KRG and ROIC: A Pair of REITs for This Rocky Road

10/16/2015 9:33 am EST

Focus: REITS

Michael Berger

President & Founder,

One of the sectors he has focused on during this volatile time is real estate investment trusts, and Michael Berger, of, has been able to locate two REITs focused on the shopping center market that offer investors both growth and income potential.

Recent market volatility has left investors searching for investments that will be able to withstand a downturn in the market. One of the sectors we have focused on during this time is the real estate investment trust (REIT) industry. Within this industry, we have been able to find value in companies focused on the shopping center market.

During these volatile times, we continue to favor companies that are levered to the United States market and have strong balance sheets. We have been able to locate two investments that offer investors both growth and income potential.

Kite Realty Group Trust (KRG) is a vertically integrated real estate investment trust focused on the development of neighborhood and community shopping centers in selected markets in the United States. KRG owns 122 operating development and redevelopment properties in 22 states.

KRG represents an attractive growth and income investment. The company offers investors a 4.7% dividend yield and we expect third quarter earnings to be a catalyst for shares. KRG will report third quarter earnings on October 29. During the second quarter, KRG beat analyst earnings estimates and reported $0.49 earnings per share (consensus estimates were $0.48). KRG’s second quarter result represents 276% growth when compared to the same period last year. During the second quarter, KRG generated $83.7 million in revenue, which was up 105.1% on a year-over-year basis.

Retail Opportunity Investments Corp. (ROIC) is real estate investment trust that is also focused on owning shopping centers in the eastern and western regions of the United States. During the last six months, shares have fallen 0.5% and we think this has created an attractive entry point for shareholders.

We are favorable on ROIC because the company continues to execute on its relationship-driven, off-market acquisition strategy. ROIC owns a high quality portfolio of properties that will continue to report strong same-store net operating income growth. CEO Stuart Tanz has put together a high quality, West Coast real estate portfolio and we believe management will continue to drive above-average earnings and net asset value growth. We view ROIC as an acquisition candidate due to its clean asset portfolio and limited structure complexity.

Michael Berger, Founder and President,

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