Real estate investment trusts (REITs) come in a lot of shapes and sizes, and those shapes and sizes frequently morph in ways that can blur the lines between the neat categories in which they're often grouped.
Retail REITs, for instance, often include multifamily properties in properties they own and manage, and some REITs -- like Equity Commonwealth -- are well into the process of changing emphasis entirely, in that case from office to industrial.
That's not the case with the two office REITs highlighted here as promising buys for October. Boston Properties (NYSE: BXP) and Alexandria Real Estate Equities (NYSE: ARE) are sticking with what's worked for years, although the former is pushing its way into the fast-growing life sciences office game, too.
Here's some more on each.
Alexandria Real Estate Equities
Alexandria is credited with pioneering its niche in 1994 and now owns, operates, and develops collaborative life science, agtech, and technology campuses in what it calls the top urban innovation clusters of Boston, New York City, suburban Maryland, North Carolina's Research Triangle, Seattle, San Diego, and in and around San Francisco.
As of June 30, the company's portfolio included 58.1 million square feet comprising 36.7 million rentable square feet (RSF) of operating properties, 3.4 million RSF of Class A properties under construction, and another 18 million RSF of development and redevelopment projects in various stages of planning.
Alexandria stock was trading at $192.55 a share mid-afternoon on Sept. 29, some 8.2% off its 52-week high of $209.76 from Sept. 1 and up 39.1% from its 52-week low of $150.08 from last Oct. 30. That was good for a market cap of $29.3 billion and a yield of 2.34% based on an annual dividend yield of $4.48 per share.
Boston Properties lays claim to being the largest publicly traded developer, owner, and manager of Class A office properties in the United States, currently concentrated in five markets: Boston, midtown Manhattan, Washington, D.C., San Francisco, and Princeton, New Jersey. As of June 30, Boston Properties' portfolio included 197 properties covering 51.5 million square feet that was 88.6% leased for an average term of 7.9 years.
The company also has been on a buying spree, investing heavily in life science properties in Rockville, Maryland, and Waltham, Massachusetts, while expanding into an entirely new market, Seattle.
Boston Properties stock was trading at $112.75 a share mid-afternoon on Sept. 29, some 9.25% below its 52-week high of $124.24 from June 14 and up 61.8% from its 52-week low of $69.69 from last Oct. 29. That was good for a market cap of $17.6 billion and a yield of 3.47% based on an annual dividend yield of $3.92 per share.
The Millionacres bottom line
For its part, Nareit puts 20 REITs in the office category and says that as of Aug. 31 they had posted a year-to-date total return of 16.34% (after an abysmal 2020 showing of -18.44%) and an average yield of 3.47%.
Alexandria's one-year total return as of Sept. 29 was 21.69%, according to Nareit, while Boston Properties' was 40.49%. The latter also appeared to be relatively more expensive, with a price/earnings ratio of 58.79 compared with 29.33 for Alexandria.
But by any measure, both of these real estate stocks are good buys for October, with deep roots in their markets, long records of investor return, and aggressive growth plans for the immediate future that should pay dividends in the years ahead.
October seems as good a time as ever to buy either. Nothing spooky here.