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 have begun to 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 -1.0% over the past 12 months, well below the Russell 1000’s total return of 21.2%, as of December 18, 2020. All statistics in the tables below are as of December 21.
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)||15.44||0.6||1.5|
|Brandywine Realty Trust (BDN)||11.77||2.0||6.7|
|Equity Commonwealth (EQC)||26.40||3.2||7.2|
- 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.
- 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. On October 21, the company reported net income growth of 3,948.9% despite a 13.2% decline in revenue in Q3 2020, which ended September 30, 2020. Lower operating expenses and one-time gains on the disposition of real estate compared to the year-ago quarter helped to boost net income. Due to the uncertainties posed by the pandemic, Brandywine said that it did not plan on providing its 2021 guidance during its third quarter earnings cycle.
- 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.
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)||11.77||2.0||3,900|
|The Howard Hughes Corp. (HHC)||81.17||4.5||263.8|
|W.P. Carey Inc. (WPC)||69.45||12.2||254.2|
- 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. The company announced in early December the appointment of David R. O’Reilly as chief executive officer (CEO). Mr. O’Reilly began serving as interim CEO in late September. Prior to that, he served as the company’s president and chief financial officer (CFO).
- 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.
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)||904.70||35.7||54.4|
|Taubman Centers Inc. (TCO)||42.91||2.6||46.1|
|Equinix Inc. (EQIX)||709.73||63.2||27.4|
|Real Estate Select Sector SPDR ETF (XLRE)||N/A||N/A||-1.0|
- 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. The company announced on December 17 the acquisition of Houses.com for an undisclosed price, marking its entrance into residential real estate marketplaces. CoStar also said that on December 16 the Federal Trade Commission approved CoStar Group’s purchase for $250 million of Homesnap, Inc., which provides real estate brokers with a mobile platform and other technology.
- Taubman Centers Inc.: Taubman Centers, through its operating partnership Taubman Realty Group LP, holds interests in and owns, develops, and operates regional shopping centers. It engages in shopping center management, leasing, and expansion. On November 9, the company reported a net loss of $36.6 million as revenue fell 1.7% in Q3 2020, which ended September 30, 2020. The net loss was more than double the net loss reported in the year-ago quarter. Taubman Centers said its financial results were negatively affected by disruptions related to the pandemic, including mall closures, tenant bankruptcies and nonpayments.
- 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.