Real estate investment trusts (REITs) are an attractive option for income investors looking for higher yields than what the S&P 500 offers. REITs hav
Key Highlights :
CTO Realty Growth (CTO, 9.3%) is a diversified REIT that owns 15 retail properties, three office properties, and five mixed-use properties totaling more than 3.7 million square feet. It also owns a nearly 15% stake in Alpine Income Property Trust (PINE). CTO has dipped by more than 20% over the past year, hurt in part by being forced to lower the rents on two large leases. Occupancy across office, retail and multifamily was down year-over-year during the first quarter, but FFO improved 16% year-over-year, while same-store NOI improved 6.5%.
American Assets Trust (AAT, 6.8% yield) is another diversified REIT, this one boasting 23 properties spanning office, retail and residential. AAT has been battered, losing nearly half of its value over the past year or so.
One Liberty Properties (OLP, 8.8% yield) is a net-lease REIT that has been transforming itself over the past few years. Its 121 properties include restaurants, fitness centers, grocery-anchored real estate and office space, but it’s increasingly shifting toward industrial holdings. Bed Bath & Beyond’s bankruptcy, as well as a possible restructuring of leases with Regal Cinemas, is hanging over OLP’s head. And while OLP has an excellent yield near 9%, the payout hasn’t grown in years.
Broadstone Net Lease (BNL, 7.0% yield) is another net-lease REIT, this one focusing on single-tenant commercial properties. Its portfolio includes 801 properties, the vast majority (794) spread across 44 states, with the rest in four Canadian provinces. Despite its nearly 30% losses over the past year, things don’t look dire for this REIT, which boasts 99.4% occupancy. BNL also has a long debt leash, with less than 2% of its debt coming due through the end of 2025.
Gladstone Commercial (GOOD, 10.4%) is part of the Gladstone family of REITs, this one focused on single-tenant and anchored multi-tenant net-leased industrial and office properties. GOOD was forced to cut its dividend by 20% this year, to 10 cents per share. “Capital preservation” is a smart move for the troubled REIT, and it brought its FFO payout ratio down from 96% before to 77% now. Still, roughly $100 million worth of interest-rate caps will expire in the middle of this year, which will raise interest expenses, and it faces the longer-term problem of what WFH means for its properties.
REITs are an attractive option for income investors looking for higher yields than what the S&P 500 offers. With the anticipation of an upcoming recession, now is the perfect time to take a closer look at five potential REITs that offer massive yields: CTO Realty Growth, American Assets Trust, One Liberty Properties, Broadstone Net Lease, and Gladstone Commercial. All five of these REITs have unique advantages and challenges, so it’s important to do your own research before investing.
