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For over two decades, I built stores for some of the most recognizable names in retail: Dollar General (DG), CVS (CVS), Advance Auto Parts (AAP), Sherwin-Williams (SHW), Blockbuster Video, PetSmart, Walmart (WMT)…
Each project reinforced the oldest truth in real estate: that it really is all about location, location, location.
These companies would tell me where to go, and I would scout out likely properties in the area. Then, when those were approved, I’d manage construction and leases… all the while studying the tenants themselves.
Source: Brad Thomas (while building a shopping center in Laurens, South Carolina)
That’s how I came to learn these successful businesses weren’t merely choosing cities or towns to expand into. They were engineering outcomes through very specific location-centric strategies.
For instance, Walmart and PetSmart taught me scale and trade-area dominance. CVS and Dollar General showed the power of convenience and proximity. Advance Auto Parts highlighted the value of complementary neighbors, while Sherwin-Williams was all about contractor access and repeat demand.
Blockbuster, of course, delivered the hardest lesson: how even perfect real estate can’t save a broken business model. (See my article here.)
But no company shaped my thinking more than McDonald’s (MCD) with its relentless discipline for curated real estate. Hard corners, signalized intersections, dominant traffic patterns – every choice was intentional to make each fast-food store part of people’s daily routines.
I saw this obsession with prime locations again while studying Donald Trump for my 2016 book, The Trump Factor: Unlocking the Secrets Behind the Trump Empire.
Mar-a-Lago, Trump National Doral Miami, Trump International Hotel and Tower Chicago… They all indicate an exceptional eye for location. Trump seeks scarcity, trophy assets, and irreplaceable dirt with natural barriers to entry.
And they end up paying off over time.
Ultimately, it doesn’t matter whether you’re siting a McDonald’s or building an empire. If you own the best locations, everything else tends to take care of itself.
These days, I work hard to apply this location principle to every investment opportunity I evaluate – but especially concerning real estate investment trusts (REITs).
Source: ChatGPT
The strongest ones, like Federal Realty (FRT) and Simon Properties (SPG), own select assets in the best neighborhoods. It’s hard to get more location-savvy than them.
Federal Realty: location is the moat
Federal Realty is one of the purest expressions of “location, location, location” you can find. Its entire model is built around owning open‑air shopping centers and mixed‑use districts in supply‑constrained coastal markets with high‑income residents.
Its 103 properties are situated across just nine major metros, each carefully selected in specific neighborhoods such as Bethesda Row outside Washington, D.C., and Santana Row in Silicon Valley.
Source: Federal Realty Investor Deck
I cannot stress enough how careful Federal Realty is about cultivating its portfolio. The REIT is more than happy to exploit bargains where available, but it’s also willing to pay up for the best properties when the numbers work out.
That’s because it knows its tenants will do the same for the right locations.
Speaking of tenants, Federal Realty curates a disciplined tenant mix of necessity retail, food, and services, with select experiential retailers added in where appropriate. And to create another layer of diversification, some of its properties include apartments and offices as well.
Every single bit of this portfolio is carefully crafted to drive higher foot traffic and rent per square foot… that just keeps growing as time goes on.
This all helped the REIT generate strong incremental cash flow in the first quarter. Funds from operations (FFO) came in at $1.88 per share, up 10.6% year over year. And occupancy was a very attractive 96.1% – further proof that Federal Realty knows how to pick its properties.
All that good news was enough for it to raise core FFO guidance by $0.03–$0.04 to between $7.46 and $7.55 per share. At the midpoint, that represents 6.3% growth over 2025.
Anything can happen going forward; there is no risk-free investment. But Federal Realty is about as derisked as you can get.
With 58 consecutive years of annual dividend growth, it’s an undisputed dividend king – right up there with companies like Proctor & Gamble (PG), Johnson & Johnson (JNJ), and Coca-Cola (KO).
Yet shares are trading at 21.1x compared with their normal 26.3x multiple, and FRT’s well-covered dividend yield is 3.9%.
The stock has already returned about 20% year-to-date (YTD). However, we believe it could hit $128 by December 31, which could result in a 22% annualized return.
VICI: All in on the experiential
VICI Properties is just as good at selecting sites as Federal Realty, only in the experiential real estate arena. It owns land and buildings it then leases out under triple-net contracts to entertainment companies like Caesars (CZR) and MGM Resorts (MGM).
A specialized landlord‑financier, VICI provides capital to interested tenants through acquisitions and sale‑leasebacks. Then it locks them in for 30-40 years – complete with built‑in escalators – to generate consistent, growing rent…
All while tenants handle the properties’ taxes, insurance, and maintenance.
Throughout all this, VICI is exceptionally mindful about the locations it engages with. The REIT owns 11 trophy assets on the Las Vegas Strip alone, including:
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660 acres of underlying land
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About 43,600 hotel rooms
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Around 6.9 million square feet of conference, convention, and trade show space.
Source: VICI Investor Presentation
In fact, nearly half of VICI’s gaming rent comes from that elite stretch of land. The Las Vegas Strip is one of the world’s most valuable and supply‑constrained entertainment corridors.
And VICI has literal front-row tickets to some of its most valuable properties.
It also owns assets in other regional gaming markets across the U.S. and Canada, adding an important layer of diversification. And it’s been pushing into the world of amusement and water parks, destination hospitality, and fitness.
But its bottom-line focus remains the same: VICI only selects large, hard‑to‑replicate properties with mass appeal. The result is a 100%-occupied portfolio that produces inflation‑linked cash flows.
In full disclosure, Caesars is VICI’s most significant tenant, providing 38% of annualized base rent (ABR). And as I wrote about two months ago, it’s a current acquisition target of both billionaire activist investor Carl Icahn and the privately owned Fertitta Entertainment.
That kind of privatization could provide incremental risk for VICI. But keep in mind we’re talking about a net-lease REIT with investment-grade ratings from all three major credit ratings services.
This company has made wise move after wise move since debuting in 2012. And it’s boosted its dividend by about 7% CAGR (compound annual growth rate) since 2018 – while maintaining a payout ratio around 75%.
I plan to visit Las Vegas in a few weeks for the annual ICSC conference. In which case, I’m sure to gather more information about how VICI is doing.
(I’ll also be putting together a “boots on the ground” research report for members of The Wide Moat Letter.)
But I doubt I’ll find any surprises. VICI is a top-notch expert in selecting and maintaining profitable locations.
Its shares are trading at 11.9x compared with a normal valuation of 15.3x thanks to the Caesars drama, giving it an attractive dividend yield of 6.3%. I believe the stock could fetch $33 by year’s end, which could result in annual returns of over 30%.
Regards,
Brad Thomas
Editor, The Wide Moat Daily
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