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).
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 many corporate employees working from home. However, the U.S. government's $1.9 trillion stimulus package, passed by Congress in March 2021 could fuel a rapid economic recovery, and along with it, a rebound in commercial real estate.
REITs, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have significantly underperformed the broader market. XLRE's 69.2% total return over the past 12 months is well below the general market benchmark iShares Russell 1000 ETF (IWB), which has provided a total return of 132.4%, as of April 20. All statistics in the tables below are also as of April 20.
Here are the top 3 REITs with the best value, the fastest growth, and the most momentum.
These are the REITs with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value REITs|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Brandywine Realty Trust ( BDN)||13.26||2.3||7.5|
|Equity Commonwealth ( EQC)||28.59||3.5||8.1|
|Kimco Realty Corp. ( KIM)||19.87||8.6||8.8|
- Brandywine Realty Trust: Brandywine Realty Trust is a REIT that owns, leases, develops, and manages primarily office properties. These are mostly located in the Philadelphia, Austin, and Washington D.C. markets. It also has an ownership interest and operates a commercial real estate management services company.
- Equity Commonwealth: Equity Commonwealth is a REIT that owns office buildings located mainly in central business districts and suburban areas of major U.S. metropolitan markets. A large share of its properties are leased to the U.S. government and tenants in healthcare. Equity Commonwealth also owns industrial lands in Hawaii. On April 9, Equity Commonwealth's board of trustees declared a quarterly dividend of $0.40625 per share of series D preferred stock. The dividend will be paid on May 17 to shareholders of record as of April 29.
- 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 announced on April 15 that it would merge with Weingarten Realty Investors (WRI), a grocery-anchored Sun Belt shopping center owner, manager and developer. Per the agreement, Weingarten will merge into Kimco. The merger is expected be completed in the second half of 2021 and will have a pro forma equity market capitalization of roughly $12.0 billion.
These are the top REIT stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing REITs|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|VICI Properties Inc. ( VICI)||29.87||16.0||152.4||57.0|
|Ventas Inc. ( VTR)||54.80||20.6||866.7||-7.5|
|SL Green Realty Corp. ( SLG)||71.56||5.0||1,080||-23.8|
- VICI Properties Inc.: VICI Properties is a REIT that owns gaming, hospitality, and entertainment destinations. Its portfolio includes several dozen gaming facilities. It also owns four championship golf courses, 34 acres of undeveloped land adjacent to the Las Vegas Strip, and has an investment in Chelsea Piers in New York City. On March 11, Vici Properties declared a quarterly cash dividend of $0.33 per share of common stock for the quarter ending March 31.
- Ventas Inc.: Ventas is a REIT focused on senior housing, hospital, skilled nursing, and other properties that in the U.S., Canada, and the U.K. The company has about 1,200 properties and has made $39 billion in accretive investments since 2004.
- SL Green Realty Corp.: SL Green Realty is a fully integrated REIT focused on real estate in Manhattan. The company is engaged in the acquisition, development, ownership, management and operation of both commercial and residential real estate properties.
These are the REITs that had the highest total return over the last 12 months.
|REITs with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Park Hotels & Resorts Inc. ( PK)||21.15||5.0||158.2|
|Brixmor Property Group Inc. ( BRX)||21.22||6.3||131.7|
|Kimco Realty Corp. (KIM)||19.87||8.6||129.0|
|iShares Russell 1000 ETF (IWB)||N/A||N/A||132.4|
|Real Estate Select Sector SPDR ETF (XLRE)||N/A||N/A||69.2|
- Park Hotels & Resorts Inc.: Park Hotels & Resorts is a lodging REIT whose portfolio spans 60 premium-branded hotels that are primarily located in the U.S. Its properties offer a variety of services and amenities, including accommodation, dining, meeting and wedding rooms, spas, and fitness centers. Originally part of Hilton Worldwide Holdings Inc. (HLT), the parent company spun off the entity into an independent, publicly traded company in January 2017.
- Brixmor Property Group Inc.: Brixmor Property Group is a REIT owning and operating grocery-anchored community and neighborhood shopping centers. The company has a portfolio of roughly 400 retail centers.
- Kimco Realty Corp.: See description above.
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CNN. "Biden Signs Historic $1.9 Trillion COVID-19 Relief Law." Accessed April 20, 2021.
YCharts. "Financial Data." Accessed March 29, 2021.
Equity Commonwealth. "Equity Commonwealth Declares Series D Preferred Dividend." Accessed April 20, 2021.
Kimco Realty Corp. "Kimco Realty and Weingarten Realty Announce Strategic Merger." Accessed April 20, 2021.
Vici Properties. "ICI Properties Inc. Declares Regular Quarterly Dividend." Accessed April 21, 2021.
Hilton Worldwide Holdings Inc. "Hilton Completes Spin-off of Park Hotels & Resorts and Hilton Grand Vacations." Accessed April 20, 2021.