Top REITs for December 2021

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 real estate sector, which includes companies that own, develop, and manage residential, commercial, and industrial properties.

Among other requirements, REITs are required to pay out at least 90% of their taxable income as dividends. A key REIT metric is funds from operations (FFO), a measure of earnings particular to the industry. Some big names within the sector include American Tower Corp. (AMT), Crown Castle International Corp. (CCI), and Prologis Inc. (PLD).

The COVID-19 pandemic has significantly disrupted the commercial real estate industry, as workers around the world adapted to working from home and various lockdown measures have been enacted. Despite the economy’s rebound, the industry’s recovery has been uneven. Workers who are returning to cities to live and work, for example, are now encountering soaring prices for privately owned apartments and commercial apartments – prices that are dramatically higher than when they left.

REITs, as represented by an exchange-traded fund (ETF)—the Real Estate Select Sector SPDR Fund (XLRE)—have outperformed the broader market. XLRE’s 38.2% total return over the past 12 months exceeded the benchmark Russell 1000 index, which has provided a total return of 30.4%. These market performance numbers and the statistics in the tables below are as of Nov. 24, 2021.

Here are the top three REITs with the best value, fastest growth, and most momentum.

These are the REITs with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

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• Annaly Capital Management Inc.: Annaly Capital Management invests in real estate and related assets, including agency mortgage-backed securities (MBS), residential and commercial real estate, and middle-market lending. On Nov. 10, Annaly Capital Management announced quarterly dividends on its Series F Preferred Stock, Series G Preferred Stock, and Series I Preferred Stock. All of these dividends are payable on Dec. 31 to preferred shareholders of record as of Dec. 1, 2021.
• AGNC Investment Corp.: AGNC Investment invests mainly in residential MBS on a leveraged basis through collateralized borrowings. It uses an active portfolio management strategy to provide risk-adjusted returns. For Q3 2021 ended Sept. 30, AGNC Investment reported a 70.6% year-over-year (YOY) decline in net income attributable and declining net interest income. The company said that uncertainty regarding the outlook for the economy and interest rates affected its performance.
• SL Green Realty Corp.: SL Green Realty invests in office properties in the New York metropolitan area.

These are the top REITs as 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 YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• Regency Centers Corp.: Regency Centers is a REIT that owns and operates neighborhood retail centers that are anchored by grocery stores. The company’s properties are located throughout the U.S. Regency Centers reported results on Nov. 4 for Q3 2021 ended Sept. 30. For that period, net income attributable to common shareholders skyrocketed by more than nine-fold YOY as revenue surged.
• Sun Communities Inc.: Sun Communities owns and operates manufactured-housing communities, recreational vehicle resorts, and marinas. The company owns properties throughout the Midwest and the Southeast regions of the United States, as well as Canada. The company announced on Nov. 15 that it would acquire Park Holidays U.K. for approximately £950 million ($1.3 billion). Park Holidays owns and operates 40 holiday communities throughout the U.K. The acquisition dramatically expands Sun Communities’ operations in the region.
• Duke Realty Corp.: Duke Realty owns, develops, and manages logistics and industrial properties across the U.S. The company also provides leasing, property management, construction, and related services.

These are the REITs that had the highest total return over the last 12 months.

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• Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages malls, outlet centers, community centers, and other related properties across North America, Europe, and Asia.
• Jones Lang LaSalle Inc.: Jones Lang LaSalle is a real estate and investment management service provider. The company provides services such as tenant representation, property management, leasing, finance, and valuation services to a variety of corporate and institutional clients globally.
• Iron Mountain Inc.: Iron Mountain is a REIT providing storage and information management solutions. The company’s properties provide records management, data management, and information destruction services. Net income grew by 77% as total revenue climbed by 9% YOY in Q3 2021, ended Sept. 30. The growth was fueled in part by strong demand for the company’s digital and other product offerings.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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