2. Brookfield Property REIT
Brookfield Property REIT is a U.S.-listed REIT managed by Canadian asset manager Brookfield Asset Management (NYSE: BAM). BAM created Brookfield Property in 2018 in connection with its acquisition of mall owner GGP. Investors in GGP continued owning shares of a REIT instead of units in the company’s publicly traded global real estate partnership Brookfield Property Partners (NASDAQ: BPY). The two real estate companies, however, are economically equivalent, so investors can own either one and still gain access to its diversified global real estate portfolio.
Brookfield invests roughly 85% of its capital into core office, retail, and multifamily properties that it owns directly. While its entire core retail portfolio consists of malls and urban retail centers in the U.S., its core office and multifamily portfolios are global. It currently owns premier office complexes in several U.S. cities as well as major international gateway cities like London, Toronto, Sydney, and Berlin. Meanwhile, it’s developing multifamily properties in New York and London. These assets produce very stable cash flow, which Brookfield uses to pay its dividend.
Besides those core long-term real estate holdings, the Brookfield REIT invests about 15% of its capital into real estate funds managed by Brookfield Asset Management. These funds have a much broader mandate and currently include interests in not only office, retail, and multifamily, but also logistics, hospitality, self-storage, student housing, and other properties, many of which are in international markets. Among its investments are hospitality properties and student housing in the U.K., a resort in the Bahamas, beachfront retail in Dubai, and luxury hotels in India. These investments tend to generate higher returns, which Brookfield reinvests in growing its portfolio so it can increase its dividend. Brookfield aims to boost it by 5% to 8% per year over the long term.
What makes Brookfield Property REIT stand out as a top international buy is its balance of stability from its core assets and the upside from its internationally focused investments in several private equity funds. That should let the company produce outsized total returns in the coming years.
3. Medical Properties Trust
Medical Properties Trust is a U.S.-based healthcare REIT that primarily owns hospitals. As of the end of the third quarter of 2019, the company owned nearly 350 hospitals in the U.S., Germany, the U.K., Switzerland, Italy, Spain, and Australia. The company leases these facilities to hospital operating companies.
While Medical Properties operates a diversified portfolio of hospitals, the U.S. is by far its largest market -- it currently supplies more than 80% of the REIT's revenue -- followed by Germany at 11%. However, its international exposure has surged in recent years.
The company has completed several acquisitions of overseas hospital real estate in 2019 alone. In January, it agreed to invest $859 million to buy 11 hospitals in Australia. It followed that up in May by sealing a deal to invest $236.5 million for a 46% stake in a Swiss hospital real estate company that currently owns 13 campuses in that country. It then bought eight U.K. hospitals for $434 million in July. The company has also acquired several more U.S. hospitals this year. Medical Properties doesn’t expect its buying spree to slow, with the company noting in the third quarter that its acquisition pipeline had about $5 billion of opportunities remaining.
That steady deal flow has allowed Medical Properties to grow its cash flow at a healthy pace in recent years, supporting its ability to keep increasing its dividend. The company has raised its payout in each of the last six years, including a 4% raise for 2019. With a conservative payout ratio and a fully stocked acquisition pipeline, it should have no problem keeping that trend going. That dividend, when combined with the company’s exposure to the growth in healthcare both in the U.S. and internationally, makes it a top option for global REIT investors.
Buying these international REITs could pay big dividends over the long term
While the U.S. is the largest and most developed real estate market in the world, investors shouldn't remain confined to its borders. Many global markets are growing faster, which could yield higher returns.
While there are many ways to go global in real estate, these three top U.S.-listed REITs have meaningful exposure to several international markets, which should let them grow faster than their U.S.-focused peers. Add their growing dividends and they could produce healthy total returns, making them great REITs to buy for the long term.