6-8% Yields: Deeply Discounted REITs To Buy In June 2024

seekingalpha06-27

REITs have been one of the worst-performing sectors over the past several years.However, the fundamental performance of many REITs has been quite strong over this same period.This has created some ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n6-8% Yields: Deeply Discounted REITs To Buy In June 2024\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-27 19:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4701276-6-8-percent-yields-deeply-discounted-reits-to-buy-in-june-2024><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>REITs have been one of the worst-performing sectors over the past several years.However, the fundamental performance of many REITs has been quite strong over this same period.This has created some ...</p>\n\n<a href=\"https://seekingalpha.com/article/4701276-6-8-percent-yields-deeply-discounted-reits-to-buy-in-june-2024\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4080","symbol_name":"零售业房地产投资信托","start_time":0,"source_url":"https://seekingalpha.com/article/4701276-6-8-percent-yields-deeply-discounted-reits-to-buy-in-june-2024","article_id":"2446539031","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1289941019/image_1289941019.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2446539031","pubTimestamp":1719486300,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"REITs have been one of the worst-performing sectors over the past several years.However, the fundamental performance of many REITs has been quite strong over this same period.This has created some hig","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4080":"零售业房地产投资信托","VNQ":"不动产信托指数ETF-Vanguard","CFA.SI":"NikkoAM-STC Asia REIT","EPR":"EPR不动产","BK4234":"特殊用途房地产信托","BK4084":"特种房地产投资信托","BK4160":"多样化房地产投资信托v","BK4231":"零售房地产信托","BK4585":"ETF&股票定投概念","O":"Realty Income Corp","WPC":"W. P. Carey Inc","BK4588":"碎股","CFA":"VictoryShares US 500 Volatility Wtd ETF"},"translate_title":"6-8%收益率：2024年6月购买大幅折扣的REITs","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WPC":1,"VNQ":1,"CFA":1,"CFA.SI":1,"EPR":1,"O":1,"US2Y.BOND":0.64,"US7Y.BOND":0.64,"US6M.BOND":0.64,"US5Y.BOND":0.64,"US3Y.BOND":0.64,"US30Y.BOND":0.64,"US12M.BOND":0.64,"US10Y.BOND":0.64,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"REITs have been one of the worst-performing sectors over the past several years.However, the fundamental performance of many REITs has been quite strong over this same period.This has created some highly compelling opportunities in the sector right now.In this article, I share three of some of the most compelling opportunities in the sector.   z1bREITs (VNQ) have been one of the weakest-performing sectors since the Federal Reserve started raising interest rates aggressively in 2022. Over that period, they have delivered a -21.53% total return, indicating they are still in a bear market. In contrast, the S&P 500 has delivered a 19.24% total return over the same period. Data by YChartsHowever, many REITs are performing well on a fundamental basis. Occupancy levels remain strong, balance sheets are in good shape with fairly low leverage ratios, and rents are growing. Few have had to cut their dividends, and even many of those that have are now in strong positions for solid growth moving forward. For these reasons, I believe REITs are one of the most opportunistic sectors to allocate capital to right now. This article will discuss three REITs in particular that are well-positioned for the current environment, unjustifiably beaten down by the market, and likely to deliver attractive risk-adjusted total returns moving forward. #1. W. P. Carey (WPC) W. P. Carey is a triple net lease REIT that is highly diversified by geography, tenant, property type, and tenant industry. It has significant exposure to both the United States and Europe, providing geographic diversification and access to different debt markets. It has an investment-grade balance sheet and generates very stable cash flows due to its long-term triple net leases with contractual rent bumps. W. P. Carey boasts 1,282 properties and 335 tenants, making it extremely well-diversified and resilient against individual tenant challenges. Additionally, 54% of its rent comes from leases with CPI-linked rent escalators, making it resilient in a high-inflation environment. Its weighted average lease term is 12.2 years, and it has a 99.1% occupancy rate, implying significant cash flow visibility well into the future. W. P. Carey has been increasingly growing its industrial warehouse allocation, which now stands at 63% and continues to grow. Furthermore, 22% of its portfolio is allocated to defensive retail, and it has minimal office exposure while also having meaningful exposure to self-storage properties. W. P. Carey has a BBB+ credit rating from S&P, a 61% equity capitalization, and $2.8 billion in liquidity, giving it plenty of financial flexibility to weather any headwinds that may come its way moving forward. Additionally, it is very attractively priced, as it trades at a 6.3% forward dividend yield and a low price-to-AFFO ratio of 11.66 times, compared to its three-year average of 14.14 times. Despite shedding office assets and increasing its industrial warehouse properties, it trades at a 4% discount to its NAV compared to historically trading at a 10% premium. This indicates a significant margin of safety for the stock at current prices. Meanwhile, analysts expect its dividend to grow at a 5% CAGR through 2027, thanks to its robust growth pipeline and solid organic growth. #2. EPR Properties (EPR) EPR Properties has a higher risk profile than WPC due to its 37% portfolio concentration in theaters and 24% in eat-and-play locations like Top Golf. However, it is diversifying away from theaters by selling assets and recycling capital into other asset types. Additionally, investors are compensated for the additional risk with an 8.3% dividend yield - which was recently increased by over 4% - and an 18% discount to its NAV. On top of that, EPR Properties trades at an attractive 8.46 times price-to-AFFO ratio, despite its three-year average being 10 times, its five-year average being 11.5 times, and its 10-year average being 12.6 times. Meanwhile, its portfolio is performing well, with 99% occupancy, a 12-year weighted average lease term, and annual rent escalators of 1.5 to 2%. Additionally, despite the market being concerned about its large theater exposure, it is important to keep in mind that EPR owns some of the most profitable theaters in North America, generating 8% of North American box office revenues with only 3% of its theaters. EPR's balance sheet is also in decent shape as it has a BBB- credit rating from S&P with a stable outlook, few debt maturities this year, a weighted average debt term to maturity of four years, and over $1 billion in total liquidity. Moreover, its AFFO payout ratio is just 75%, indicating a well-covered dividend. Analysts expect the company to grow its dividend at a low single-digit rate along with its AFFO per share. When combined with a high likelihood of valuation multiple expansion as it diversifies away from theaters as well as its 8.3% dividend yield, it has a strong probability of generating double-digit annualized total returns and potentially even 20% annualized returns, depending on if/how much the market drives up its valuation multiple. #3. Realty Income (O) Realty Income is another triple net lease REIT, focusing primarily on essential retail properties instead of the industrial/warehouse focus of WPC or the experiential property focus of EPR. It has an impressive long-term track record, growing its dividend for 30 consecutive years at a 4.3% CAGR, and delivering market-crushing double-digit annualized total returns of 13.6% since its 1994 listing. Management believes its 6% dividend yield can combine with 2% internally generated FFO from contractual rent bumps and reinvested retained cash flow, as well as an additional 2 to 3% annually by issuing equity and combining it with attractively priced debt and reinvesting it in new property acquisitions at an attractive spread. This means that - ignoring valuation multiple changes - O is poised to deliver an 8% annualized total return without any externally funded growth, with the potential for 10 to 11% returns with growth. However, there could also very possibly be some valuation multiple expansion as Realty Income is attractively priced with a 12.55 times price-to-AFFO multiple, compared to its three-year average of 15.87 times and its 10-year average of 18 times. Additionally, it trades at a 7% discount to its NAV, versus a three-year average of trading at 1.1 times, a five-year average of 1.17 times, and a 10-year average of 1.2 times its NAV. With an A- credit rating, 36% of its rent from investment-grade clients, and 90% of its total rent considered resilient to economic downturns, Realty Income is well-positioned to weather any challenges that come its way while delivering a dependable and attractive dividend to its shareholders. Investor Takeaway   There are significant opportunities in the REIT sector right now, as demonstrated by the attractive valuations and strong fundamentals of the REITs discussed in this article. While my favorite of these three is W. P. Carey - and it is the only one of these three that I'm currently buying since I like the happy medium of risk and return that it provides relative to O and EPR - EPR Properties is compelling for more aggressive investors with a bullish outlook on the economy and Realty Income is a solid pick for retirees who prioritize safety and a strong track record while still seeking a solid yield and total return potential.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2446539031"}