There are a lot of differences between the two major party candidates for president in 2020. Who gets elected can make a big difference in the life of every American, but here we're going to look at real estate investors.
Narrowing it further, we're going to look at real estate investment trusts (REITs), and even narrower, at what might be good prospects for new money in the market now if you want to place your marker specifically on former Vice President Joe Biden and the Democrats winning the White House.
1. Healthcare and National Health Investors
Biden's first priority in healthcare is to restore health insurance -- or provide it for the first time -- to as many Americans as possible while maintaining choice of providers and plans. Among the many measures laid out in his plan is expansion of Medicaid.
A number of states have declined federal money to expand that program. Biden's plan to go around that blockade would free up a lot of money for low-income residents and senior citizens in states where there currently is limited availability of everyday services and Medicaid beds in nursing homes.
Meanwhile, healthcare REITs are a diverse lot. National Health Investors (NYSE: NHI) is one that specializes in senior housing and skilled nursing facilities, and an aging population means it has an obvious growing market.
NHI stock took a massive hit during the pandemic's early weeks, plunging from a 52-week high of about $91 a share to about $33.50 before bouncing back to about $62 on Sept. 1. It may well still be a bargain. Years of strong dividend growth -- the current yield is 6.57% -- and rent collection that barely wavered during the pandemic show the benefit of having a tenant list that includes some of the country's best-known operators, including National Healthcare Corp. (NYSE: NHC).
Senior living centers became COVID-19 hotspots across the country, tragically costing tens of thousands of lives. The elimination of that threat alone would be a boon to this sector, and if Biden's call for mask mandates, plus the culmination of work toward a vaccine, has the desired effect, that may well happen within the first 18 months or so of a Biden administration. One can hope.
2. Renewable energy and Brookfield Renewable Partners
Biden pledges to launch a plan to spend $400 billion over 10 years -- twice what it cost in today's dollars to put a man on the moon -- on clean energy and innovation.
Here's part of the pitch: "Biden will set a target of reducing the carbon footprint of the U.S. building stock 50% by 2035, creating incentives for deep retrofits that combine appliance electrification, efficiency, and on-site clean power generation."
And here's a related REIT to consider: Brookfield Renewable Partners (NYSE: BEP), whose portfolio of renewable power-generating facilities includes 193 hydroelectric-generating stations, 11 wind facilities, and two natural gas-fired plants in the United States, Canada, and Brazil.
This REIT is managed by Brookfield Asset Management (NYSE: BAM) -- also the operator of Brookfield Property Partners (NASDAQ: BPY) -- and its stock has risen by around 50% over the past three years, double the 24% or so the S&P 500 rose at the same time. The current dividend yield is a nice 4.45% and seems sustainable for an operation that makes its money by selling the energy its renewable sources produce.
Renewable energy seems like a growing imperative regardless of who's in charge in Washington, but a Biden administration would seem to add a lot of energy, and investment, in that direction.
3. Rural broadband and American Tower
Biden's "Plan for Rural America" includes $20 billion in rural broadband infrastructure, including tripling funding to expand broadband access in rural areas.
While the focus may be on providers such as the utility companies who collect the monthly bill, the data itself will primarily be riding two rails: cable and mobile. Even in areas where cable companies dominate, there are wide-open spaces where laying wire just doesn't make financial sense.
That's where the major wireless players again come in -- Verizon (NYSE: VZ), T-Mobile (NASDAQ: TMUS), AT&T Mobility (NYSE: T), and DISH Wireless (NASDAQ: DISH) -- as well as smaller providers of fixed wireless service. One thing they have in common: mobile towers.
And that puts American Tower (NYSE: AMT) on the radar. The largest publicly traded REIT -- with a market cap of about $110 billion -- is currently trading at about $250 a share, close to its 52-week high of $272. Current yield is about 1.45%.
In the long haul, work is underway to create satellite and other competition to traditional cell tower delivery, but that could be down the road. Right now, the major provider of the quickest way to make wireless happen -- the cell tower -- looks like a safe bet.
4. Affordable housing and Sun Communities
Renewed interest in direct investment in affordable housing would seem to be a natural fit in a Biden administration, but there are not a lot of REITs that specialize in that. Those that do -- such as Housing Partnership Equity Trust (HPET) and Community Development Trust (CDT) -- are usually not publicly traded.
Crowdsourcing could be emerging as an option, but in the meantime, consider Sun Communities (NYSE: SUI), a REIT that owns and operates or has an interest in 426 manufactured housing and recreational vehicle communities in 33 states and Ontario, Canada.
Sun Communities has been around since 1975, and while its current yield of 4.27% does trail the residential REIT average of 5.97%, it's still pretty respectable. Its stock as of Sept. 1 was trading at about $150 a share after plunging to about $94 in March from a 52-week high of about $173 in February.
Their second-quarter payout ratio was only 70%, too, giving it room to grow there, and it has been investing significantly in new communities and sites.
A Sun Communities investment would be putting a stake in the affordable housing market simply by the types of property the REIT owns and manages.
5. Cannabis and Innovative Industrial Properties
You can legally smoke pot recreationally now in 11 states, and medical marijuana is legal in 33. That number is likely to grow regardless of who's in the White House. The very real threat of federal involvement, though, may be holding back the industry's growth, but if the Democrats take the White House, it might take off like the legal bar business after Prohibition.
One piece of evidence for that: The Democratic-controlled House recently approved an appropriations amendment that would protect states with legal marijuana from federal interference. That's happened regularly since 2014, in fact.
Of course, it would have to make it through the Senate, but even without codifying that lenience, commercial real estate investors might feel more comfortable knowing the Justice Department just doesn't care like it has notably under, for instance, Jeff Sessions.
Further codifying that protection into law would also help ease regulatory concern from financial institutions now reluctant to provide banking services to the trade.
All in all: If you think Biden will win, a REIT to consider here is Innovative Industrial Properties (NYSE: IIPR). This trust relies on long-term leases to companies that grow and process legal marijuana. Annual rental increases have typically been around 3.25%.
IIPR currently yields 4.27%, compared with an average of 2.92% among industrial REITs, even with all the uncertainty and limitations around its niche. Put that in your pipe and smoke it.