Below we present the list of Top 10 Real Estate Stocks to Buy According to Land & Buildings Investment Management. For our methodology and a more comprehensive list please see Top 10 Real Estate Stocks to Buy According to Land & Buildings Investment Management.
5. American Homes 4 Rent (NYSE:AMH)
Kicking off the second half of our list of Land & Buildings Investment Management’s top real estate stock picks is American Homes 4 Rent (NYSE:AMH). The fund raised its stake in AMH by 10% during Q3, pushing it to 988,493 shares valued at $37.68 million as of the end of September. Hedge fund ownership of AMH has steadily increased over each of the last six quarters, hitting a record high of 34 during the September quarter.
Third Avenue Management, which initiated a stake in American Homes 4 Rent (NYSE:AMH) in Q3 of 2020 and remains a shareholder through the latest 13F filing period, discussed its latest purchase in its Q3 2020 investor letter. The fund expressed optimism over AMH’s unique build-to-rent platform, noting that it was well-positioned to expand the platform thanks to its unusually strong free cash flow for a REIT in addition to already having enough land secured to build another 6,000 homes. AMH is already North America’s second-largest owner of single-family homes for rent.
4. Retail Opportunity Investments Corp. (NASDAQ:ROIC)
Land & Buildings Investment Management built a large new stake in Retail Opportunity Investments Corp (NASDAQ:ROIC) during Q3, buying 2.39 million shares valued at $41.66 million on September 30. It was the fund’s only new purchase of the quarter and made ROIC its fourth-largest stock holding. Hedge fund ownership of ROIC has remained steady since jumping by 50% between the first and third quarters of 2019.
Retail Opportunity Investments Corp (NASDAQ:ROIC) completed its departure from the Sacramento market in Q3 and has lined up nearly $123 million worth of grocery-anchored commercial property acquisitions. The company’s third-quarter revenue and FFO were pretty much right in line with estimates and the company announced a special cash dividend of $0.07 per share that will be payable on January 14.
3. Apartment Income REIT Corp. (NYSE:AIRC)
Land & Buildings Investment Management sold off 36% of its former stake in Apartment Income REIT Corp (NYSE:AIRC) during the September quarter, leaving it with 897,592 AIRC shares valued at $43.81 million. 17 hedge funds were shareholders of AIRC in Q4 2020 following its spinoff from Aimco and after dipping slightly in the first half of 2021, that figure returned to 17 in Q3.
Jonathan Litt tried and failed to stop that spinoff from taking place without a shareholder vote being conducted first, which Aimco refused. Litt was particularly concerned about the potential tax implications of the split on some of Aimco’s shareholders, who may have been hit for as much as $8 per share. He also argued that the two separated companies were unlikely to approach the underlying value of Aimco’s assets, which the company had estimated at $59. Litt was slightly off on that prediction, as the two stocks now trade for a combined $62.84.
2. American Campus Communities, Inc. (NYSE:ACC)
Land & Buildings Investment Management’s second-largest real estate holding is American Campus Communities, Inc. (NYSE:ACC), which it owns over 1.43 million shares of as of September 30, valued at $69.52 million. The fund raised the size of its ACC holding by 10% during Q3. Hedge fund ownership of ACC dipped by 37% during the first three quarters of 2021.
American Campus Communities, Inc. (NYSE:ACC) is yet another stock that’s been a strong performer for Jonathan Litt in recent quarters, gaining nearly 50% between the middle of 2020 and Q3 2021. The Austin-based student housing developer and operator earned $228.9 million in revenue during Q3, topping estimates by over $10 million while pulling in $0.40 in FFOM. The company also anticipating net operating income returning to pre-pandemic levels during Q4. ACC pays out a dividend that currently yields 3.33% annually.
1. Lexington Realty Trust (NYSE:LXP)
Topping the list of Land & Buildings Investment Management’s top real estate stock picks is Lexington Realty Trust (NYSE:LXP). The stock replaced Apartment Income REIT Corp (NYSE:AIRC) as the fund’s top pick after it added 267% more shares to its holding in Q3, pushing its stake to nearly 6.78 million shares which were valued at $86.43 million.
Jonathan Litt has reportedly been in discussions with Lexington Realty Trust (NYSE:LXP), ostensibly about its viability as a potential takeover candidate. The company should be highly coveted in the rapidly consolidating industrial REIT space and that prompted KeyBanc to upgrade LXP in November, saying that there was effectively a “for sale” sign on the company now and that a sale is “highly probable”.
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