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).
The COVID-19 pandemic has significantly disrupted the commercial real estate industry, as workers around the world adapted to working from home and various lockdown measures have been enacted. Despite the economy’s rebound the industry’s recover has been uneven. Some analysts predict a speedy recovery to pre-pandemic levels.
REITs, as represented by an exchange-traded fund (ETF)—the Real Estate Select Sector SPDR Fund (XLRE)—have narrowly outperformed the broader market. XLRE’s 38.8% total return over the past 12 months is just above the benchmark iShares Russell 1000 ETF (IWB), which has provided a total return of 35.5%. These market performance numbers and the statistics in the tables below are as of Sept. 22, 2021.
Here are the top three REITs with the best value, fastest growth, and 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)||8.67||12.5||3.8|
|AGNC Investment Corp. (AGNC)||16.02||8.4||4.6|
|New Residential Investment Corp. (NRZ)||10.91||5.1||8.7|
- 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. On Sept. 9, Annaly declared a Q3 2021 cash dividend of $0.22 per common share. The dividend is payable Oct. 29 to shareholders of record as of Sept. 30, 2021.
- AGNC Investment Corp.: AGNC Investment invests mainly in residential MBS on a leveraged basis through collateralized borrowings. It uses an active portfolio management strategy to provide risk-adjusted returns.
- New Residential Investment Corp.: New Residential Investment invests in the residential housing sector. The company owns mortgage servicing-related assets, residential loans, and similar investments. New Residential Investment announced on Aug. 23 that it had completed the acquisition of mortgage originator and servicer Caliber Homes Loans Inc. The deal was initially announced on April 14, 2021. The company said it planned to bring together the mortgage platforms of Caliber and Newrez LLC, which is New Residential’s wholly owned mortgage originator and servicer, Newrez LLC. The acquisition is expected to add a roughly $150 billion unpaid principle balance of mortgage servicing rights (MSRs), technological enhancements, and other benefits. Terms of the deal were not disclosed in the announcement.
These are the top REITs as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing REITs|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Weyerhaeuser Co. (WY)||35.26||26.4||1,270||92.8|
|Jones Lang LaSalle Inc. (JLL)||234.78||11.9||1,220||22.5|
|Sun Communities Inc. (SUI)||194.56||22.6||60.7||100.0|
- Weyerhaeuser Co.: Weyerhaeuser is a forest products company that grows and harvests trees and develops real estate. The company also provides construction services and forest products. On July 30, the company announced that net earnings soared 14-fold as revenue rose nearly 7%. in Q2 2021 ended June 30, 2021. Adjusted EBITDA reached a record level. The profit performance was driven by a significant increase in export sales realizations and a more modest improvement in export sales volumes.
- Jones Lang LaSalle Inc.: Jones Lang LaSalle is a real estate and investment management service provider. The company provides services such as tenant representation, property management, leasing, finance, and valuation services to a variety of corporate and institutional clients globally. On Sept. 13, the company announced the appointment of Siddharth Taparia to chief marketing officer. Taparia will be responsible for global marketing strategy and all marketing activities worldwide. Previously, Taparia was senior vice president and global head of corporate brand and experience marketing at software company SAP SE (SAP).
- Sun Communities Inc.: Sun Communities owns and operates manufactured-housing communities. The company owns properties throughout the Midwest and the Southeast regions of the United States, as well as Canada.
These are the REITs that had the highest total return over the last 12 months.
|REITs with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Jones Lang LaSalle Inc. (JLL)||234.78||11.9||137.8|
|Simon Property Group Inc. (SPG)||130.38||42.9||114.9|
|CBRE Group Inc. (CBRE)||93.73||31.5||101.8|
|iShares Russell 1000 ETF (IWB)||N/A||N/A||35.5|
|Real Estate Select Sector SPDR Fund (XLRE)||N/A||N/A||38.8|
- Jones Lang LaSalle Inc.: See above for company description.
- Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages malls, outlet centers, community centers, and other related properties.
- CBRE Group Inc.: CBRE Group is a real estate service provider. The company offers valuation, advisory, real estate investment, and property management services. It focuses on offices, hotels, gaming properties, multifamily residences, and data centers. In September, the company announced it was the top-ranked firm for commercial real estate investment sales globally in the first half of 2021, according to Real Capital Analytics. CBRE Group had a 23.7% market share across all property types on a worldwide basis during that period, nearly twice as big as the two next biggest rivals, according to RCA.
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YCharts. “Financial Data.” Accessed Sept. 22, 2021.
Annaly Capital Management Inc. “Annaly Capital Management, Inc. Announces 3rd Quarter 2021 Common Stock Dividend of $0.22 per Share.” Accessed Sept. 22, 2021.
New Residential Investment Corp. “New Residential Investment Corp. Completes Previously Announced Acquisition of Caliber Home Loans, Inc. and Raises Third Quarter 2021 Common Dividend to $0.25.” Accessed Sept. 22, 2021.
Weyerhaeuser Co. “Weyerhaeuser reports record second quarter results.” Accessed Sept. 22, 2021.
Jones Lang LaSalle Inc. “JLL names Siddharth Taparia Chief Marketing Officer.” Accessed Sept. 22, 2021.
CBRE Group Inc. “CBRE Leads Global Investment Sales Activity in First Half of 2021.” Accessed Sept. 22, 2021.