VEREIT (NYSE: VER) and W.P. Carey (NYSE: WPC) are both diversified real estate investment trusts (REITs), meaning they don't specialize in one property type. Instead, they have a well-diversified portfolio among several property types. Diversified REITs like this are often a good addition to a REIT portfolio because they are generally pretty stable and less vulnerable to market challenges for any one property type.
The question, of course, is which diversified REIT is the best buy to add to your portfolio right now? We'll look at two of the largest diversified REITs that have a strong tenant mix across well-performing property sectors.
Let's take a look at W.P. Carey and VEREIT as two potential options to add to your portfolio.
VEREIT has a real estate portfolio consisting of retail, restaurant, industrial, and office that's well distributed throughout the United States. Roughly 45% of its portfolio is invested in retail, with the remaining property types taking up a pretty even share of the rest of its real estate holdings.
The majority of VEREIT's properties are net leases with many investment-grade tenants. In terms of its real estate portfolio, it is well diversified and shouldn't expect any significant revenue loss from any of its current assets.
The last few years have been pretty rocky for VEREIT, however. While it was operating under its previous name of American Realty Capital, there was an allegation that the REIT's chief financial officer and chief accounting officer manipulated a 2014 earnings report to meet their expected earnings.
The resulting lawsuit ended in a settlement in 2019, with a cost of about $1 billion to the REIT. The company raised the funds by selling roughly that amount in shares. This diluted the shares by about 9%, which was a blow to investors because the sale didn't contribute to any growth.
VEREIT's tenant mix is hard to beat, with 37% of them being investment grade. While it has more exposure in retail since it takes up almost half of its total portfolio, it has a very healthy tenant base with almost 46% of its retail tenants being investment grade and an average of nine years remaining on retail leases.