Real estate investment trusts, or REITs, are a way for investors in the general public to diversify their portfolio without actually having to go in on income-producing property.
There are numerous REITs on the public market, and retail investors can snag shares as they please. These real estate portfolios have proven themselves to be diversified and durable, ultimately making them a popular investment for gung-ho traders who may retain some aversion to the level of risk that's typically associated with individual stock picking.
Different types of REITs to choose from
Not all REITs are created equal. Publicly traded REITs, which operate similar to exchange-traded funds (ETFs), are just one slice of the pie. Other options include public non-traded REITs (which are SEC-registered but not available on any exchange) and private REITs.
There are also equity, mortgage, and hybrid REITs. Equity REITs own underlying real estate while mortgage REITs (or mREITs) carry property-backed debt securities.
Find Brandywine Realty Trust on the public market
Brandywine Realty Trust (BDN) shares were trading at $11.90 on Jan. 19. The stock has lost about a quarter of its value in the last 12 months, but its potential for growth means BDN could be a buy. After all, the trust does have a self-reported $5 billion market cap with $2.6 billion in development.
Brandywine Realty takes a broad approach to real estate, and its emphasis on development could be a good thing as an infrastructure-happy Democratic administration leads the White House.
Power REIT performs well, all things considered
If you are looking for an entry point into $PW today is the day as it's down 15%. There is a widespread misunderstanding that $IIPR and Power REIT will somehow suffer with federal legalization. it's 100% false - they have federal legalization clauses built into the leases.— MJ Stock Trader (@stock_mj) January 14, 2021
Power REIT, or "PW" on the NYSE American, has moved in the right direction over the past year. With a smaller market cap of $65.05 million, shares have increased in value by nearly 300 percent over the last 12 months.
Power REIT focuses on three industries:
- Controlled environment agriculture (greenhouses)
- Solar farm land
This could be a useful addition to an impact or ESG-oriented portfolio.
Equinix proves lucrative in the long term
Equinix Inc., "EQIX" on the Nasdaq Exchange, sees more volatility in the short term but overall long-term growth. Shares were up 21.29 percent in the last year, but 140.91 percent in the last five years.
Equinix is different from the average REIT due to its emphasis on data center real estate. This could help diversify a retail investor's portfolio.
Safehold Inc. is a publicly traded REIT that's on the up and up
Safehold $SAFE is a unique REIT targeting the ground lease market.— Jared Schreiber (@JaredSchreiber2) September 14, 2020
They’re the only institutional player in the U.S. with scale and the company’s aggregate gross book value has grown 8X since IPO (2016).
They earn an average 5.5% yield on a 4% cost of funds.
Safehold Inc., or "SAFE" on the NYSE, has mustered strength to achieve more than 71 percent of stock growth in the last 12 months.
Too volatile for swing trading, this ESG-compliant REIT could be a safeguard in the long-term.
Fidelity's REIT ETF has struggled
The Fidelity MSCI Real Estate Index ETF (FREL) has struggled to maintain momentum throughout 2020 and into the new year. The fund has yet to recover from a 43.44 percent drop off that occurred during the COVID-induced market crash.
Growth for the ETF has been in line with the market rate, however, since the start of H2 of 2020. This proves there's potential for Fidelity's REIT.