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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. 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).
Many commercial real estate companies that own office buildings and retail space have been badly hurt by the COVID-19 pandemic and economic downturn, both due to layoffs and as many corporate employees work from home.
REITs, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have dramatically underperformed the broader market. XLRE has provided a total return of -6.2% over the past 12 months, well below the Russell 1000’s total return of 21.4%, as of February 17, 2021. All statistics in the tables below are as of February 17.
Here are the top 3 REITs with the best value, the fastest growth, and the most momentum.
Best Value REITs
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.
Source: YCharts
- Brandywine Realty Trust: Brandywine Realty Trust is a self-administered and self-managed REIT that owns, leases, develops, and manages primarily suburban office properties. It also has an ownership interest in and operates a commercial real estate management services company. The company reported a 13.8% decline in revenue in Q4 2020, which ended December 31, 2020. However, net income rose 13.1%, boosted by a net gain on the disposition of certain real estate assets.
- Kimco Realty Corp.: Kimco is a REIT that owns and operates open-air shopping centers throughout the U.S. and Puerto Rico. Its properties are usually anchored by a supermarket and big box store selling consumer staples products. The company reported a 9.0% decline in revenue in Q4 2020, which ended December 31, 2020. However, net income rose 83.4%, boosted by a significant net gain on marketable securities.
- Equity Commonwealth: Equity Commonwealth is a REIT that owns office buildings in major metropolitan markets throughout the U.S. A special focus of the company is on medical-related tenants and on properties leased to the U.S. government.
Fastest Growing REITs
These are the REITs with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- SL Green Realty Corp.: SL Green Realty is a fully integrated and self-administered REIT primarily focused on acquiring and managing commercial properties in Manhattan. The company reported a 23.8% decline in revenue in Q4 2020, which ended December 31, 2020. However, net income rose 726.0% compared to the year-ago quarter. Net income was boosted by a net gain on the sale of real estate assets as well as from purchase price and other fair value adjustments.
- The Howard Hughes Corp.: Howard Hughes develops and manages master planned communities, shopping malls, and mixed-use properties.
- Healthpeak Properties Inc.: Healthpeak Properties operates as a REIT that invests in real estate properties related to health care, including senior housing, life sciences, medical offices, hospitals, and skilled nursing homes.
REITs with the Most Momentum
These are the REITs that had the highest total return over the last 12 months.
Source: YCharts
- CoStar Group Inc.: CoStar provides information, analytics, and online marketplaces for commercial real estate. The company’s products include research and real-time data, a mobile and online real estate marketplace, comparative analytics for the hotel industry, and similar offerings. CoStar recently submitted a proposal to the board of directors of CoreLogic Inc. (CLGX) to acquire 100% of the equity interests in CoreLogic. The proposed per-share purchase price represents an equity value of approximately $6.9 billion. CoreLogic is a provider of property information, analytics, and data-enabled services.
- Rayonier Inc.: Rayonier is a timberland REIT with assets located in timber-growing regions of the U.S. and New Zealand. In addition to leasing and managing timberland and providing related management services, the company sells cellulosic fibers, standing timber, real estate, and timberland acreage.
- CubeSmart: CubeSmart is a self-administered and self-managed REIT that owns, operates, and develops self-storage facilities. Its properties are designed to offer storage space for its residential and commercial customers. Its storage facilities provide lockers, mini storage units, and large storage rooms.
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