Four Residential REITs Worth a Closer Look

Jacob Harper  |

After the 2000s, where real estate prices skyrocketed to unreal levels before crashing and nearly taking the entire economy with them, the majority of investors are understandably skittish about reinvesting in that market. After all, housing has already proven itself to be volatile and prone to the biggest of bubbles.  

Slowly but surely though, investors have begun to creep back into the market, notably through Real Estate Trusts, commonly known as REITs. REITs tend to spread out risk by holding several income-producing real estate ventures, like apartment buildings.  

Of course, like real estate investments not all REITs are created equal. But by isolating a few key metrics investors can dig up the ones with more solid foundations and hopefully find plays with a minimal amount of risk.

To find stronger REITs, we wanted to find investments that fit into these criteria:

It’s important for finance companies to have strong book value and cash, in addition to validation of these assets by the market. A floor of 1 helps assure this.

A high operating margin indicates the company is allocating capital efficiently.

This shows the REIT is using invested capital wisely.

While we trust our metrics, it certainly does not hurt to have the agreement of the experts.

After applying these criteria we found four REITs that fit the bill. It should be noted none of these REITs have provided substantial gains over the last year with two actually losing a bit of value. However, REITs are still rebounding, not to mention they tend to provide a nice dividend, and thus can be considered less growth plays and more value storage investments.

The four REITs we isolated are:

Market Cap: $3.19 billion

Price: $38.45

P/E: 55.72

Dividend: 2.6 percent

Market Cap: $5.71 billion

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Price: $152.94

P/E: 37.86

Dividend: 3.16 percent

Market Cap: $1.5 billion

Price: $23.29

P/E: 8.06

Dividend: 2.36 percent

Market Cap: $2.47 billion

Price: $45.36

P/E: 30.65

Dividend: 2.91 percent

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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