Although many REITs had a rough start a decade ago after recovering from housing market crash of 2007, most were solid enough to survive even that fiasco. These days, there are some REITs that are seeing a high like never before, and these are the same ones that soared through the crash as well. Investors that have stuck through these REITs are likely jumping for joy today—evidence that delayed gratification is always, always the better deal against instant satisfaction. If you want to jump in on the action, here are the five best REIT IPOs of the last decade.
1. First Industrial Realty Trust (FR)
When it comes to logistics real estate, First Industrial Realty Trust has been blazing the trail since it was founded in 1994. Since its beginnings, the company has worked with many Fortune 500 companies, but their portfolio is also filled with small commercial firms. First Industrial has managed to stay on top of the game because of the company’s ability to quickly adapt to change. The industry is constantly evolving, after all, and responsiveness is key to success. This industrial REIT owns a total of 783 properties and over 1,990 tenants. The average building size they offer is 89,000 square feet. Some of the more popular companies that use FR include Amazon, Lowe’s, Harbor Freight, and more. Given its industrial nature, about 75% of the company’s portfolios are bulk warehouses. FR has done tremendously well in the last decade when it comes to growing its dividend. They’re also in the position to drive further growth with more developments underway and a massive land ownership across major US markets, which add up to about 16 million square feet of land.
2. Blackstone Mortgage (BXMT)
Blackstone Mortgage is associated with the highly successful private equity investment management firm, the Blackstone Group (BX). Acquired by BX from Capital Trust, the sole purpose of Blackstone Mortgage is to focus on originating first-lien mortgages. BXMT works under an unusual sphere because it sources all of its deals from the Blackstone Group. What this means for the investor is highly essential—investing in BXMT means that you’ll also be investing in the debt associated with BX, which is some of the world’s highest quality properties. Current shares in BXMT are above the Fair Value Target of $36, and the dividend yield is currently at 6.7%. Although the dividend hasn’t seen any growth since 2016, BXMT is expected to see some increase after 2020. Still, BXMT is considered to be one of the best REIT platforms right now.
3. Sun Communities (SUI)
As the second largest player in the manufactured housing and recreational vehicle industry, Sun Communities has been in the position for growth for at least a decade now. This REIT owns and operates over 420 manufactured home communities and RV resorts throughout the US and Canada. Having been in operation since 1975, the company has capitalized on the “silver tsunami” that happened with the baby boom generation aging. The growth engines used by SUI are practical and effective. From 2% to 4% rent increases annually, expansions, and high occupancy rates, SUI’s growth has remained to be steady. In addition, SUI’s external growth is also impressive—with over $780 million in acquisitions and up to 8% yield from developments. Current shares of this REIT are a little bit rich for common taste, but investors are expecting a pull back to happen at some point—although not soon. When it does happen, it would be foolish not to take a piece of the pie.
4. Extra Space (EXR)
It may have been surprising to see a couple of decades ago, but time has proven things to be different in the self-storage industry. In the last decade alone, EXR generated returns of up to an incredible 116.7% annually. Self-storage assets seem to weather any storm that come its way, and the self-storage leader EXR has always managed to come out on top. This REIT knows exactly what it’s doing. The internal fundamentals are all in place and working cohesively towards progress. EXR has over 1,800 properties divided up into 920 properties owned, 247 JVs, and 630 managed properties. Although there’s been a recent pull back, SUI is expected to make a comeback after 2020. Current Fair Value is at $105.00, and the current SUI price is at $106.52. Yield is at 3.4% at the moment, but it’s expected to go up to 4%. This is exactly the kind of asset that will always see growth. It’s exactly the kind of asset you should be holding on to once you manage to acquire it.
5. Arbor Real Estate Trust (ABR)
With a 406.9% return in the last decade, ABR is in the position to be one of the best REITs an investor could look into. The commercial mortgage REIT stands out among its peers because of its niche lending model. The company focuses on multifamily and senior loans, both of which generate strong leveraged returns. ABR is a nationwide trust and direct lender that has loans amounting to more than $30 billion. Although the company has only been operational since 1995, ABR strives to revolutionize the industry. They’re the first real estate firm to launch a crowdfunding platform, which opens up real estate investing for a new set of investors. Shares of ABR are currently trading at the Fair Value Target of $14.19, and it seems there might be an opportunity for a pull back soon. Just last year, the shares exploded at +53.4%. However, forecasters are calling for investors to wait a little bit longer for a pull back. ABR is a good REIT to have on any portfolio. If it’s not on yours just yet, it’s worth to keep an eye out on.
Written by Allen Lee
Read more posts by Allen Lee