As the delta variant upends expectations of a post-vaccination return to normal -- or something like it -- it’s a good time for real estate investors to look at some sectors and stocks that could present some resilience and even growth in the months to come.
A good place to start is with essentials. And a place to live is pretty much that. A rip-roaring housing market has made buying problematic for many, even if they wanted to, and the appeal of a nice apartment just grows as a significant chunk of that same population grows their own appreciation for mobility. So, that leads us to looking at multifamily housing as a place to plunk some investment bucks this month.
Many real estate investment trusts (REITs) own apartments, some more than others, and each has its own blend of multifamily, single-family rentals, and commercial real estate.
We’ll look at three that stand out among the 20 or so equities gathered by Nareit under the label residential REITs. As of July 31, that group had posted a 2021 total return of 41.46% and was yielding 2.38%.
AvalonBay Communities (NYSE: AVB) is a major player among REITs and other owners and managers of multifamily communities. It focuses on major metropolitan areas it believes have the following market characteristics: growing employment in high-wage economic sectors, lower housing affordability, and diverse and vibrant quality of life.
As of June 30, the Arlington, Virginia-based company owned or held a direct or indirect ownership interest in 288 apartment communities comprising 85,749 apartment homes in 11 states, of which 16 communities were under development and two communities were under redevelopment.
Those properties are primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California.
AvalonBay stock was trading at $222.71 per share late in the day on Wednesday, Aug. 11, some 4.3% off its 52-week high of $232.72 reached on July 30 and 69.52% above its 52-week low of $131.38 from last Oct. 28. The stock was yielding 2.85% based on an annual dividend of $6.36 per share.
AvalonBay was posting a stellar year-to-date return of 57.53% late in the day on Wednesday, Aug. 11, and its expansion plans present the possibility for more. In its 2Q21 earnings release, for instance, AvalonBay said it had just completed developing four communities in three states (New Jersey, Maryland, and Washington) and is now chasing opportunities in Dallas and Austin, Texas, and Charlotte and Raleigh-Durham, North Carolina.
American Campus Communities
American Campus Communities (NYSE: ACC) is the nation’s largest manager, developer, and owner of student housing communities, a business that saw both rents and occupancy rates recover quickly after the rollout of vaccinations and campus reopenings.
As of June 30, Austin-based American Campus Communities owned 166 student housing properties containing approximately 111,900 beds. Adding in third-party managed properties gives it a total managed portfolio of 205 properties with approximately 141,300 beds.
American Campus Communities was trading at $48.86 per share late in the day on Wednesday, Aug. 11, 5.47% off its 52-week high of $51.69 reached on July 27 and 57.26% above its 52-week low of $31.07 from last Aug. 20, when the nation’s colleges and universities were still basically in shutdown mode. The stock was yielding 3.89% based on an annual dividend of $1.88 per share.
American Campus Communities' stock was posting a very handsome year-to-date return of about 48% on Aug. 11. That’s the result of making up for lost ground, of course, but this REIT also has a portfolio and growth plans that could well put it in good stead going forward. All bets are off, though, if universities and colleges begin going all online again.
Camden Property Trust
Camden Property Trust (NYSE: CPT) is also one of the larger publicly traded companies in the country that focus on buying, building, and redeveloping -- as well as owning and managing -- multifamily apartment communities.
As of July 31, the Houston-based firm owned interests in and operated 169 properties containing 57,611 apartment homes across the U.S. Like its competitors, Camden also is focusing attention and money on high-growth markets, announcing acquisitions, construction, and/or leasing underway most recently in Orlando, Florida; Atlanta; San Diego; and Nashville, Tennessee.
Camden Property Trust stock has returned about 72.91% so far this year. Its stock was trading at $144.59 per share late in the day on Wednesday, Aug. 11, 5.27% off its 52-week high of $152.63 reached on July 30 and 68.63% above its 52-week low of $85.74 from last Aug. 24. The stock was yielding 2.32% based on an annual dividend of $3.32 per share.
The Millionacres bottom line
American Campus Communities, AvalonBay Communities, and Camden Property Trust are each well-established operations that have provided solid returns through some tough times and appear able to continue making gains after making up ground lost during the first year or so of the pandemic. Nothing is certain, of course, but people interested in investing in rental properties without owning them can turn to these three real estate stocks with some degree of confidence.