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 SBA Communications Corp. (SBAC).

REIT, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have dramatically underperformed the broader market, providing investors with a total return of -5.0% compared to the S&P 500's total return of 22.5% over the past 12 months. These market performance numbers and the statistics in the tables below are as of August 24.

Here are the top 3 REITs with the best value, the fastest earnings 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.

Best Value REITs

 

Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Kimco Realty Corp. (KIM) 11.43 4.9 5.1
Simon Property Group Inc. (SPG) 64.52 19.7 11.3
Boston Properties Inc. (BXP) 84.26 13.1 12.9

Source: YCharts

  • 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. Kimco reported net income growth of 637.9% despite a 16.1% decline in revenue for Q2 2020, which ended June 30, 2020. Net income growth was driven by a $715.5 million gain from the company's investment in Albertsons Companies Inc. (ACI). During the quarter, the company granted rent deferrals approximating 18% of pro-rata minimum base rent amid the COVID-19 pandemic.
  • Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages retail real estate properties throughout the world.
  • Boston Properties Inc.: Boston Properties operates as a REIT that owns, manages, and develops office properties primarily in Boston, Washington, D.C., Midtown Manhattan, and San Francisco. The company reported net income growth of 46.8% despite a revenue decline of 10.8% for Q2 2020, which ended June 30, 2020. The increase in net income was largely driven by gains from asset sales.

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.

Fastest Growing REITs

 

Price ($) Market Cap ($B) EPS Growth (%)
Kimco Realty Corp. (KIM) 11.43 4.9 755.0
Alexandria Real Estate Equities Inc. (ARE) 170.69 21.5 167.6
Boston Properties Inc. (BXP) 84.26 13.1 61.3

Source: YCharts

  • Kimco Realty Corp.: See above for company description.
  • Alexandria Real Estate Equities Inc.: Alexandria Real Estate Equities is a REIT that owns and operates office and laboratory space properties. The company leases its properties to pharmaceutical, biotechnology, diagnostic, and personal care products companies, as well as research institutions and related government agencies. The company reported net income growth of 179.4% on revenue growth of 16.9% for Q2 2020, which ended June 30, 2020.
  • Boston Properties Inc.: See above for company description.

REITs with the Most Momentum

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

REITs with the Most Momentum

 

Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Equinix Inc. (EQIX) 782.17 69.3 44.0
Digital Realty Trust Inc. (DLR) 154.56 41.6 29.8
Prologis Inc. (PLD) 103.04 76.1 26.2
S&P 500 N/A N/A 22.5
Real Estate Select Sector SPDR ETF (XLRE) N/A N/A -5.0

Source: YCharts

  • Equinix Inc.: Equinix is a REIT that provides colocation space and related services. The company provides customers with access to a selection of business partners and solutions based on their colocation, interconnection, and managed IT service needs. Equinix announced earlier this month that it was expanding in India through the acquisition of the India operations of GPX Global Systems Inc. The value of the all-cash transaction is $161 million and is expected to close during the first quarter of 2021.
  • Digital Realty Trust Inc.: Digital Realty Trust is a REIT that owns and manages technology-focused real estate properties across the U.S. and England.
  • Prologis Inc.: Prologis is a REIT focused on industrial real estate across the Americas, Europe, and Asia. The company leases modern distribution facilities, including manufacturers, retailers, transportation companies, third-party logistics providers, and other companies. Prologis reported net earnings growth of 10.7% on revenue growth of 60.2% for Q2 2020.