Gym/Fitness REIT

It's becoming more common for the Fitness industry firms to rely on franchisees for growth, great for corporate because they take some fees, but don't really benefit from net equity boost for all the membership income. If I'm a long-term holder like a REIT, I would only want to buy the leases backed by corporate guaranty, not franchisees , maybe a few large ones with 200-300 locations.

This is the type of industry that can easily be saturated in any market because the risk is taken by the franchisees, some of which are not super savvy in business smarts. Unlike the food industry, people don't get a Snap fitness membership for $20/mo and a Planet Fitness membership for $10/mo. But they might occasionally go to a Burger King, and then go to a Taco Bell. The next name brand gym franchisee that comes to town will have a tough time convincing people to leave their current membership unless it's some awesome benefit or super cheap like Planet Fitness @ $10/mo, or there's just an under served and heavily populated area.

I would never invest in a fitness REIT.

It could work for a firm like Lifetime because I think they own a lot of their stores, so it'd basically just be them cashing out of their real estate to the equity markets and backing the leases with a corporate guaranty and they raise a bunch of cash for expansion. It's a different story if you're just taking in equity and you have to go acquire these corporate locations in a hot market. Maybe in the next downturn this will show up, but a lot of the big retail guys already have these in their portfolios, so you're not going to get a rock-bottom price.