, I choose to abstain from investing in this route. Nevertheless, if you are familiar with this industry, then by all means, look into this read and the values they can bring into your portfolio. Now we will explore the discretionary spending reads. The definition of discretionary simply means optional, not compulsory. So what comes to mind when we talk about discretionary spending The common man on the street would say movies, entertainment, joints, theme parks, golfing, etc. So imagine a read that invest in all these unique properties that cater to all these fun activities.
Would you be interested EPR properties is one of such read, but to capitalize on several promising trends, here's what you need to know about this unique read. While most reads specialize in a single broad property type, such as apartment buildings, healthcare facilities, or shopping malls. EPR, however, is a specialty read with an investment portfolio that includes primarily entertainment, education and recreational properties. Looking at its property composition portfolio, as at FYI, 2016. The largest focus is on entertainment properties which makes up 54% of the portfolio. Have this 54% It consists of megaplex movie theaters, retail entertainment centers, and so forth.
The rest of their portfolio is split between other types of recreation properties be at ski parks and golf complexes, and a sizable portion of the portfolio is on education properties such as public charter schools. Similar to the automotive reads. This route uses a triple net leasing structure under which tenants cover variable expenses such as taxes, insurance and building maintenance. Moreover, the portfolio is currently 99% leased, and extremely impressive occupancy rate I must say. EPR movie theaters which make up roughly half of the reads portfolio are designed to appeal to millennials a group which represents more than 50% of movie goers with amenities such as quality seating and innovative industry. or food and beverage options, these next generation theaters are seeing double the customer spending than older ones.
Studies have shown that box office revenue in America has grown at a steady rate of 3.7% per year. This growth excludes food and beverage growths, implying that aprs tenants should experience rising revenue streams over the coming years. Moving on to the recreation properties portion of this route, which also targets a promising market EPR ski resorts are located close to growing middle income population areas that people can easily take day trips to its golf entertainment complexes, according to online forums are gaining popularity amongst younger generation of golfers as well. And let's not forget EPR is education properties, the non discretionary portion of the portfolio yet most appealing to long term investors. Most of its education portfolio consists of public charter schools, and this is an extremely attractive market because there are over a million students currently on waiting lists to study at the schools. Investors see this education portion as a $2.5 billion potential opportunity for the rich to tap into.
In a nutshell, EPR properties performance has been nothing but fantastic. The real strengths can be seen in multiple areas such as its revenue growth, increase in net income, good cash flow from operations and expanding profit margins. On the basis of net income growth EPR has significantly outperformed against s&p 500 and exceeded that of the industry average many times since the year 2012. No rekindle ever such high returns without taking on risks. VR is no exception. Specifically EPR relies heavily on discretionary spending.
About three fourths of its portfolio is made up of entertainment and recreational properties, which are extremely vulnerable to changes in consumers ability and willingness to spend money. Even though EPR is one of the best performing us reads that any investor could ask for its share price was hit much harder than many of the other reads during the Great Recession in 2008, and 2009. Although the saving grace is its education portion of the portfolio, which has grown substantially since bringing in better stability to its revenue, but the fact remains, that EP RS portfolio is still highly susceptible to recessions. So do weigh the pros and cons before investing any PR. We have come to the end of Section seven. I hope that these three uncommon reads have been spotted Do to look out for more of such reads at your own free time.
Feel free to share your discovery on chlorophylls Facebook page. Once again, thank you for your attention.