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 -4.1% over the past 12 months, well below the Russell 1000's total return of 19.5%, as of January 15, 2021. All statistics in the tables below are as of January 18.

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.

Best Value REITs

 
Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Brookfield Property REIT Inc. (BPYU) 17.21 0.7 1.7
Brandywine Realty Trust (BDN) 11.90 2.0 6.8
Equity Commonwealth (EQC) 27.79 3.4 7.6

Source: YCharts

  • Brookfield Property REIT Inc.: Brookfield Property is a REIT that owns, develops, builds, manages, and leases various commercial properties. Among the company's portfolio of properties are restaurants, malls, entertainment facilities, and parking areas. On January 4, Brookfield Property REIT and Brookfield Property Partners L.P. (BPY) confirmed receipt of a non-binding proposal from Brookfield Asset Management Inc. Brookfield Asset Management proposes acquiring 100% of the limited partnership units of Brookfield Property Partners that it does not already own in a deal valued at about $5.9 billion. As of the date of the press release, Brookfield announced that the board of directors of the general partner of Brookfield Property Partners had established a committee of independent directors to review and consider the proposal.
  • 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.
  • 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. On January 11, Equity Commonwealth declared a quarterly dividend of $0.40625 per Series D Preferred Share, to be paid on February 16.

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 (%)
Brandywine Realty Trust (BDN) 11.90 2.0 3,900
The Howard Hughes Corp. (HHC) 84.11 4.6 263.8
W.P. Carey Inc. (WPC) 67.24 11.8 254.2

Source: YCharts

  • Brandywine Realty Trust: See above for company description.
  • The Howard Hughes Corp.: Howard Hughes develops and manages master planned communities, shopping malls, and mixed-use properties.
  • W.P. Carey Inc.: W.P. Carey is a self-managed diversified REIT that owns and manages commercial real estate, primarily net leased to companies on a long-term basis. It provides long-term sale-leaseback and build-to-suit financing solutions. The company also manages a series of non-traded REITs. In early January, W.P. Carey announced four industrial property investments made in December totaling roughly $121 million. This brings the company's total investment volume for 2020 to roughly $826 million.

REITs with the Most Momentum

These are the REITs 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 (%)
CoStar Group Inc. (CSGP) 853.72 33.7 31.6
Equinix Inc. (EQIX) 707.76 63.1 22.6
CyrusOne Inc. (CONE) 72.33 8.7 17.8
Russell 1000  N/A N/A 19.5
Real Estate Select Sector SPDR ETF (XLRE) N/A N/A -4.1

Source: YCharts

  • CoStar Group Inc.: CoStar Group is a provider of commercial real estate information, analytics, and online marketplaces. It offers commercial real estate research and real-time data, mobile and online real estate marketplace, and more. In December, CoStar announced that its Apartments.com network, which includes 11 marketplace websites, received a record-setting 1 billion website visits by prospective renters in 2020. This marks an increase of more than 160 million visits relative to 2019.
  • 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.
  • CyrusOne Inc.: CyrusOne owns, develops, and operates data center properties. The company's properties are enterprise-class and carrier-neutral, and its facilities protect and ensure the continued operation of critical IT infrastructure.

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