In this article, we discuss 12 best REIT stocks to buy now. If you want to skip our detailed discussion on the real estate industry, head directly to 5 Best REIT Stocks To Buy Right Now.
Global markets are facing a dilemma caused by significantly higher borrowing expenses, which seem likely to remain high, alongside a scarcity of homes leading to inflated property prices. This situation has resulted in increasing housing affordability issues in many regions. Property owners with loans subject to readjustment are experiencing growing financial pressure. In the US, where 30-year mortgages are common, the housing market is at a standstill. People with low-rate mortgages are hesitant to sell, and buyers are finding it difficult to make purchases. Similarly, as per Bloomberg, house values have not dropped much in places like New Zealand and Canada, leaving some buyers who paid high prices struggling with larger loan payments. Landlords in different countries, from the UK to South Korea, are also facing challenges. Higher interest rates are making it harder to build new properties in several locations.
Mark Zandi, chief economist at Moody’s Analytics, anticipates that US 30-year mortgage rates, currently around 7.4%, will likely average about 5.5% over the next decade, compared to the low of 2.65% in early 2021. He predicts a similar increase in most other developed countries, although the specific levels may differ. He said:
“The golden age of single-family housing is behind us. If you bought in the wake of the financial crisis, you built up a lot of equity in most parts of the world, but the next 10 years is going to be more of a slog.”
Last year, the real estate industry aimed to weather risks and set up for a period of lasting growth and better returns. However, this year, industry leaders interviewed by PwC are confronting a new reality. They no longer anticipate a complete return to pre-pandemic norms. Instead, they are acknowledging that many individuals may not return to the office as frequently or at all. This shift poses implications not just for office owners, managers, and brokers but also for downtown areas and other property sectors reliant on a strong office market. Moreover, there is a prevailing acceptance in the industry that interest rates will likely remain elevated for at least the upcoming year, or potentially longer. Even positive news, like increased investor interest in acquiring new assets, is overshadowed by disappointing sector statistics. For instance, despite available funding, real estate transactions have decreased. Many attribute this decline to disagreements between buyers and sellers over pricing due to limited sales, hindering price clarity. However, amidst these challenges, respondents in PwC’s ‘Emerging Trends’ survey anticipate that the worst of inflation might be in the past, possibly giving the Federal Reserve cause to stop interest rate hikes.
On October 7, in an interview with Fox Business, Redfin CEO Glenn Kelman responded to the state of the U.S. real estate market, cautioning prospective homebuyers that any relief from the extremely challenging economic conditions might not be guaranteed in 2024. He stated:
"You'll have to ask the Fed when the market's going to get better, because it seems very unlikely that interest rates will ease by the end of this year. So, the only real question is whether we're going to catch a break entering the home buying season of 2024. But I think most people have written off the 2023 home buying season."
Despite ongoing concerns, global economies are holding up reasonably well, showing some clearer areas amid persistent uncertainties, according to Deloitte. Heading into 2024, the global economy faces multiple challenges. Yet, early responses to banking troubles in 2023, strong consumer demand, and steady energy and food prices have provided some stability. The global real estate industry sees an opportunity to strengthen its foundations in 2024. Different factors, such as changes in work patterns due to pandemic recovery and recent uncertainties in global affairs and financial markets, make the year ahead crucial for real estate firms. With mixed signals about the industry's health, real estate leaders may need to navigate uncertainties while reshaping future ownership and investment strategies. The next 12 to 18 months are pivotal for real estate firms to adapt, requiring crucial insights and strategic changes, some differing from current practices.
Even though the industry is facing headwinds currently, elite hedge funds have been piling into REIT stocks, some of which include American Tower Corporation (NYSE:AMT), Prologis, Inc. (NYSE:PLD), and Crown Castle Inc. (NYSE:CCI).
Our Methodology
We chose the top REIT stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the third quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
A skyline shot of a bustling city, showcasing the many business centers leased by the REIT.
12. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 27
AvalonBay Communities, Inc. (NYSE:AVB) is a real estate investment trust focused on developing, revamping, acquiring, and managing apartment communities in prominent metropolitan areas. On November 16, AvalonBay Communities, Inc. (NYSE:AVB) declared a $1.65 per share quarterly dividend, in-line with previous. The dividend is to be paid on January 16 to shareholders of record as of December 29.
According to Insider Monkey’s third quarter database, 27 hedge funds were bullish on AvalonBay Communities, Inc. (NYSE:AVB), same as the previous quarter. Greg Poole’s Echo Street Capital Management held the largest position in the company, with 1.35 million shares worth $231.22 million.
In addition to American Tower Corporation (NYSE:AMT), Prologis, Inc. (NYSE:PLD), and Crown Castle Inc. (NYSE:CCI), AvalonBay Communities, Inc. (NYSE:AVB) is one of the best REIT stocks to buy.
Here is what Baron Real Estate Income Fund has to say about AvalonBay Communities, Inc. (NYSE:AVB) in its Q2 2023 investor letter:
“In the third quarter, we maintained our exposure to apartment REIT AvalonBay Communities, Inc. (NYSE:AVB). We believe public valuations remain discounted relative to the private market. Tenant demand remains healthy and rent growth has modestly improved since the first quarter of 2023. Rental apartments continue to benefit from the current homeownership affordability challenges. Multi-family REITs provide partial inflation protection to offset rising costs due to leases that can be reset at higher rents, in some cases, annually. We continue to closely monitor new supply deliveries and job losses in key geographic markets.”
11. Agree Realty Corporation (NYSE:ADC)
Number of Hedge Fund Holders: 28
Agree Realty Corporation (NYSE:ADC) is a publicly traded real estate investment trust that is reshaping the retail landscape by acquiring and building properties leased to top-tier retail tenants with strong online and offline presence. It is one of the best REIT stocks to buy. On November 9, Agree Realty Corporation (NYSE:ADC) declared a $0.247 per share monthly dividend, in-line with previous. It is to be paid on December 14 to shareholders of record as of November 30.
According to Insider Monkey’s third quarter database, 28 hedge funds were bullish on Agree Realty Corporation (NYSE:ADC), compared to 29 funds in the preceding quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest position holder in the company, with 1.35 million shares worth $74.8 million.
10. Healthpeak Properties, Inc. (NYSE:PEAK)
Number of Hedge Fund Holders: 29
Healthpeak Properties, Inc. (NYSE:PEAK) is a real estate investment trust that is part of the S&P 500 index. Ranked 10th on our list of the best REIT stocks, it is a fully integrated company focusing on owning, managing, and developing top-tier real estate properties specifically designed for healthcare purposes, including research and healthcare services. On October 30, Healthpeak Properties, Inc. (NYSE:PEAK) and Physicians Realty Trust (NYSE:DOC) made public their decision to merge through an all-stock merger of equals valued at $21 billion.
According to Insider Monkey’s third quarter database, 29 hedge funds were bullish on Healthpeak Properties, Inc. (NYSE:PEAK), in contrast to the prior quarter when 36 funds had invested in the stock.
9. First Industrial Realty Trust, Inc. (NYSE:FR)
Number of Hedge Fund Holders: 30
Ranked among the best REIT stocks, First Industrial Realty Trust, Inc. (NYSE:FR) is a prominent owner, operator, developer, and purchaser of logistics properties solely within the United States. They offer top-notch facilities and excellent customer service to multinational corporations and local businesses, crucial for their supply chains, using an integrated operational and investment approach. First Industrial Realty Trust, Inc. (NYSE:FR)’s focus lies in 15 metropolitan areas, specifically in supply-constrained markets located along the coasts.
On November 1, First Industrial Realty Trust, Inc. (NYSE:FR) declared a $0.32 per share quarterly dividend, in-line with previous. It is to be paid on January 16 to shareholders of record as of December 29.
According to Insider Monkey’s third quarter database, 30 hedge funds were bullish on First Industrial Realty Trust, Inc. (NYSE:FR), up from 24 funds in the previous quarter. Benjamin Pass’ TOMS Capital is the largest shareholder of the company, with 1.6 million shares valued at approximately $76.76 million.
Here is what Baron Real Estate Income Fund has to say about First Industrial Realty Trust, Inc. (NYSE:FR) in its Q3 2023 investor letter:
“Though we expect rent growth to moderate from its frenzied pace of the last few years, we remain optimistic about the long-term prospects for industrial REITs. With industrial vacancies at less than 4%, new supply expected to moderate in 2024, rents on in-place leases more than 50% below market, and multi-faceted demand drivers including the ongoing growth in e-commerce and companies seeking to improve inventory supply-chain resiliency by carrying more inventory (shift from just in time to just in case inventory), we believe our investments in industrial warehouse REITs like First Industrial Realty Trust, Inc. have compelling multi-year cash-flow growth runways.”
8. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 31
Founded in 1975, Sun Communities, Inc. (NYSE:SUI) transitioned to a publicly traded company in December 1993. It functions as a fully integrated real estate investment trust. The company possesses, manages, or holds stakes in a portfolio of manufactured housing, recreational vehicle, and marina properties. These properties are situated across the United States, the United Kingdom, and Canada. Sun Communities, Inc. (NYSE:SUI) is one of the best REIT stocks to buy.
On October 26, Sun Communities, Inc. (NYSE:SUI) reported a Q3 FFO of $2.57 and a revenue of $983.2 million, outperforming Wall Street estimates by $0.06 and $45.98 million, respectively.
As per Insider Monkey’s third quarter database, 31 hedge funds were bullish on Sun Communities, Inc. (NYSE:SUI), compared to 30 funds in the last quarter. Greg Poole’s Echo Street Capital Management held the top position in the company, with 915,942 shares worth $108.4 million.
Third Avenue Real Estate Value Fund made the following comment about Sun Communities, Inc. (NYSE:SUI) in its second quarter 2023 investor letter:
“The Fund had the opportunity to initiate a position in the common stock of Sun Communities, Inc. (NYSE:SUI) during the quarter, as its recent divergence created a rare price-to-value disconnect in Fund Management’s opinion.
Founded by the Shiffman family in the mid 1970’s, Sun Communities Inc. (“Sun”) has been publicly-traded since 1993, and meaningfully expanded its platform over the past 40 years. In fact, Sun is now the largest single owner of Manufactured Housing and Recreational Vehicle communities in North America, with more than 500 properties comprising nearly 150,000 leasable sites, and a particular focus on the Sunbelt and Midwest regions of the U.S. The company is also the largest owner of marinas in the U.S. with 135 locations and nearly 50,000 slips, as well as investments in the MH and RV space internationally, primarily through its wholly-owned subsidiary Park Holidays in the U.K. and 10% stake in separately-listed Ingenia Communities in Australia (also held in the Fund)…”
7. SBA Communications Corporation (NASDAQ:SBAC)
Number of Hedge Fund Holders: 32
SBA Communications Corporation (NASDAQ:SBAC) stands as a leading independent owner and operator of wireless communications infrastructure, which includes towers, buildings, rooftops, distributed antenna systems, and small cells. With a presence in 16 markets across the Americas, Africa, and the Philippines, the company manages a massive portfolio of communications sites. It is among the best REIT stocks to invest in.
On November 2, SBA Communications Corporation (NASDAQ:SBAC) declared a $0.85 per share quarterly dividend, in-line with previous.The dividend is to be paid on December 14 to shareholders of record as of November 16.
According to Insider Monkey’s third quarter database, 32 hedge funds were bullish on SBA Communications Corporation (NASDAQ:SBAC), compared to the preceding quarter when 42 funds had invested in the stock. Ken Griffin’s Citadel Investment Group is the leading position holder in the company, with 1.3 million shares valued at $262.64 million.
Baron Asset Fund made the following comment about SBA Communications Corporation (NASDAQ:SBAC) in its Q3 2023 investor letter:
“We reduced our stake in long-term holding SBA Communications Corporation (NASDAQ:SBAC), which owns and operates cellular towers, on concerns that higher interest rates will increase its debt servicing costs and indications that its primary customers will spend less on upgrading their cellular networks.”
6. Camden Property Trust (NYSE:CPT)
Number of Hedge Fund Holders: 32
Camden Property Trust (NYSE:CPT) operates as a real estate company focused on multifamily apartment communities. The company is involved in owning, managing, developing, acquiring, and building these communities. On October 26, Camden Property Trust (NYSE:CPT) announced a Q3 FFO of $1.73 and a revenue of $390.78 million, both in-line with Wall Street estimates.
According to Insider Monkey’s third quarter database, 32 hedge funds were bullish on Camden Property Trust (NYSE:CPT), an increase from 28 funds in the prior quarter. John Khoury’s Long Pond Capital held the largest position in the company, with 1.77 million shares valued at $167.53 million.
Like American Tower Corporation (NYSE:AMT), Prologis, Inc. (NYSE:PLD), and Crown Castle Inc. (NYSE:CCI), Camden Property Trust (NYSE:CPT) is one of the best REIT stocks to buy.
Here is what Baron Real Estate Income Fund has to say about Camden Property Trust (NYSE:CPT) in its Q2 2022 investor letter:
“The Fund’s multi-family REIT Camden Property Trust (NYSE:CPT) has been generating strong occupancy, rent, and cash flow growth. We expect in-place rents, which remain below market rents, to be a source of ongoing strong cash flow growth in the near term. We also expect rental apartments to continue to benefit from homeownership affordability challenges. Currently, the Fund’s investments in multi-family REITs provide partial inflation protection to offset rising costs due to leases that can be reset at higher rents, in some cases, annually. Valuations are attractive at 5% capitalization rates and remain at discounts to recent private market multi-family transactions which have been valued at high 3% to low 4% capitalization rates.”
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Disclosure: None.12 Best REIT Stocks To Buy Right Nowis originally published on Insider Monkey.
