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 $1.9 trillion stimulus package, passed by Congress in March 2021, is fueling a rapid economic recovery, which ultimately is expected to lead to a rebound in key sectors of the commercial real estate market.
REITs, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have underperformed the broader market. XLRE’s 32.4% total return over the past 12 months is below the Russell 1000 index, which has provided a total return of 40.6%, as of June 22. All statistics in the tables below are also as of June 22.
Here are the top 3 REITs with the best value, the fastest growth, and the most momentum.
These are the REITs with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value REITs | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Annaly Capital Management Inc. ( NLY) |
9.17 | 12.8 | 2.9 |
| AGNC Investment Corp. ( AGNC) |
17.00 | 8.9 | 3.1 |
| Brandywine Realty Trust ( BDN) |
14.13 | 2.4 | 8.0 |
Source: YCharts
- Annaly Capital Management Inc.: Annaly Capital Management invests in residential and commercial real estate. Its Residential Credit group focuses on non-agency residential mortgage assets, and its Commercial Real Estate group focuses on commercial mortgage, loans, securities, and other commercial real estate debt and equity investments. On June 9, the company announced a Q2 2021 common stock dividend of $0.22 per share. The dividend is payable July 30 to shareholders as of June 30, 2021.
- AGNC Investment Corp.: AGNC Investment invests mainly in residential mortgage-backed securities (MBS) whose interest payments and principal are guaranteed by a U.S. agency or the federal government. The company serves customers across the U.S. On June 10, the company announced a cash dividend of $0.12 per share of common stock for June 2021 and payable on July 12 to shareholders as of June 30, 2021.
- Brandywine Realty Trust: Brandywine Realty Trust is a REIT that owns, leases, develops, and manages primarily office properties. These are mostly located in the Philadelphia, Austin, and Washington D.C. markets. It also has an ownership interest and operates a commercial real estate management services company.
These are the top REITs as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Fastest Growing REITs | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Jones Lang LaSalle Inc. ( JLL) |
203.08 | 10.4 | 1,870 | -1.4 |
| Weyerhaeuser Co. ( WY) |
34.13 | 25.6 | 355.0 | 45.0 |
| Kilroy Realty Corp. ( KRC) |
71.13 | 8.3 | 1,050 | 6.5 |
Source: YCharts
- 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. On June 2, the company announced the appointment of Kylie Kendrick as chief operating officer (COO), effective June 7.
- 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 in California and Washington state. Kilroy Realty announced on June 16 that it had reached agreement to acquire three properties and sites in Texas, California, and the state of Washington for a total of $670 million.
These are the REITs that had the highest total return over the last 12 months.
| REITs with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Park Hotels & Resorts Inc. ( PK) |
21.35 | 5.0 | 106.7 |
| Simon Property Group Inc. ( SPG) |
130.25 | 42.8 | 103.0 |
| Jones Lang LaSalle Inc. (JLL) | 203.08 | 10.4 | 98.0 |
| Russell 1000 | N/A | N/A | 40.6 |
| Real Estate Select Sector SPDR ETF (XLRE) | N/A | N/A | 32.4 |
Source: YCharts
- Park Hotels & Resorts Inc.: Park Hotels & Resorts owns and operates hotels around the world. The company provides accommodations and services for meetings, weddings, and a variety of other events.
- Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages malls, outlet centers, community shopping centers, and related properties. For Q2 2021, Simon Property Group will pay a common share dividend of $1.40 per share. The dividend represents a 7.7% increase over the prior dividend. It is payable on July 23 to shareholders as of July 2, 2021.
- Jones Lang LaSalle Inc.: See company description above.
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