Real estate investment trusts (REITs) are generally considered a safer bet than the average equity investment in the stock market. They generally make the bulk of their money from renting out property that they own, manage, or both and they’re required to pay out at least 90% of their taxable income in the form of dividends to shareholders.
But these aren’t typical times. The COVID-19 pandemic has deeply disrupted the economy, including shuttering -- in many cases, permanently -- stores and restaurants, while emptying hotels and offices, and generally wreaking havoc on (and tragically, ending for many) life here in America.
And just as it looked like things might get back to normal, the delta variant is raging through the populace, threatening a return to abnormality. Just how much of a return will become clearer in the weeks ahead, but in the meantime here are three REITs to consider that offer good reasons to be considered safe bets for August buys.
Invitation Homes and single-family rentals
Invitation Homes (NYSE: INVH) already lays claim to being the nation’s largest owner of single-family rental homes and it’s getting larger, announcing July 26 a joint venture in which the Dallas-based landlord would buy approximately 7,500 new homes over five years from homebuilder Pulte Group.
Invitation Homes already has a portfolio of about 80,000 homes in 16 states and is coming off a second quarter in which it grew total revenues by 9.3% year over year, core funds from operations (FFO) by 14.4%, and net income by a resounding 40.8% from the second quarter of 2020.
Invitation Homes stock hit its 52-week high of $41.20 a share on Friday, July 30, before settling slightly lower as the day wore on, giving it a market cap of about $23.6 billion. It was yielding 1.67% based on an annual dividend of $0.68 per share.
Prologis and logistics
Prologis (NYSE: PLD) boasts that it’s the largest owner, operator, and developer of industrial real estate in the United States. As of June 30, 2021, that meant ownership or investment in nearly a billion square feet in 19 countries, serving about 5,500 customers.
Prologis focuses on business-to-business and retail/online fulfillment, with warehouses serving the likes of Amazon and FedEx, from coastal and inland ports and regional distribution hubs. It also focuses on making lots of money. In its second-quarter earnings report just announced, the San Francisco-based titan reported net earnings of $0.81 per share, up sharply from $0.54 in the year-ago quarter, and its chairman and CEO exuded optimism for more to come.
"Demand for logistics space is robust and diverse, and operating conditions remain the healthiest in our 38-year history. Vacancies in our markets are at all-time lows, contributing to record rent growth and valuation increases," Hamid R. Moghadam said in the 2Q21 earnings press release.
Prologis stock closed at $128.04 a share on Friday, July 30, after -- like Invitation Homes -- hitting its 52-week high of $129.49 earlier in the day and giving it a market cap of about $94.8 billion. It was yielding 1.97% based on an annual dividend of $2.52 per share.
Boston Properties and office space
Boston Properties (NYSE: BXP) stakes its claim to being the nation’s largest publicly traded developer, owner, and manager of Class A properties, with a portfolio of about 51.6 million square feet contained in 196 properties primarily in Los Angeles, New York City, San Francisco, Washington, D.C., and, obviously, its hometown, Boston.
Of course, office space is a sector in transition, to put it mildly, because of the pandemic, and Boston Properties is also investing heavily in the promising life sciences sector and in some new geography. On July 27, it announced it would pay $116.5 million for the Shady Grove Bio+Tech Campus in Rockville, Maryland, and about $465 million to move into a brand-new market, Seattle, to acquire Safeco Plaza, a 50-story, 800,000-square-foot, LEED-Platinum certified, Class A office property positioned in the heart of the tech-heavy coastal city.
Boston Properties stock closed at $117.38 a share on Friday, July 30, 5.52% below its 52-week high of $124.24 (reached on June 14) and giving it a market cap of about $18.3 billion. It was yielding 3.31% based on an annual dividend of $3.92.
The Millionacres bottom line
Each of these three companies has the bandwidth and budget to profitably expand their portfolios as they leverage the booming potential in their respective segments. While big doesn’t necessarily mean safe -- as longtime General Motors investors can attest -- all three make good arguments for that label in the REIT world right now.