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The real estate sector includes companies that own, develop, and manage residential, commercial, and industrial properties. Each of these three real estate segments includes publicly traded real estate investment trusts (REITs). REITs are vehicles that legally allow individual investors to buy shares in real estate portfolios that receive income from a variety of properties. A key REIT metric is funds from operations (FFO), a measure of earnings particular to the industry. Some big names within the sector include American Tower Corp. (AMT), Public Storage (PSA), and Welltower Inc. (WELL).
Real Estate stocks, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have underperformed the broader market, providing investors with a total return of -1.0% compared to the S&P 500’s total return of 8.9% over the past 12 months. These market performance numbers and the statistics in the tables below are as of July 28.
Here are the top 3 real estate stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Real Estate Stocks
These are the real estate stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Vornado Realty Trust: Vornado Realty Trust is a REIT that owns office, retail, merchandise mart properties, and other real estate and related investments. On May 4, the company reported a net loss of $104.5 million on a 16.9% decline in revenue for Q1 2020, which ended March 31, 2020. The company said that many of its retail tenants had closed their stores and were seeking rent relief.
- Simon Property Group Inc.: Simon Property Group is a REIT that owns, develops, and manages retail real estate properties throughout the world. The company announced at the end of June that it had reopened 199 of its 204 U.S. retail properties across the U.S., which had been closed in response to the pandemic. Those properties represent more than 95% of the company’s property net operating income.
- Host Hotels & Resorts Inc.: Host Hotels & Resorts operates as a REIT engaged in the management of luxury and upper-upscale hotels. The company announced on June 19 that it was temporarily suspending quarterly cash dividends in order to preserve liquidity amid the negative impacts to the economy resulting from COVID-19.
Fastest Growing Real Estate Stocks
These are the real estate stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Boston Properties Inc.: Boston Properties operates as a REIT that owns, manages, and develops office properties primarily in Boston, Washington, D.C., Midtown Manhattan, and San Francisco.
- Healthpeak Properties Inc.: Healthpeak Properties operates as a REIT that invests in real estate properties related to health care, including senior housing, life sciences, medical offices, hospitals, and skilled nursing homes. Despite reopening admissions, occupancy rates at Healthpeak senior housing facilities have plunged amid the COVID-19 pandemic. Ventas Inc. is seeing the same trend.
- Ventas Inc.: Ventas operates as a REIT that owns seniors housing communities, skilled nursing facilities, hospitals, and medical office buildings in both the U.S. and Canada. On May 8, the company reported net income growth of 272.1% on revenue growth of 7.3% for Q1 2020, which ended March 31, 2020.
Real Estate Stocks with the Most Momentum
These are the real estate stocks that had the highest total return over the last 12 months.
| Real Estate Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Equinix Inc. (EQIX) | 754.00 | 66.7 | 56.9 |
| Digital Realty Trust Inc. (DLR) | 151.01 | 40.5 | 40.2 |
| Crown Castle International Corp. (CCI) | 168.44 | 70.2 | 33.3 |
| S&P 500 | N/A | N/A | 8.9 |
| Real Estate Select Sector SPDR ETF (XLRE) | N/A | N/A | -1.0 |
Source: YCharts
- Equinix Inc.: Equinix is a REIT that provides colocation space and related services. The company provides customers with access to a selection of business partners and solutions based on their colocation, interconnection, and managed IT service needs. On May 6, the company reported net income growth of 1.0% on revenue growth of 6.0% for Q1 2020, which ended March 31, 2020.
- Digital Realty Trust Inc.: Digital Realty Trust is a REIT that owns and manages technology-focused real estate properties across the U.S. and England.
- Crown Castle International Corp.: Crown Castle International is a REIT that owns, operates, and leases shared wireless infrastructure. The company operates and leases cell towers and a network of fiber-optic cables throughout the U.S. and Puerto Rico.