NLY, JLL, and PK are top for value, growth, and momentum, respectively
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 $1.9 trillion stimulus package, passed by Congress in March 2021, is fueling a rapid economic recovery. Commercial-property sales volumes have begun to rebound to their pre-pandemic levels with many investors believing that the worst of the coronavirus crisis is over. However, risks still remain as the more-transmissible Delta variant of the virus continues to spread.
REITs, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have underperformed the broader market. XLRE’s 36.2% total return over the past 12 months is below the Russell 1000 index, which has provided a total return of 40.1%. These market performance numbers and the statistics in the tables below are as of July 26, 2021.
Here are the top 3 REITs with the best value, the fastest growth, and the most momentum.
These are the REITs with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value REITs|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Annaly Capital Management Inc. (NLY)||8.47||11.9||2.7|
|AGNC Investment Corp. (AGNC)||16.18||8.5||2.9|
|Kimco Realty Corp. (KIM)||20.82||9.0||8.8|
- Annaly Capital Management Inc.: Annaly Capital Management invests in real estate and related assets, including agency mortgage-backed securities (MBS), residential and commercial real estate, and middle market lending.
- AGNC Investment Corp.: AGNC Investment invests mainly in residential MBS on a leveraged basis through collateralized borrowings. It uses an active portfolio management strategy in order to provide risk-adjusted returns. The company recently announced financial results for Q2 of its 2021 fiscal year (FY), the three-month period ended June 30, 2021. It reported a net loss of $411 million, a significant deterioration from the year-ago quarter’s net income of $718 million. AGNC Investment’s net interest income fell 21.4% year over year (YOY). It also reported a “total other” loss of $621 million on its investment holdings compared to a “total other” gain of $447 million in the year-ago quarter.
- Kimco Realty Corp.: Kimco Realty owns and operates open-air, grocery-anchored shopping centers and mixed-use assets. Its portfolio of assets is mostly concentrated in the first-ring suburbs of top major metropolitan markets.
These are the top REITs as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing REITs|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Jones Lang LaSalle Inc. (JLL)||209.19||10.7||1,870||-1.4|
|Weyerhaeuser Co. (WY)||34.66||26.0||355.0||45.0|
|Kilroy Realty Corp. (KRC)||68.99||8.0||1,050||6.5|
- Jones Lang LaSalle Inc.: Jones Lang LaSalle is a real estate and investment management service provider. The company provides services such as tenant representation, property management, leasing, finance, and valuation services to a variety of corporate and institutional clients globally. Jones Lang LaSalle announced in early June the appointment of Kylie Kendrick as chief operating officer (COO). She formerly was managing director, global head of Wholesale Banking Operations at HSBC in London.
- Weyerhaeuser Co.: Weyerhaeuser is a forest products company that grows and harvests trees and develops real estate. The company also provides construction services and forest products.
- Kilroy Realty Corp.: Kilroy Realty is a REIT that owns, develops, acquires, and operates Class A office properties throughout the U.S. The company announced in mid-June that it agreed to purchase three separate properties totaling about $670 million, including: Indeed Tower in Austin, Texas; a land site next to its development project in San Diego; and the ground lease below its Key Center office tower in Bellevue, Washington. All three transactions are expected to close by the end of the third quarter.
These are the REITs that had the highest total return over the last 12 months.
|REITs with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Park Hotels & Resorts Inc. (PK)||19.10||4.5||123.9|
|Simon Property Group Inc. (SPG)||127.03||41.7||121.7|
|Jones Lang LaSalle Inc. (JLL)||209.19||10.7||109.1|
|Real Estate Select Sector SPDR ETF (XLRE)||N/A||N/A||36.2|
- Park Hotels & Resorts Inc.: Park Hotels & Resorts is a REIT that owns and operates hotels and resorts. Its properties offer services and amenities such as accommodation, dining, meeting and wedding rooms, spas, and fitness centers.
- Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages malls, outlet centers, community centers, and other related properties. The company announced in June a 7.7% increase in its common stock dividend for the second quarter of 2021, which was scheduled to be paid on July 23, 2021.
- Jones Lang LaSalle Inc.: See above for company description.
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