Real estate investment trusts, or REITs, aren't commonly thought of as "growth stocks." And there's a good reason -- REITs are generally designed to produce steady growth and income with limited volatility.
However, that's not to say some REITs don't have tremendous room to grow over time. In fact, it's not uncommon for REITs to average market-beating total returns over long time periods, and when it happens, aggressive growth is often a contributing factor.
With that in mind, here are five REITs with large market opportunities that could grow to several times their current sizes over time.
STORE Capital (NYSE: STOR) is a net lease REIT with about 2,700 properties, most of which are single-tenant properties occupied by retail, service, or manufacturing businesses. The company has a market cap of $9.6 billion as of this writing, which is a pretty impressive accomplishment considering it has only been in business since late 2014.
However, there could be tons of room to grow. While the portfolio might sound huge, STORE's management estimates that there are over 2 million properties in its investable universe with a total market value of $3.9 trillion.
Physicians Realty Trust
Physicians Realty Trust (NYSE: DOC) is a medical-office REIT and has proven to be one of the most resilient REITs in the market throughout the COVID-19 pandemic. After all, healthcare is one of the most essential businesses there is.
Not only is medical office REIT rather recession-proof, but it is also a massive market opportunity, and most medical office properties in existence aren't yet REIT-owned. In an interview with CEO John Thomas, he told me that the company (whose current market cap is just over $4 billion) sees an opportunity of $250 billion to $300 billion worth of properties in its investable universe.
EPR Properties (NYSE: EPR) is an experiential REIT that owns a portfolio of movie theaters, waterparks, ski resorts, family entertainment centers, and more. The company currently owns 357 properties and has a market cap of $3.6 billion.
Obviously, this is a REIT that was severely disrupted by the COVID-19 pandemic, as all of its properties rely on people choosing to go to places where other people are gathered. However, the worst of the pandemic's effects are in the rearview mirror, and EPR Properties is ready to get back into growth mode. The company has over $1.5 billion in liquidity and sees a $100 billion investable universe, so the next few years could get very interesting.
Healthpeak Properties (NYSE: PEAK) is a healthcare REIT that specializes in three different types of properties: life science, medical offices, and continuing-care retirement communities. All have large addressable markets and should have long-tailed demand growth for decades to come.
The healthcare real estate market in general is highly fragmented and is in the early stages of REIT consolidation. In fact, of the $1.1 trillion in existing healthcare real estate, only about 15% is owned by public REITs. That's a big market opportunity and is in addition to any future demand for new properties.
Ryman Hospitality Properties
Ryman Hospitality Properties (NYSE: RHP) is a hospitality REIT with two main business segments. One segment is its hotel business, which owns five large-scale hotels under the Gaylord brand name, all of which focus on group events. In fact, the four largest hotels in the U.S. by meeting space are Gaylord properties.
The other segment is entertainment, which owns iconic venues such as the Grand Ole Opry and Ryman Auditorium, as well as the growing Ole Red restaurant chain.
Both segments have tons of room to grow. Many other hotel REITs own 100 properties or more, and Ryman's recent booking data suggests that there's a ton of demand for group events, and the company is just scratching the surface when it comes to its entertainment-based restaurant concept.
It isn't going to happen overnight
As a final thought, it's worth emphasizing that I'm suggesting these REITs have tremendous growth potential over the long term. They aren't going to double in size in a year or two, but over time they could certainly get pretty massive. Keep the long term in mind when considering any of these.