Global real estate posted the strongest performance in July since December 2021, outperforming the broader market, despite the challenging macroeconomic landscape. Moreover, the global real estate market size is expected to expand at a 5.2% CAGR between 2022 and 2030.
While the rising short-term interest rates may not have any significant effect on real estate investment trusts (REITs), they have performed relatively well during times of moderate to high inflation. Moreover, REITs offer steady distributions that provide protection in a downturn.
Hence, we believe the high-yielding REITs SmartCentres Real Estate Investment Trust (CWYUF), Getty Realty Corp. (GTY), BrightSpire Capital, Inc. (BRSP), TPG RE Finance Trust, Inc. (TRTX), and Urstadt Biddle Properties Inc. (UBA) might be solid investments now. These stocks are rated Buy in our proprietary POWR Ratings system.
SmartCentres Real Estate Investment Trust (CWYUF)
CWYUF is one of Canada’s fully integrated REITs that has a portfolio featuring strategically located properties in communities across the country. The company owns significant assets and income-producing value-oriented retail space.
On August 3, CWYUF declared a monthly distribution of CAD0.15417 per trust unit, which is payable to trustees on September 15. Its annual dividend of $1.45 yields 6.54% on prevailing prices. The company’s dividend payouts have increased at a 2.5% CAGR over the past three years and a 2.6% CAGR over the past five years. The company has an excellent record of five years of consecutive dividend growth.
CWYUF’s net rental income and other increased to CAD 124.96 million ($96.61 million) for the second quarter of 2022, representing a 4.9% year-over-year growth. Its adjusted EBITDA amounted to CAD 493.79 million ($381.76 million), while its AFFO amounted to CAD 89.45 million ($69.16 million).
Analysts expect CWYUF’s revenue for the fiscal year ending December 2022 to be $613.13 million.
CWYUF has gained marginally over the past five days to close its last trading session at $22.32.
CWYUF’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CWYUF has an A grade for Stability. It is ranked #3 out of 32 stocks in the REITs - Retail industry.
Beyond what we’ve stated above, we have also given CWYUF grades for Growth, Value, Momentum, Sentiment, and Quality. Get all CWYUF ratings here.
Getty Realty Corp. (GTY)
GTY is a publicly traded REIT in the United States specializing in the ownership, leasing, and financing of convenience stores and gasoline station properties.
On July 27, GTY declared a quarterly dividend of $0.41 per share on its common stock, payable to shareholders on October 6. Its annual dividend of $1.64 yields 5.38% on current prices. The company’s dividend payouts have increased at a 5.8% CAGR over the past three years and an 8.3% CAGR over the past five years. The company has a record of eight years of consecutive dividend growth.
For the second quarter of 2022 ending June 30, GTY’s total revenues increased 6.5% year-over-year to $41.18 million. Its adjusted fund from operations grew 8.3% from its previous-year quarter to $25.39 million. The company’s net earnings and net earnings per share came in at $30.68 million and $0.64, up 138% and 128.6% from the prior-year period.
Street EPS estimate for the fiscal year ending December 2022 of $2.20 reflects a rise of 17.2% year-over-year. Likewise, Street revenue estimate for the year of $163.87 million indicates an improvement of 6.5% from the prior-year period.
Over the past six months, GTY’s stock has gained 9.4% to close its last trading session at $30.50. It has gained 10% over the past month.
This promising prospect is reflected in GTY’s POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. GTY has an A grade for Sentiment and a B grade for Stability. It is ranked #2 in the REITs – Retail industry.
Click here to see the additional POWR Ratings for GTY(Growth, Value, Momentum, and Quality).
BrightSpire Capital, Inc. (BRSP)
BRSP operates as a commercial REIT in the United States. The company engages in originating, acquiring, financing, and managing a portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties.
On June 15, BRSP declared a quarterly dividend of $0.20 per share on its class A common stock, which was payable to shareholders on July 15. Its annual dividend of $0.80 yields 9.16% on prevailing prices.
BRSP’s net interest income increased 25% year-over-year to $32.76 million for the second quarter ended June 30, 2022. Its adjusted earnings came in at $31.45 million, up 16.2% year-over-year, while its adjusted EPS came in at $0.24, up 20% year-over-year.
BRSP’s revenue is expected to increase 11.2% year-over-year to $114.13 million in fiscal 2022. Its EPS is expected to grow 11.5% year-over-year to $0.97 in the same period. It has surpassed EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 6.9% over the past month and 1% intraday to close its last trading session at $8.94.
It is no surprise that BRSP has an overall B rating, which translates to Buy in our POWR Rating system. The stock also has a B grade in Growth, Value, and Sentiment. Within the REITs - Mortgage industry, it is ranked #2 out of 29 stocks.
To see additional POWR Ratings for Momentum, Stability, and Quality for BRSP, click here.
TPG RE Finance Trust, Inc. (TRTX)
TRTX is a commercial real estate finance company that originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments. The company qualifies as a real estate investment trust for federal income tax purposes.
On June 14, TRTX declared a quarterly dividend of $0.24 per share on its common stock, which was payable to shareholders on July 25. Its annual dividend of $0.96 yields 9.80% on prevailing prices.
TRTX’s interest income increased 6.6% year-over-year to $66.02 million for the second quarter ended June 30, 2022. Its total other revenue came in at $629 thousand, up 300.6% year-over-year. Moreover, its cash provided by operating activities came in at $65.10 million for the six-month period ended June 30, up 6.6% from its year-ago value.
Street expects TRTX’s EPS to increase 7.1% year-over-year to $1.17 current fiscal year ending December 2022. Its revenue is expected to be $150.73 million in the same period.
TRTX has gained marginally intraday to close its last trading session at $9.80.
It is no surprise that TRTX has an overall B rating, which translates to Buy in our POWR Ratings system. TRTX has a B for Value and Stability. It is ranked #1 in the REITs – Mortgage industry.
Beyond what we’ve stated above, we have also given TRTX grades for Growth, Momentum, Sentiment, and Quality. Get all TRTX ratings here.
Urstadt Biddle Properties Inc. (UBA)
UBA is a self-administered equity REIT that owns or has equity interests in multiple properties. The company engages in acquiring, owning, and managing commercial real estate, primarily neighborhood and community shopping centers in the metropolitan tri-state area outside of the City of New York.
On June 6, UBA declared a quarterly dividend of $0.2145 per share on its common stock, which was payable to shareholders on July 15. Its annual dividend of $0.95 yields 5.39% on prevailing prices.
UBA’s total revenue increased 9.3% year-over-year to $36 million in the second quarter ended April 30. The company’s operating income increased 17.3% from the year-ago value to $13.50 million. UBA’s net income applicable to common and class A common stockholders rose 53.8% from the prior-year quarter to $7.10 million, while its net earnings per common share grew 54.5% year-over-year to $0.17.
For the third fiscal quarter ended July, the company’s EPS is expected to grow 9.7% year-over-year to $0.40. Street expects the revenue for the same period to increase 5.1% from the prior-year period to $36.10 million.
UBA gained 2.4% over the past three months to close the last trading session at $17.61.
The stock has an overall rating of B, which equates to a Buy in our POWR Ratings system. UBA also has a B grade for Growth, Stability, and Sentiment. The stock is ranked #1 in the REITs - Retail industry.
In addition to the POWR Rating grades just highlighted, you can see UBA ratings for Value, Momentum, and Quality.
CWYUF shares were trading at $22.05 per share on Friday afternoon, down $0.27 (-1.21%). Year-to-date, CWYUF has declined -9.97%, versus a -14.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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