Top 13 real estate investment funds to own in 2021

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Introduction

Real estate provides diversification and far more income than the average market. These are 13 of the best real estate investment funds you can buy with a focus on 2021.

The effects of the COVID pandemic have made the year 2020 a difficult year for Real Estate Investment Trusts (REITs). Even with generous dividends, the real estate sector suffered a loss of 2% last year. american tower

Read Also: Top 20 Stocks to Buy for the Joe Biden Presidency

Office and retail real estate investment funds have been hit hard by the closures and work-from-home authorizations that left spaces empty and rents uncollected. 

Even this year's best REITs - the Industrial and Self-Storage industries - have been negatively affected, providing 9% and 10% of total returns in 2020 that remain behind the S&P 500.

Good news for investors? REIT returns are very generous at the start of the New Year. The Vanguard REIT ETF (VNQ) is distributing 4.2% at current prices - just under three times the wider market, and nearly four times the return on a 10-year T-note.

Better yet: With the advent of COVID vaccines signaling the ultimate end of the pandemic and REIT stocks preparing to rebound in 2021, there may not be a better time to tap into the wealth of real estate returns. crown castle

Real estate developers

1- American Tower

Market value: $ 95.5 billion

Dividend yield: 2.2%

American Tower (AMT, $ 214.19) is a leader in communications infrastructure. This REIT has a global portfolio of 181,000 cell towers, including 41,000 locations in the US, 75,000 locations in India, and locations spread across Europe, South and Central America, and Africa.

The American Tower can increase profits by increasing the number of tenants per tower. With mobile penetration increasing by 8% annually, data usage increasing by 28% annually, and the launching of 5G technology, REIT is preparing to take advantage of existing tower leases and sign new tenants.

In addition, American Tower is capitalizing on high-return international opportunities by accelerating its new construction program and making acquisitions. 

REIT is expanding in Canada this year with the acquisition of Insight Wireless Group, which owns 3,000 contact sites across the US and Canada, in a $ 3.5 billion deal that instantly accumulates money from operations (FFO, an important measure of REIT's profitability). wp carey

2 - Equity Lifestyle Properties

Market value: $ 10.9 billion

Dividend yield: 2.3%

Equity LifeStyle Properties (ELS, $ 59.62) has locations where renters locate manufactured homes, cottages, and recreational vehicles. Its 415 properties are located in the popular resort and vacation areas and boast nearly 158,000 residential locations in 33 states. 

Many of its properties offer a lake, river, or ocean frontage, and 120 of its communities are located 10 miles off the U.S. coast.

Equity LifeStyle Properties is a downsizing game for retirees of the baby boom generation, with an estimated 10,000 seniors turning 65 each day through 2030. Tenants own the units placed on-site and pay rents to REIT under contracts Rent to be renewed annually. 

This business model produced in-site income growth of an average of 4% per annum, outpacing both real estate property and overall sector growth rates.

It has also shown great resilience across business cycles, supporting an annual FFO growth of 9% and an increase in profits of 24% per year since 2006. stag industrial

3 - Americold Realty Trust

Market value: $ 8.6 billion

Dividend yield: 2.4%

COVID-related home eating trends are expanding food storage supply chains. American old (COLD, $ 34.18) stands out as a rare, general-purpose REIT that specializes in temperature-controlled warehouses. 

Americold has 185 cold storage warehouses representing 1.1 billion cubic feet of storage space across the United States, Canada, South America, and Australia.

Americold is an essential link in the farm-to-table supply chain. Its 2,600 clients include leading domestic and international food producers and distributors such as ConAgra (CAG), Unilever (UL), Kraft Heinz (KHC), Safeway, and Kroger (KR).

Contracted rental increases, occupancy growth, and improved customer mix have supported steady margin expansion and 8% annual revenue growth for Americold since 2015. 

REIT is also expanding through development and acquisition; It expects to close at least two to three major expansion/development projects each year and has more than $ 1 billion in potential investments in the pipeline already. digital realty trust

4 - Innovative Industrial Properties

Market value: $ 4.2 billion

Dividend: 2.7%

Many investors considering marijuana stocks are considering companies served by Innovative Industrial Properties (IIPR, $ 189.77).

IIPR acquires hemp growing and processing facilities leased to farmers under long-term, three-network contracts. It is the only real estate investment fund listed on the New York Stock Exchange that specializes in cannabis growers for medical use. 

As of December 2020, the REIT portfolio consists of 66 properties and 5.4 million square feet in 16 states. The remaining lease periods are long at 16.1 years, and its property is 99.3% leased.

Medical cannabis is a $ 12.4 billion industry that is expected to nearly triple to $ 34 billion by 2025. Medical cannabis is used to treat a variety of medical conditions, and is already legal in 35 states, and is expected to be legalized in all 50 states Within the next four years.

New tenants and properties will drive growth in the future. REIT acquired real estate in Massachusetts and Washington during the month of December and signed multi-state cannabis growing company 4Front as a new tenant. 

Analysts are forecasting a 2021 FFO per share of 60% growth for the REIT, which could lead to similar-sized earnings growth over the next year.

5 - Digital Realty

Market value: $ 37.4 billion

Dividend yield: 3.4%

Digital Realty (DLR, $ 133.45) is a leading global data center providing REIT services to clients across the fields of ICT, social networking, financial services, and manufacturing, healthcare, and consumer products.

It is one of the largest American real estate investment funds overall. It is on its way to becoming an aristocrat with a dividend system thanks to its 15-year dividend growth chain. Given its field of operation, it could be one of the best real estate investment funds for 2021 and beyond.

Digital Realty is the largest data center real estate operator in the market by the number of properties owned. Across 23 countries on six continents, its presence consists of 284 data facilities.

So far, in its fiscal year, the REIT has produced three consecutive quarters of positive FFO surprises and raised its full-year guidance to $ 6.10 to $ 6.15 per share, easily covering a dividend of $ 4.48. Profit growth has averaged 5.7% per year for the past five years. realty income

6 - CubeSmart

Market value: $ 6.6 billion

Dividend yield: 4.0%

With 1,260 properties nationwide, CubeSmart (CUBE, $ 33.81) ranks among the top three self-stocking mutual funds in the United States. Third parties.

The company derives approximately 70% of its revenue from major urban markets such as New York, Miami, Chicago, and Dallas.

The self-storage industry represents some of the best REITs across economic cycles, with average returns for 10 years of 17% per year because of a more diversified tenant base, higher margins, and short-term rentals that allow for frequent re-pricing. 

CubeSmart was a top performer based on the store's own revenue, income, margins, and FFO growth consistently outpacing its peers.

Over the past five years, CUBE has grown its FFO by nearly 8% annually, and its dividend yield is 10% while maintaining an investment-grade balance sheet and expanding its real estate portfolio by more than $ 1.6 billion through acquisitions and developments.

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7 - American Campus Communities

Market value: $ 5.9 billion

Dividend: 4.5%

Campus Communities of America (ACC, $ 43.10) is the largest owner/manager of student housing in the nation, at 204 properties with nearly 140,000 beds in the 69 U.S. markets.

American Campus Communities and/or develops student residences near universities that compete in the best nationally ranked sports conferences or have Ph.D. programs that generate robust research activity. 

Almost all of its properties are within walking distance of the main campus.

Student real estate housing funds are taking advantage of opportunities for consolidation in a highly fragmented industry and a growing trend by colleges to outsource student housing to third parties to free up capital and improve quality.

Admittedly, the money growth from operations at ACC was negligible because it was rearranging its portfolio, dumping non-core assets, and replacing those new developments that had not yet started to generate strong rental income. 

But REIT expects to return to stronger growth with the Pursue Growth 2030 plan, which focuses on acquisitions funded through joint ventures and expansion of management fees from third-party properties.

8 - STORE Capital

Market value: $ 8.2 billion

Dividend yield: 4.7%

STORE Capital (STOR, $ 30.99) is the first of many “net lease” operators among the 2021 Best Real Estate Investment Trusts. The name stems from a business model where REIT collects only rent - tenants are responsible for taxes, maintenance, and insurance.

STORE boasts a diverse portfolio of nearly 2,600 rental properties to more than 500 tenants in 110 industries and 49 states. 

Single-tenant properties are rented primarily for chain restaurants, early childhood education facilities, health clubs, furniture stores, and auto service centers. 

In addition to other retailers and even some manufacturing industries. As of September 30, its portfolio is leased at 99.6%.

This fast-growing REIT has added approximately 14 new customers and 70 properties each quarter, with repeat customers accounting for a third of the new business. 

While the pandemic caused FFO declines for 2020, rental groups began to improve in the September quarter, putting STORE Capital into the 2021 FFO recovery as the US economy strengthened.

The average annual net income growth of the Real Estate Investment Fund has reached 16% since the 2015 IPO, and dividends have increased by more than 7% annually. The modest 70% yield from an FFO provides ample room for more rises over time.

9 - STAG Industrial

Market value: $ 4.5 billion

Dividend yield: 4.8%

STAG Industrial (STAG, $ 30.40) invests in warehouses across the country and has been a major recipient of e-commerce trends. 

The largest real estate investment fund tenant is Amazon.com (AMZN), and nearly 40% of its portfolio is leased to e-commerce tenants. As of September 30, STAG Industrial had 462 warehouses that account for 92.3 million square feet of leasable space.

The growth of the store's own net operating income (NOI), which averaged 1% over the past five years, was helped by slight increases in annual rent. It expects growth to accelerate to 2% to 3% annually through 2025. 

In addition, the acquisition activity, which has averaged $ 675 million per year in the past, is expected to rise to a range between $ 800 million and $ 1 billion in the future.

Overall, analysts are forecasting a 4% to 5% annual growth in FFO over the next several years.

STAG is one of the few monthly dividend stocks - one well supported by cash flow from long-term leases, with less than 25% of leases expiring through 2022. 

A solid balance sheet shows debt at only 25% of equity and only 12% of the debt due through 2022 gives STAG the flexibility to increase its payments.

10 - Realty Income

Market value: $ 20.9 billion

Dividend yield: 4.9%

Realty Income (O, $ 57.83) is a trusted net worth retail leasing fund that owns approximately 6,600 rental retail properties to nearly 600 tenants in 51 industries. 

Its top tenants - including Walgreens (WBA), 7-Eleven, Dollar General (DG), FedEx (FDX), and Dollar Tree (DLTR) - are recession-proof businesses. 

Bear in mind that despite COVID and the recession, Realty Income grew its FFO rate of 4% during the first nine months of 2020.

The real estate company also managed to increase its payments in each of those three quarters, closing $ 1.3 billion in acquisitions and maintaining a conservative balance sheet, no less.

Portfolio occupancy improved to 98.6% in the September quarter and never fell below 96%. REIT contracted rental groups rose to 93.6% in November and are on track to improve further in 2021 if the economy recovers.

11 - Physicians Realty Trust

Market value: $ 3.7 billion

Dividend yield: 5.2%

Physicians Realty Trust (DOC, $ 17.66) is a healthcare fund focused on medical office space that is leased out to national and regional healthcare networks. The REIT portfolio consists of 269 properties valued at $ 4.9 billion and is spread across 31 states. 

As of September 30, its portfolio was 96% leased, and Healthcare Network tenants account for 89% of the leased space.

Of the healthcare real estate investment trusts, Physicians Realty offers the highest proportion of investment-grade tenants, as well as the most facilities located off-campus. 

Location matters: Patients and service providers increasingly prefer to provide health care from outpatient facilities.

This trend has accelerated during the pandemic, too. In a recent survey, 77% of patients said they would prefer to visit doctors' offices and clinics that are not located on the hospital campus.

Although pandemic shutdowns tempered growth in 2020, Physicians Realty has grown revenues by 32% and profits from continuing operations by 60% annually over the past five years. The REIT forecast began to improve in the September quarter as rental volume returned to pre-pandemic levels and 98.4% of rents were collected.

12 - W.P. Carey

Market value: $ 11.7 billion

Dividend yield: 6.3%

W. Carey (WPC, $ 66.61) is the world's largest diversified rental fund. The company has 1,215 single-tenant properties totaling 142 million square feet that are leased to more than 350 tenants across the United States and Europe. 

W. Carey's portfolio mainly consists of industrial, warehouse, office, retail, and self-storage space.

The Real Estate Investment Fund (REIT) integrates growth by an annual rent increase of 1.6% in 99% of leases and flexibility through occupancy of an average of 99% and an average remaining lease term of 10.6 years. 

Top WPC tenants are household names like U-Haul and Extra Space Storage (EXR) in the US, Pendragon car dealerships in the UK, and Hellweg DIY stores in Germany.

Given the diversity and low exposure of its retail portfolio, W.P. Carey collected nearly 99% of rentals contracted in 2020 despite the pandemic. REIT also boasts an investment-grade balance sheet. 

At the end of the September quarter, and. Carey had $ 1.6 billion on its credit facility after closing nearly $ 1 billion in real estate acquisitions during 2020.

13 - Iron Mountain

Market value: $ 8.7 billion

Dividend yield: 8.7%

Iron Mountain (IRM, $ 30.19) is the highest of 2021 REIT Picks, and as you might imagine, it's a game of transformation.

REIT is shifting its business from storing and slicing physical records to storing data with a much higher margin. 

Iron Mountain has 1,450 storage facilities in 50 countries and stores documents and data for more than 225,000 customers worldwide, including 95% of Fortune 1000 companies. digital realty trust dlr

Iron Mountain takes advantage of its 98% high customer retention rate through data storage cross-sell to its existing customers. This segment is expected to grow to 10% EBITDA in 2020, supporting revenue diversification and enhancing margins.

In addition to improving the business mix, the REIT has a program in place to reduce expenditures and is expected to achieve annual cost savings of $ 375 million by 2022. reits