In this article, we discuss the 5 best REIT stocks to buy right now. If you want to read our comprehensive analysis of REIT stocks, their history, performance, and outlook for future growth, go directly to 11 Best REIT Stocks To Buy Right Now.
5. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 26
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust which owns data centers across the United States, serving mega-companies such as Meta Platforms, IBM, JPMorgan Chase, Oracle, and Verizon. Given the large costs associated with changing data center service providers, Digital Realty Trust, Inc. (NYSE:DLR) also boasts an impressive customer retention rate and is set to benefit as digital transformation around the world boosts data center spending. The firm has also invested in expanding its operations beyond the United States, with ventures in India, Nigeria, and Europe.
On February 18, Wells Fargo analyst Eric Luebchow kept an ‘Overweight’ rating on Digital Realty Trust, Inc. (NYSE:DLR), noting that the firm’s fourth-quarter earnings reflected broader industry trends such as record demand and a modestly improving pricing environment despite higher operating costs. He expects the firm’s FFO per share to improve in 2023 and beyond to 7% plus, given, there are no further mergers and acquisitions. Digital Realty Trust, Inc. (NYSE:DLR) posted a revenue of $1.11 billion in Q4 2021, beating consensus estimates by $6.78 million and showing an increase of 4.57% year-on-year.
As of the fourth quarter, 26 out of 924 elite hedge funds tracked by Insider Monkey held positions in Digital Realty Trust, Inc. (NYSE:DLR) with a combined worth of $409 million. In comparison, 28 hedge funds were bullish on the company shares a quarter ago. The top shareholder of the firm during the fourth quarter was Holocene Advisors, which held roughly 816,000 shares worth $144.35 million.
4. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 30
Then there’s Realty Income Corporation (NYSE:O), a real estate investment trust which manages a large portfolio of real estate properties across the United States. It leases out thousands of commercial properties to clients in long-term agreements, bringing in the cash flow required to power its monthly dividend payments to shareholders. It boasts the largest net lease of all REIT stocks and is known as a Dividend Aristocrat, having grown its dividend for 25 years in a row. The firm’s revenue for Q4 stood at $643.26 million, up 62.73% year-on-year.
In February, Realty Income Corporation (NYSE:O) acquired the real estate of Encore Boston Harbo Resort and Casino in a deal worth $1.7 billion with Wynn Resorts (WYNN) under a long-term net lease agreement. This stands as the firm’s first acquisition in the gaming industry. In March, Wolfe Research analyst Andrew Rosivach upgraded Realty Income Corporation (NYSE:O) to ‘Outperform’ from ‘Peer Perform’.
Investors were eager on the famous REIT stock in the fourth quarter, realizing the importance of holding dependable dividend-payers in uncertain times. 30 hedge funds were bullish on Realty Income Corporation (NYSE:O) stock in Q4, up from 22 hedge funds in the preceding quarter. The firm’s top shareholder in the fourth quarter of 2021 was Glendon Capital Management, which held 1.85 million shares valued at $132.93 million.
3. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 36
AvalonBay Communities, Inc. (NYSE:AVB) is a residential real estate investment trust that focuses on acquiring, developing and operating apartment communities across the United States. It owns more than 86,000 apartment homes across 11 states, making it the third largest apartment owner in the US.
In early March, AvalonBay Communities, Inc. (NYSE:AVB) reported year-on-year growth of 7.3% in same store residential rental revenue for first two months of 2022. This growth stood 60 basis points above the firm’s expectations. The firm also announced the establishment of a $500 million unsecured commercial paper note program in the United States, proceeds from which will be used for general corporate purposes.
On March 24, Deutsche Bank analyst Derek Johnston maintained a ‘Buy’ rating on AvalonBay Communities, Inc. (NYSE:AVB) shares, and lowered the price target to $272 from $285. Truist analyst Michael Lewis in March gave AvalonBay a ‘Hold’ rating, noting that he expects the REIT to generate 15% FFO per share growth in 2022, and 9% in 2023. He sees stock valuations across the apartment REIT sector going up, reflecting the sector’s strong earnings growth and low property cap rates.
Investors were seen buying up on AvalonBay Communities, Inc. (NYSE:AVB) in the fourth quarter of 2021, where 36 hedge funds were long on the company shares. In contrast, 28 hedge funds were holding shares in the REIT a quarter ago. Zimmer Partners held roughly 918,000 shares worth $231.75 million of AvalonBay Communities, Inc. (NYSE:AVB) in Q4 2021, making it the biggest shareholder of the firm.
2. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 37
Prologis, Inc. (NYSE:PLD) is the largest real estate investment trust in the world. It operates a network of warehouses located in key transportational hubs across the globe. It leases its logistics facilities to more than 5,500 clients globally, serving e-commerce and B2B companies. Owing to the growth in online shipping and the rise in real estate valuations, Prologis, Inc. (NYSE:PLD) is well-positioned to continue its upward trajectory.
37 hedge funds reported bullish bets on Prologis, Inc. (NYSE:PLD) in the fourth quarter, with combined stakes worth $544.4 million. This shows a positive trend from the previous quarter where 32 hedge funds held $483.5 million worth of positions in the company. As of April 1, shares of Prologis, Inc. (NYSE:PLD) have gained 52.99% in the last year, and 30.73% in the last 6 months.
Deutsche Bank analyst Derek Johnston on March 31 maintained a ‘Buy’ rating on Prologis, Inc. (NYSE:PLD) shares, and lowered the price target to $179 from $180. The analyst sees further occupancy growth for the REITs he covers, and sees resilient demand for well-located centers. In March, Prologis, Inc. (NYSE:PLD) submitted an offer to acquire Blackstone’s European portfolio of logistics properties, in a deal worth €21 billion which could see it further enhance its global logistics footprint. The firm’s revenue for the fourth quarter was recorded at $1.07 billion, up 8.76% year-on-year and surpassing estimates by $20.20 million.
Third Avenue Management, an investment firm, mentioned Prologis, Inc. (NYSE:PLD) in its Q2 2021 investor letter. The fund said:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that is primarily comprised of fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
1. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 61
American Tower Corporation (NYSE:AMT) owns and operates communication signal towers and related infrastructure around the globe. It owns 219,000 communication sites worldwide, with a large network in India, Brazil, Spain, Germany, Mexico and the United States. As the demand for wireless devices and data usage grows, American Tower Corporation (NYSE:AMT) stands to benefit as service providers expand their offerings by deploying AMT’s cell towers. The cell towers run by the REIT can be especially profitable when two or more tenants (service providers) lease out the same site.
In November 2021, American Tower Corporation (NYSE:AMT) completed the $10.1 billion acquisition of Coresite Realty, which is an operator of 25 data centers in the United States. Coresite’s interconnection-focused data center business will allow American Tower to take leadership in the 5G market.
On March 21, American Tower Corporation (NYSE:AMT) was given a ‘Buy’ rating by Citi analyst Michael Rollins, who also added the firm to Citi’s “Positive Catalyst Watch List”. The analyst sees the stock trading a sum-of-parts discount to its competitors, and sees the durability of its business model as under-appreciated in the market. He sees American Tower Corporation’s (NYSE:AMT) bid for CoreSite Realty (COR), and a rise in domestic leasing activity as potential catalysts for the REIT.
Akre Capital Management was the top shareholder of American Tower Corporation (NYSE:AMT) during the fourth quarter, with a stake worth $2.05 billion consisting of 7 million shares. 53 hedge funds were long American Tower Corporation (NYSE:AMT) in the fourth quarter, with combined holdings worth $4.75 billion.
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