Still Room for (ATM) Cash Flow Buyers

Implications: Right if you seek only Equity Returns from an ATM Portfolio, but timing is ripe for Fixed Income investors. All the warnings and diligence advice is right on the button, but if you are looking to replace minimal returns on a portion of your fixed income portfolio, a properly structured ATM buy can produce premium returns. Buying ATM's and their cash flow, just like all business transactions, reveal their true worth on the buy side of the transaction. A properly structured set of purchase terms manages and boxes the risks and ensures a proper return. ATM's for fixed income investors may just be the right time in the right place.

Analysis: Although it is impossible to disagree with the article's conclusions and advice, the opportunities for a different Buyer Profile are still quite good; if the new Buyer seeks cash flow as an alternative fixed income investment and not as a replacement for equity returns, an ATM portfolio may work quite nicely.

Properly structured ATM portfolios with modest leverage are able to generate consistent cash on cash returns in the high single digit and low double digit range.

With proper start-up diligence and simple structured limited recourse leverage, a modest portfolio can be created within a month or two and will be able to replace historically low interest returns on other fixed income investments. Diligence is the key and the debt structure must match re-negotiated Site Leases, but these are all manageable risks.

A creative look at boring ATM's can be worth the effort.