Real Estate Investment Trusts (REITs) are publicly traded companies that allow individual investors to buy shares in real estate portfolios that receive income from a variety of properties. They allow investors to easily invest in the immovable sector, which includes companies that own, develop and manage residential, commercial and industrial properties.
Among other requirements, REITs are required to pay at least 90% of their taxable income as dividends. A key FPI indicator is funds from operations (FFO), an industry-specific measure of revenue. Some big names in the industry include American Tower Corp. (AMT), Crown Castle Inc. (ICC), and Prologis, Inc (PLD).
The COVID-19 pandemic has significantly disrupted the commercial real estate industry as workers around the world have adapted to working from home and various containment measures have been enacted. Despite the recovery in the economy, the recovery in the real estate industry has been uneven. Some businesses are moving into new commercial offices, others are remodeling existing spaces, and others are redesigning their existing space. Boosted by interest rate hikes imposed by the Federal Reserve, some analysts have predicted that the residential housing market could experience a correction or even a crash.
REITs, represented by a exchange-traded fund (ETF)—the selected real estate sector SPDR fund (XLRE)—outperformed the broader market. XLRE’s total return of 0.0% over the past 12 months beat the benchmark Russell 1000 Index, which provided a total return of -5.5%. These market performance figures and statistics in the tables below are as of August 10, 2022.
Here are the top three REITs with the best value, fastest growth and most momentum.
These are the REITs with the lowest last 12 months price/earnings ratio (P/E). Since profits can be returned to shareholders in the form of dividends and redemptionsa low P/E ratio indicates that you pay less for every dollar of profit generated.
| REITs at the best value for money | |||
|---|---|---|---|
| Price ($) | Market capitalization ($B) | 12 month price/earnings ratio | |
| Annaly Capital Management Inc. (NLY) | 6.69 | 11.5 | 2.7 |
| Rhythm Capital Corp. (rhythm) | 9.97 | 4.7 | 5.0 |
| Apartment Income REIT Corp. (IARC) | 45.34 | 7.0 | 7.5 |
Source: Y-Charts
- Annaly Capital Management Inc.: Annaly Capital invests in real estate and related assets, including agencies mortgage-backed securities (MBS)residential and commercial real estate and middle market loans.
- Rhythm Capital Corp. : Rithm Capital, formerly known as New Residential Investment Corp., is a public REIT that invests in the residential housing sector. The Company’s portfolio includes mortgage servicing assets, residential loans, non-agency securities and similar investments. The company first announced the name and ticker change, as well as an internalization of management, in June 2022.
- Apartment Income REIT Corp. : Apartment Income REIT, known as AIR Communities, is a self-managed REIT that invests in multifamily real estate across the United States. The Company owns properties that it manages as well as properties that it plans to sell or lease to a third party. On July 27, AIR Communities announced a quarterly dividend of $0.45 per Class A ordinary share for Q2 2022. The dividend is payable on August 30 to shareholders as of August 19, 2022.
These are the best REITs ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly report on the year earnings per share (EPS) growth. Sales and profits are critical factors in the success of a business. Therefore, ranking companies on a single measure of growth makes a ranking sensitive to accounting anomalies in that quarter (such as changes in tax laws or restructuring costs) that may render either number unrepresentative of the business in general. Companies with quarterly EPS or revenue growth greater than 2,500% were excluded as outliers.
| Fastest growing REIT | ||||
|---|---|---|---|---|
| Price ($) | Market capitalization ($B) | EPS growth (%) | Revenue increase (%) | |
| Real Estate Revenue Corporation (O) | 74.13 | 45.8 | 12.1 | 74.9 |
| The Howard Hughes Company (HHC) | 72.62 | 3.6 | 366.7 | 30.2 |
| Rexford Industrial Building Inc. (REXR) | 66.80 | 11.4 | 46.7 | 42.9 |
Source: Y-Charts
- Realty Income Corp. : Realty Income is a REIT that owns and manages commercial properties in the United States and Europe. The company seeks investments with the aim of providing monthly dividends. Realty Income released its second quarter 2022 results on August 3. Net revenue available to common shareholders jumped 79.3% year-on-year, as revenue increased by a similar margin. The company’s growth reflects its merger in November 2022 with VEREIT Inc.
- The Howard Hughes Company: The Howard Hughes Corp. is a REIT that owns, manages and develops commercial, residential and mixed-use real estate across the United States. She focuses on planned communities in New York, Maryland, Texas, Nevada and elsewhere.
- Rexford Industrial Building Inc. : Rexford Industrial Realty is a REIT that owns, operates and develops industrial properties in Southern California. It owns 335 properties with nearly 41 million leasable square feet. Rexford released its second-quarter 2022 results on July 20. Net profit soared 57.1% on strong year-over-year revenue growth. During the quarter, the company executed 36 new leases, more than half of the number of lease renewals for the quarter.
REITs have had the highest total return over the past 12 months.
| REITs with the most momentum | |||
|---|---|---|---|
| Price ($) | Market capitalization ($B) | Total return over 12 months (%) | |
| Duke Realty Corp. (DRE) | 63.49 | 24.4 | 28.9 |
| Iron Mountain Inc. (IBD) | 54.13 | 15.7 | 24.0 |
| VICI Properties Inc. (VICI) | 34.81 | 33.5 | 22.9 |
| Russell 1000 | N / A | N / A | -5.5 |
| SPDR Selected Real Estate Sector Fund (XLRE) | N / A | N / A | 0.0 |
Source: Y-Charts
- Duke Realty Corp. : Duke Realty is a self-managed REIT that owns, manages and develops industrial real estate. It also provides services related to construction management and development. On June 13, the company announced that it would be acquired by logistics real estate company Prologis in an all-stock deal worth around $26 billion. Prologis plans to retain 94% of Duke’s assets. The transaction is expected to close in the fourth quarter of 2022.
- Iron Mountain Inc.: Iron Mountain focuses on information management and storage. It provides a data center, secure recording storage, art storage, and similar offerings.
- VICI Properties Inc. : VICI Properties is a REIT that owns gaming, hospitality and entertainment properties. Its properties include Caesars Palace Las Vegas, MGM Grand and Venetian Resort Las Vegas. On July 14, the company announced that it had agreed to provide a loft loan up to $59 million to Great Wolf Resorts Inc. The loan is tied to the development of Great Wolf Lodge South Florida, a 500-room indoor water park slated to open in summer 2024.
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