Marty Fridson is a long standing expert on dividend investment opportunities; here, the editor of Forbes/Fridson Income Securities Investor looks at a trio of favored real estate investment trusts.
BRT Apartments Corp. (BRT) is a multi-family REIT that invests in income-producing apartments, both directly and through joint ventures (JVs). BRT also invests in the development of multifamily projects. The portfolio is geographically oriented towards the Southeast and Texas, although opportunities outside of these regions may be considered.
BRT typically seeks multifamily investments and acquisition opportunities that are stabilized, but under-managed, positioning the acquired properties to benefit from capital improvements and stronger management.
The REIT reported 3Q 2021 adjusted funds from operations (AFFO) of $5.65 million or $.0.31 per share, topping analysts’ estimates by a penny. AFFO results were up a solid 15.5% from a year ago, while revenue of $7.71 million climbed 5.5% year-over-year, exceeding expectations by almost 13%.
It was successful at navigating the challenges of the pandemic, with improving occupancy rates in 2021. We initially recommended BRT in August 2018 and we continue to recommend BRT for medium-risk tax-deferred portfolios and we are raising the fair value price from $17.50 to $26.00.
Global Medical REIT, Inc. (GMRE) is a REIT engaged in the acquisition and net-leasing of licensed purpose-built healthcare facilities, with various clinical operators. Specialized facilities include surgery centers, specialty hospitals, and outpatient centers. GMRE’s medical portfolio as of 09/31/21 included 163 owned properties.
GMRE reported 3Q 2021 adjusted funds from operations (AFFO) of $16.4 million or $0.24 per share, ahead of analysts’ $0.23 estimates. Revenue of $30.0 million was up a sharp 19.0% from a year ago, bolstered by the REIT’s acquisition activity. Occupancy remains strong in the healthcare sector, with the company’s portfolio 99% occupied.
GMRE’s dividend history has remained very stable, including the difficult pandemic period. This REIT investment is suitable for medium-risk tax-deferred portfolios. Dividend distributions are taxed as ordinary income. Buy at $19.25 or lower for a 4.26% annualized yield.
Simon Property Group (SPG) is the largest mall operator in the United States. The company’s industry-leading portfolio consists of premier shopping, dining, entertainment, and mixed-use properties across North America, Europe, and Asia.
With the sharp downturn in the economy during the pandemic, the shutdown of malls and shopping centers resulted in earnings pressure and increased leverage. We believe SPG has the necessary liquidity, financial flexibility, and capital position to weather any future disruptions, including rising interest rates.
SPG reported 4Q 2021 funds from operations (FFO) of $1.160 billion or $3.09 per share, up a sharp 47.5% from a year earlier, and beating analysts’ $2.88 estimates. Revenues of $1.33 billion for the period outpaced expectations of $1.13 billion. Occupancy rose steadily throughout the year and stood at a solid 93.4% at 12/31/21.
Although the company still has some issues to wrestle with in 2022, we think SPG’s common shares are relatively cheap. This investment is suitable for medium-risk tax-deferred portfolios, with dividends taxed as ordinary income. Buy at $160.00 or lower for an annualized 4.125% yield.
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