REITs by Sector

By pjain      Published Dec. 19, 2019, 8:44 p.m. in blog Invest   

REIT ETFs Diversified

REITs: Individual or ETFs

ITB capwt iShares Dow Jones U.S. Home Construction Index Fund

is the better choice," he said. "It's a cap-weighted portfolio, so you get the biggest exposure to the biggest home builders. Sixty-two percent of the portfolio is in homebuilders."


SPDR S&P Homebuilders Equally weighted was less of a direct play. - you get diluted exposure to home builders in that portfolio - Exposure to things like Bed Bath & Beyond and La-Z-Boy

iShares FTSE NAREIT Residential Plus Capped Index Fund

  • More exposure to residential real estate – about 44 percent.


Since its 2004 inception, crushed the broader market – returning 192% including dividends versus just 89% for the S&P 500. The market gods have finally taken note.This September, Standard & Poor’s will give REITs their very own sector for the first time. Which means NOW is the best time to buy them, because before it’s official, large funds will be shoveling cash into REITs as they attempt to “front run” the index as they always do. It’s JP Morgan & Chase reporting that the desire for “equal weight” portfolios will send $100 billion or so into the sector.

  • ~2010 VNQ - overall REITs - much broader ~ too general to really capture specific real estate segments Might be priced higher now 80+ - bottomed 2x $71 .. will $30b REIT pays 4.3% yield

  • ?2016 VNQ only has 17% in Residential real eastate 11/22/16> The sharp rise in interest rates since the presidential election is a short term negative for real estate investment trusts, according to Richard Anderson, a senior analyst at Mizuho who covers the REIT industry. "In the short term it's bad, and there's no way around that," said Anderson. But some REITS may be better positioned than others, such as multi-family housing. Anderson explained that if rising interest rates dissuade home buyers, companies who supply rental housing may be poised to benefit. Anderson said one REIT he favors is Alexandria Real Estate Equities ( ARE) , which focuses on investing in pharmaceutical and biotech campuses. He said that industry might be in a better position under a Trump presidency. He also sees opportunity in high-end, luxury malls, and likes Taubman Centers Real Estate Trust ( TCO) .

Vanguard REIT Index VGSIX, +0.00% 12.5%

Vanguard Global ex-US Real Estate Index VGXRX, +0.88% investing in international REITs.

--- Recession resistant REITs

Storage REITs

Public Storage PSA -0.84% (PSA)

Occupancy levels for self-storage facilities are now north of 90%, and PSA raises its rent by about 3% annually. These trends helped drive 89% dividend growth over the past 5 years. And shares pay 2.8% today.

PSA (178-244) annual$2.4b '16+10% VL 1 timely,safety

Govt Properties, Prisons

Not cutting budgets

But not highest profit

GOV y=10% ffo=12% 3yr '1808

GEO Prisons d=ffo=7.5% 3yrtot=+54% '1808

DEA d=5.2 ffo=6.3% 3yrtot=+47% '1808

Govt Agency Rentals

CXW Prisons d=6.7% ffo=8.4% 3yrtot=+7% '1808

  • who so low compared to other prison

Healthcare and Medical REITs

Healthcare real estate has some fantastic growth opportunities in the coming decades. The senior citizen population in the U.S. is expected to roughly double by 2060 with the ongoing retirement and aging of the baby boomer generation, and older Americans not only use healthcare facilities more often, but spend more when they do.

As a group, REITs focused on healthcare properties are trading for extremely low valuations, healthcare REIT is cheap because of a higher perceived risk. Many healthcare facility operators are in financial trouble, and there is significant uncertainty about the future of healthcare spending in America. However, I feel the risks are priced in and then some for Medical Properties Trust, and the 6.1% dividend yield should provide a strong, growing stream of income for decades to come. - 2016

Has been up huge 50%+ since 2015, but steady

MPW y5.65% R5

Medical Properties Trust

  • d=6.7% ffo=9.5% 3yrtot=+50% '1808

2015+ MPW is trading for $14.70 per share as of this writing and is projecting 2016 FFO in the range of $1.29 to $1.33 per share. So, using the midpoint of this guidance, this corresponds to a price-to-FFO multiple of 11.2. Compare that to other leading REITs such as Realty Income (20.9 times 2016 FFO) or Equity Residential (22.3). Even my other high-dividend favorite, Iron Mountain, trades for 17.1 times projected FFO. The company specializes in hospital properties, and in fact is the fourth-largest owner of for-profit hospital beds in the country, with 204 properties. Aside from the cheap valuation, which I'll get to in a second, healthcare real estate should be a high-growth market over the next several decades. The senior citizen (65vand older) population in the U.S. is expected to almost double by 2050, and healthcare costs have been rising quicker than other expenditures.

Med-prop-trust y7.2%, PCF=10x Div payout ~70% of cash flow Growing: recently closed the acquisition of several additional hospital properties.

Rising healthcare and demand could be one of the biggest mega-trends in the world. A subset issue to all of that is providing locations for all those doctors, research facilities, and hospitals to operate. Those REITs that do operate in this niche can be powerful income plays and Medical Properties Trust (NYSE:MPW) could be one of the highest yielding ones at 5.67%.

As its name implies, Medical Properties Trust focuses its attention on owning healthcare facilities. This includes everything from standard regional/community hospitals to more specialized acute care, ambulatory surgery and children’s hospitals. Moreover, MPW is also considered a hybrid REIT. The firm owns both physical properties and provides financing or invests in loans tied to new hospital construction. That combination provides for a very nice income stream for MPW. The firm has continued to see rising FFO numbers.

That FFO number could keep growing. MPW has continued to expand not only here in the U.S., but overseas as well. The REIT has added properties in the U.K., Germany and even Australia in recent years. And it just announced a big $1.75 billion acquisition that will add another 24 hospitals into its mix. That deal will be instantly accreditive to its cash flows. With rates falling, MPW will be able to make more deals at lower costs.\

LTC d=5 ffo=6.6% 3yrtot=+20% '1808

WELL HCN x y5.25%

Welltower health-REIT - p/FFO 15x, Div payout ~82% of cash flow - Senior housing

  • WELL d=5.2 ffo=6.2% 3yrtot=+14% '1808

It owns skilled-nursing and assisted-living facilities. Second-quarter profit contracted 21% to $51 million, or 34 cents a share, as revenue rose 18%. The operating margin narrowed from 57% to 56%. Health Care REIT's stock trades at a forward earnings multiple of 30, a book value multiple of 1.6 and a cash flow multiple of 16 -- 49%, 33% and 10% discounts to peer averages. Roughly 63% of analysts advise purchasing the REIT. Jake Lynch 09/15/10

This real estate investment trust gives you two ways to make money: either by collecting that 6.2% yield or playing the growing demand for medical care by aging Americans. HCN, with 608 properties in 39 states, owns senior homes, hospitals and other medical office buildings. It’s a diversified portfolio of real estate that Cramer thinks will help the company capitalize on the trend. - June 20,2010 Cramer

SBRA d=7.7% ffo=11% 3yrtot=+15% - downgrades 5yr inv lost -40%??? '1808

OHI d=8% ffo=6% 3yrtot=+15% '1808


Healthcare Services Group provides housekeeping, laundry and food services to nursing homes, rehabilitation centers and hospitals. Second-quarter profit gained 12% to $8.7 million, or 20 cents a share, as revenue extended 13% to $193 million. The operating margin rose from 6.8% to 7.6%. Healthcare Services Group's stock trades at a premium to peers based on forward earnings, book value and cash flow. But, its double-digit sales growth justifies the premium. Half of the analysts following the company rate its stock "buy" and half rate it "hold." Jake Lynch 09/15/10

Physicians Realty Trust

Smallest of REITs discussed here, and with its IPO in 2013, it's the newest one as well. owns over 250 healthcare properties in 30 states, and the tenant group is well-diversified. Since the 2013 IPO, when the company started out with $100 million in assets, more than $3 billion has been invested in acquisitions, and management says it expects to put an additional $1 billion or so to work each year going forward. It owns primarily medical offices, with about 11.4 million square feet of leasable space. The company's general business model is to leverage its knowledge of the healthcare industry, as well as its relationships with physicians and health systems, to find the best long-term investment opportunities. + grown its portfolio aggressively since its 2013 IPO, and management doesn't have any plans to stop anytime soon. And, in addition to being a compelling growth opportunity over the next few decades, the company pays an impressive 5.2% dividend yield. A healthy combination of growth and income can make you rich over time, and Physicians Realty Trust could be an excellent way to add both to your portfolio.


BMR (BIOMEDoffice)

---CYCLICAL---- Industrial, Warehouse


Plymouth Industrial

Prologis PLD

As a proxy for global growth and industrial demand, Prologis is more volatile than their domestic industrial brethren. Due to the Brexit vote and EU-related fears, recent share price performance has been sub par. We expect good operating numbers and view this as a good buying opportunity. - Barrons June 2016

Apartment REITs - rents may have peaked for now

New household formation is at its highest levels in a decade – and unlike previous generations, these new familiars are renting rather than buying:

AvalonBay Communities (AVB)

increased their payouts by about 50% – and both pay about 3% today

Equity Residential EQR -0.27% (EQR)

increased their payouts by about 50% – and both pay about 3% today

Office REITs and Commercial Properties x

Triple Net Leases reduces Landlord risk


I would check out WPC and NNN. Both are REIT's with triple net leases and many of them run for at lease 10 years if not longer. They don't pay out nearly as much as what's listed here, but I believe they are quite a bit more conservative with much more "headroom" to consistently pay out distributions.


I would check out WPC and NNN. Both are REIT's with triple net leases and many of them run for at lease 10 years if not longer. They don't pay out nearly as much as what's listed here, but I believe they are quite a bit more conservative with much more "headroom" to consistently pay out distributions.

LAMAR d=4.8% ffo=6.4% 3yrtot=+58% '1808


O d=4.5% ffo=5% 3yrtot=+40% '1808

Reality Income Group Diverse

GNL d=10% ffo=9% 3yrtot=+13% '1808

LXP d=8% ffo=11% 3yrtot=+35% '1808


Boston Properties Should FFO matter for this net asset value creation stock with an active disposition and special dividend strategy? While we think FFO/FAD valuation metrics are secondary to value creation for BXP, we are aware that in-place rents are very high in Manhattan and San Francisco and — while the assets are exceptional — the core office submarkets in both cities are moving away from BXP’s primary assets. And, BXP is taking more development and lease-up risk than they have historically. - Barrons June 2016


Vornado With great fanfare at the NYC NAREIT, Vornado produced clear guidance for as much as a $200mm increase in cash NOI off a $900mm base and a good outline of Net Asset Value. We expect these numbers, plus more detail on the expected Washington, D.C. spin-off, to all be positive. As with SLG, we expect a decelerating office and retail rental rate environment in NYC will have little impact on the operating metrics VNO reports given the below market leases in place. This, plus the growing cash NOI should create a tailwind for VNO shares. - Barrons June 2016

EastGroup Properties

EGP * June 20,2010 Cramer US, manufacturing in this country is “stronger than ever,” Cramer has said, and he thinks EastGroup Properties is the best way to play it. This high-yielder, paying out 5.6%, owns industrial and office properties in the Southern US, especially in Texas, Florida, California and Arizona. Like Boston Properties and Federal Realty Trust before it, which helped investors to survive the down markets of 2008 and 2009, EGP should carry its shareholders through this most recent storm, too.


Winthrop Realty Trust A real estate investment trust, focusing on commercial properties. It offers a distribution yield of 5.2%. Winthrop swung to a second-quarter profit of $4.5 million, or 25 cents a share, from a loss of $71 million, or $4.50, a year earlier. The operating margin declined to 49%. Winthrop's stock sells for a trailing earnings multiple of 13, a forward earnings multiple of 21, a book value multiple of 1.2 and a sales multiple of 5.2, 80%, 78%, 50% and 13% discounts to REIT industry averages. Just two analysts cover Winthrop, both rating it "hold." A median target of $13 suggests a return of 3%. Fairholme owns nearly 15% of the REIT. - 2010

Data Center, Systems, Cloud

Data Center Keys

Comm, Towers


  • Data center co is a REIT ~50% income as div


  • x IRM docStore d=6.5 ffo=5.7% 3yrtot=+50% '1808

About Iron Mountain

It owns and operates information storage facilities and provides information protection, storage, and records management services to more than 170,000 customers worldwide, none of whom account for more than 1% of the company's revenue. The company currently operates 1,100 facilities in 41 countries, and 94% of the Fortune 1000 are among Iron Mountain's customers.

The company has produced 26 consecutive years of revenue growth and has some pretty ambitious expansion plans going forward, including aggressive expansion into emerging markets. As of the first quarter of 2016, emerging markets made up 15% of Iron Mountain's revenue, which the company hopes to increase to 20% by 2020. This is in addition to planned expansion in the company's "adjacent businesses" such as data centers and art storage, and ongoing cost-cutting initiatives.

Another reason I like Iron Mountain is that storage facilities may sound boring, but they can be one of the most profitable types of real estate to operate. With lower ongoing costs than most other real estate, storage facilities don't need high occupancy to make money, tenant retention is high, and turnover expenses are low. In fact, Iron Mountain operates at a strong gross profit margin of 76.8%.

Iron Mountain currently pays a $1.94 annual dividend, which translates to a 5.3% yield. The company has stated its goal of a $2.18 payout by 2018, and if it continues to achieve its growth targets, I don't foresee this to be a problem.

UNIT d=ffo=12% 3yrtot=+40% . '1808

Hotel, Recreation, Resort x


  • disc not going up in upcoming recession
  • Manipulated as spun off from hotel chains - clever asset structured management

HPT d=7.3 ffo=12% 3yrtot=+35% '1808

INN d=5.3 ffo=8.6% 3yrtot=+28% '1808

EPR d=6.2 ffo=7.3% 3yrtot=+53% '1808

CHSP d=4.9 ffo=5.8% 3yrtot=+29% '1808

Chesapeake Lodging Trust Hotels

===ASSET-INFLATION=== Senior Housing and Health

Senior Housing/Health Keys

  • could get hurt on debt woes - but aging is good for volume/demand

SNH y8.4% 83% FFO payout

  • SNH d=ffo=8% 3yrtot=+50% '1808

Senior Housing Properties Trust doesn't just invest in senior housing. In fact, its portfolio is nearly a 50/50 split between senior housing and medical office properties. The company's 97% private-pay revenue mix is among the best in the industry, and the highest of the three companies mentioned here.

At first glance, you may be skeptical of the company's ­­8.4% dividend yield, and to be fair, you should be. Often, dividend yields like this are not sustainable.

However, that's not the case with Senior Housing Properties Trust. The company's expected 2017 FFO is more than enough to cover the dividend, and in fact, the 83% FFO payout ratio is actually quite reasonable (but not low) for REITs. While the dividend hasn't been increased in a few years, there's certainly no reason to expect the payment to be cut anytime soon, making Senior Housing Properties Trust worth a look for investors who want to maximize their income while still maintaining some upside potential.

HCP Sr/hlth d=5.5 ffo=7.1% 3yrtot=-12% '1808

Poorly run

I prefer HCP for its mix of property types, as well as its high concentration of private-pay revenue sources, which are generally more predictable than healthcare revenue that depends on government reimbursement. HCP has about 800 properties, the majority of which can be categorized as senior housing, life science, or medical offices. 95% of the portfolio's tenants derive their revenue from private-pay sources, which, as I mentioned in the introduction, is more stable and predictable than revenue dependent on government reimbursements. Over the past couple of years, HCP has undergone quite a transformation that has resulted in a more focused and stable operation, as well as a much better financial state. Specifically, the company spun off its riskier assets into a newly created REIT called Quality Care Properties (QCP), reduced its concentration in its top tenants, and reduced the debt on its balance sheet. Before the QCP spinoff, HCP had a quarter-century streak of consecutive dividend increases. Although the spinoff forced a dividend reduction, HCP's diversified and stable portfolio should generate many years of growing income for investors going forward.

2016 It’s one of the most widely followed – and poorly run – companies in the industry, with a long history of tears and disappointments. Long-time HCP investors will brag about their 100% returns over the last 10 years including dividends. But that’s nothing to brag about, as my favorite healthcare REIT returned 400% over the same time period! When looking at HCP’s results, the real question to ask is: “Why haven’t they profited more over the years?” HCP’s poor earnings reports took down “by infection” this stock by 25% in February and 15% in May. Soon, its superior management will shine – for now, we need to take advantage of the buying opportunity before the funds come rushing in.

VTR d=5.3% ffo=7% 3yrtot=16% '1808

Housing REITs

VENTAS 5% sr housing reit

---RISKY--- Retail, Malls, Outlet Centers

X Shopping Malls and Outlets - plain bad!



Too Risky, or High Yielding - ready to Sell on Stop Loss?

Some of the highest-yielding REITs can be found among the retail wreckage.

Hurt by e-commerce and facing plenty of bankruptcies and store closings across the country.

For those REIT investors that own the malls, shopping plazas, and other power centers, this has been a kick right to the head.

But not all malls and shopping centers are the same. There are plenty of shopping-focused REITs that have been cast aside in the wreckage.

KIM d=6.7 ffo=9% 3yrtot=-19%

MAC d=5 ffo=6.2% 3yrtot=-11%

WRI d=5 ffo=7.5% 3yrtot=7%

RPT d=6.3 ffo=9.3% 3yrtot=+0%

SKT y8.8%

Tanger Outlets

  • SKT d=5.7 ffo=8.6% 3yrtot=-13% '1808

For Tanger, the secret is in its operating model. SKT focuses on outlet shopping and in fact, is the largest owner/operator of such assets. The kicker is that outlet shopping tends to be more "destination shopping" in that, consumers plan and make special trips to Tanger's portfolio of 40 properties. As a result, its product mix is a bit different and the firm's properties feature a wide range of amenities. Restaurants, movie theaters, and entertainment aren't replicable via online means. This keeps luring shoppers back for the bargains.

And with many of SKT's properties being in higher-income areas, people are shopping in spades and will continue to do so if rates are cut. Excluding the sale of four non-core properties last quarter, Tanger's critical FFO metric increased. Rising FFO/cash flows directly translate into higher dividends.

With a nearly 9% yield, Tanger is a high-yielding REIT that has been wrongfully cast aside.


Simon Property Group It owns retail properties, including shopping malls. Simon swung to a second-quarter profit of $152 million, or 52 cents a share, from a year-earlier loss. Revenue grew 3.9%. The operating margin extended from 25% to 45%. Simon's stock trades at a forward earnings multiple of 38, a 35% discount to the REIT industry average. It's expensive based on book value and sales per share. Two thirds of analysts rate the stock "buy." - Jake Lynch 09/15/10

Federal Realty Investment Trust(FRT)

It develops, owns and redevelops retail and mixed-use properties. Second-quarter profit increased 9.5% to $31 million, or 49 cents a share, as revenue inched up 2.3%. The operating margin tightened from 43% to 42%. Federal Realty's stock sells for a forward earnings multiple of 39, a 33% discount to the industry average. It's costly based on book value and cash flow. Around 63% of researchers rate it "buy." Jake Lynch 09/15/10

It develops and rents high-end retail properties, with a focus on large efforts that span several years. It’s grown its payout by 40% over the past five years, and the firm has boosted its dividend every year for the last 50! Shares yield 2.4% today.

General Growth Properties (GGP)

It owns, develops and operates shopping malls with similar a focus on high end properties in destination locations such as Honolulu, Los Angeles, Chicago and Washington D.C. Retail at large may be hurting, but this “rich niche” strategy is quite profitable for GGP. It’s increased its FFO per share by 82% over the last five years while boosting its payout by 90% over the same time period. Shares pay 2.8% today.

Sort, Hybrid, Others or Speciality

x Financial, Mortgage, Asset backed Securities

Cypress Sharpridge Investments(CYS) invests in agency-backed mortgage securities. Second-quarter net income increased 34% to $28 million. Earnings per share advanced 20% to $1.46. Revenue nearly doubled. The operating margin rose to 88%. The stock trades at a trailing earnings multiple of 3.9, a forward earnings multiple of 5.7 and a book value multiple of 1.1 -- 94%, 80% and 55% discounts to peer averages. Roughly 88% of analysts rate it "buy." Jake Lynch 09/15/10

Redwood Trust(RWT) invests in residential and commercial real estate securities. Second-quarter net income more than quadrupled to $29 million and earnings per share more than tripled to 35 cents. Revenue fell 24%. The operating margin increased from 66% to 73%. Redwood's stock sells for a forward earnings multiple of 10 and a book value multiple of 1.2 -- 82% and 51% discounts to peer averages. All of the analysts covering Redwood rate it "buy." Jake Lynch 09/15/10

MFA Financial(MFA) invests in mortgage-backed securities. Second-quarter net income tumbled 30% to $48 million and earnings per share fell 46% to 16 cents, hurt by a larger float. Revenue fell 37%. The operating margin dropped from 95% to 92%. MFA's stock trades at a forward earnings multiple of 7.7, a book value multiple of 1 and a cash flow multiple of 8.9 -- 87%, 60% and 50% discounts to peer averages. Roughly 62% of analysts rank the REIT "buy." Jake Lynch 09/15/10

Capstead Mortgage(CMO) is a mortgage REIT, focusing on agency-backed paper. Second-quarter profit decreased 30% to $30 million, or 35 cents a share, as revenue fell 41%. The operating margin fell from 95% to 90%. Capstead's stock sells for a forward earnings multiple of 7.1, a book value multiple of 0.8 and a cash flow multiple of 4 -- 88%, 68% and 77% discounts to REIT averages. Around 50% of researchers advocate purchasing the shares. Jake Lynch 09/15/10

Anworth Mortgage(ANH) invests in residential mortgage-backed securities. Second-quarter profit decreased 24% to $26 million, or 21 cents a share, as revenue contracted 19%. The operating margin remained steady at 94%. Anworth's stock trades at a forward earnings multiple of 7, a book value multiple of 0.9 and a cash flow multiple of 3.6 -- 88%, 62% and 80% discounts to industry averages. Roughly 83% of analysts recommend purchasing the REIT. Jake Lynch 09/15/10

Hatteras Financial(HTS) is a mortgage REIT. Second-quarter profit fell 15% to $37 million, or $1.01 a share, as revenue declined 10%. The operating margin narrowed from 96% to 95%. Hatteras shares sell for a forward earnings multiple of 6.8, a book value multiple of 1.2 and a cash flow multiple of 5.4 -- 88%, 51% and 70% discounts to industry averages. Around 57% of analysts rate Hatteras Financial "buy" and the remainder rank the REIT "hold." Jake Lynch 09/15/10

Chimera Investment(CIM) purchases mortgage and asset-backed securities. Second-quarter net income more than doubled to $125 million. Earnings per share soared 60%. Revenue nearly tripled. The operating margin climbed from 88% to 94%. The stock sells for a forward earnings multiple of 5.4, a book value multiple of 1.3 and a cash flow multiple of 11 -- 91%, 47% and 37% discounts to REIT averages. Around 70% of researchers rank it "buy." Jake Lynch 09/15/10


Monmouth Real Estate




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