There’s so much to choose from in considering real estate investment trusts (REITs) for new investment money this month. To narrow the field to three, let’s look at a theme. In this case, infrastructure, which is sure to be on the market’s mind as the Biden administration rolls out its ambitious plan to do something for everyone in that regard.
The three REITs profiled below are solid performers in their own niches but also represent areas of growth that should benefit from public and private investment in the immediate future and beyond. Two of these REITs are ones we cover a lot, and for good reason, while the other is a lesser-known but venerable name with an interesting story of its own.
They are Urstadt Biddle Properties (NYSE: UBA), American Tower (NYSE: AMT), and CyrusOne (NASDAQ: CONE). Here’s some key info on each.
Urstadt Biddle Properties
Urstadt Biddle Properties (UB) is a grocery store-anchored REIT that operates primarily in the suburbs of New York City. The Greenwich, Connecticut-based REIT currently has 870 tenants occupying its portfolio of 81 properties, including 67 shopping centers and a handful of freestanding bank branches, restaurants, and small office buildings. (And one childcare center.)
The company reported last month that 90.3% of its rent for the first quarter has been paid in a portfolio that’s 89.8% leased, and it’s still turning a profit, with $4.5 million in net income for the first quarter of 2021.
Now, UB is reporting that base rents are decreasing in its new leases, but the company is finding a new way to bolster the bottom line. The company has struck a deal with Dallas-based 5G LLC for the potential installation of 5G cell sites on the rooftops of UB’s shopping centers.
"Our exclusive agreement positions UB to potentially generate additional revenue growth from a key, but underdeveloped, asset class: our rooftops," president/CEO Willing Biddle said in that announcement.Meanwhile, UB boasts of “providing uninterrupted dividends since 1969.” But it did cut its dividend sharply after the pandemic arrived, by 75% to $0.07 per share in the third quarter of 2020 after paying $0.27 to $0.28 per share for the three years prior.
That payout was doubled to $0.14 per share for the past three quarters, and this kind of concentration on essential services in well-to-do market niches, along with taking advantage of trends like being a local node for 5G rollout, bodes well for its future.
Urstadt Biddle stock was trading at $16.77 per share in midday trading on March 31, 10% below its 52-week high of $18.63 it reached on March 15. That gives it a market cap of about $650 million and a yield of 3.23% based on an annual dividend of $0.56 per share.
With a market cap of about $107 billion, AMT already towers over its competition and pretty much every other REIT in sheer size and reach, with more than 181,000 telecommunications sites in 20 countries worldwide at the end of 2020.
Colorado-based AMT is furthering its status as the 800-pound gorilla in a long-burgeoning business, adding mobile communications sites of all kinds and with operators of all sizes, including the largest, signed on and signing on for long-term leases.
Just one example: an agreement announced in March that calls for DISH Network (NASDAQ: DISH) to lease space on up to 20,000 AMT sites, securing DISH’s access to the infrastructure it needs to deploy its new 5G network.
American Tower first paid shareholders dividends at the end of 2011 and most recently handed over $1.21 a share for the fourth quarter of 2020 while continuing a string of raising the payout every quarter since the first quarter of 2012.
AMT stock was trading at $239.91 per share in midday trading on March 31, 11.86% below its 52-week high of $272.20 it reached on July 29. That’s good for a yield of 2.09% based on an annual dividend of $4.96 per share.
Dallas-based CyrusOne serves about 1,000 customers, including hundreds of major firms, through more than 50 data centers worldwide. It’s an established operator in the world of cloud-based storage and networking, one of those essential to modern world kinds of businesses.
The company grew its revenue by 5% in 2020 from 2019, to $1.03 billion, and its funds from operations (FFO) by 12% to $459.4 million. That big client base has an average weighted lease remaining of 56 months, and in its fourth-quarter report, CyrusOne noted significant growth in domestic and overseas markets.
CyrusOne declared its third-consecutive quarterly dividend of $0.51 a share effective March 31 and has raised that quarterly payout each year since the first quarter of 2016. That payout has also more than tripled since it went public in 2013.
Cyrus One stock was trading at $67.95 per share in midday trading on March 31, 21.7% below its 52-week high of $86.77 it reached on Aug. 6, 2020. That gives it a market cap of about $8.2 billion and a yield of 2.99% based on an annual dividend of $2.04 per share.
The Millionacres bottom line
Urstadt Biddle and AMT are at the opposite ends of the 5G infrastructure world in some ways, but both should benefit from its continued rollout, and the relatively small retail REIT presents a recovery play of its own. Meanwhile, both CyrusOne and AMT just kept on building out their own infrastructures through the pandemic and should be able to continue their steady growth and payouts for years to come. All three could turn your investment dollars from April showers into May flowers -- and produce nice income and some growth well beyond that.