So, to write about the three best real estate investment trusts (REITs) to buy in October, based on my very humble opinion, I first had to choose them.
And where better to start than in the little group of 10 REITs that I now have in my own portfolio? I'm of retirement age and while interested in growth, I'm also keen on capital preservation and some reliable income flow from this part of our nest egg.
That's how I've chosen to buy what I own now, and if I can't pick three of these real estate stocks as among the best, why own them in the first place, right?
That said, let's look, in alphabetical order, at Alexandria Real Estate Equities (NYSE: ARE), Innovative Industrial Properties (NYSE: IIPR), and STORE Capital (NYSE: STOR).
Alexandria Real Estate Equities
Founded in 1994, San Diego-based Alexandria has used triple net leases and deep and expanding partnerships across the life sciences spectrum to profitably build its presence in and around Boston, San Francisco, New York City, San Diego, Seattle, the Maryland suburbs, and North Carolina's Research Triangle.
That focus on innovation cluster locations has built synergy and business that as of June 30 gives this self-described urban office REIT an asset base in North America of 58.1 million square feet, including 36.7 million now in operation and the rest in various stages of development.
The essential nature of Alexandria's lab-friendly properties are typified in this latest news from a provider of COVID-19 vaccines: "Moderna Plans New Cambridge HQ."
Alexandria stock closed at $194.03 on Oct. 4, 7.5% below its 52-week high of $209.76 from Sept. 1. That was good for a market cap of $29.6 billion and a yield of 2.31% based on a 12-month dividend payout of $4.48 per share.
Innovative Industrial Properties
How much the marijuana business has changed was evident in this article from back home the other day: "Ohio Marijuana Expo … Draws Dozens of Vendors, Thousands of Attendees."
Back in the day, some of those "thousands of attendees" would have been officers of the law perfectly happy to accommodate anyone with that kind of arrest-wish.
But not anymore. Those were perfectly legitimate business folks gathered at the Summit County Fairgrounds. They couldn't sell pot from their booths, since the recreational type is still illegal in the Buckeye State, but they, and anyone else, can invest in San Diego-based IIPR, the first and so far the only NYSE-listed real estate company that specializes in the legal marijuana industry.
IIPR buys and leases facilities back to medical marijuana growers and provides capital to an industry where many banks and credit unions still dare not tread. The five-year-old firm has grown fast, and as of Oct. 1, IIP owned 75 properties in 19 states. It's also still on a buying spree, notching four acquisitions just since July 1.
IIPR stock closed at $228.27 on Oct. 4, 9.99% below its 52-week high of $253.61 from Sept. 7. That was good for a market cap of $5.5 billion and a yield of 2.63% based on a 12-month dividend payout of $6.00 per share.
STORE Capital is a strong candidate for anyone seeking exposure to commercial real estate in their portfolio, especially if focusing on retail REITs.
Don't believe us? Just ask Warren Buffett. The Oracle of Omaha bought $377 million of STORE stock in 2017, nearly 10% of the shares outstanding at the time. It's still his only reported REIT holding.
Scottsdale, Arizona-based STORE is a net lease REIT that as of June 30 had 2,738 locations occupied by 529 tenants in 49 states. That diversity is not just geographical: About 64% of its tenants are considered service businesses, with 17% in pure retail and 19% in manufacturing.
One more interesting detail, STORE's top two leaders are both women: co-founder and CEO Mary Fedewa and newly named CFO Sherry Rexroad. Where would that matter? Maybe at the bottom line.
STORE stock closed at $32.97 on Oct. 4, 11.2% below its 52-week high of $37.13 from July 30. That was good for a market cap of $9 billion and a yield of 4.66% based on a 12-month dividend payout of $1.54 per share.
The Millionacres bottom line
There are many REITs I could have chosen for this little list, but for this season of the year -- and season of my life -- each of these three makes good sense to me, and they might to you, too.