I used to invest mostly in rental properties. But these days, I favor REITs for most of my investments. I explain why.
REITs have strongly outperformed the S&P 500 in the recent past. I expect this strong outperformance to continue. There are two reasons for this.
BSR Real Estate Investment Trust operates an apartment portfolio split between Texas, Oklahoma, and Arkansas. The REIT's Q3 2024 results were mixed, as a stable AFFO per unit masked weakness in net operating income and occupancy. The company's enterprise value is 55% funded by debt and should boost returns once Sun Belt leasing dynamics improve.
Sunbelt markets are experiencing rapid growth. It is resulting in rising rents and property values. Here are 3 REITs that are poised to benefit from this.
BSR REIT, Global Medical REIT, and CTO Realty have strong fundamentals, substantial variable rate debt, and deeply discounted trading multiples. Market fears of refinancing at higher rates have led to steep discounts, but recent yield curve changes suggest these fears may be overblown. Anticipated interest rate cuts could allow these REITs to refinance with minimal impact on interest expenses, potentially boosting their AFFO multiples.
I analyzed three REITs: BSR Real Estate Investment Trust, Whitestone REIT, and Cousins Properties, focusing on their presence in the high-growth Texas Triangle markets. BSR's strong performance in the Texas Triangle markets, despite new supply, makes it a compelling investment with a 3.69% dividend yield and solid AFFO growth. Whitestone REIT's focus on smaller community centers in high-demand Texas Triangle markets offers growth potential, but inconsistent past performance warrants a Hold rating.
Despite supply and rent recovery signs in Houston, BSR's margin of safety has deteriorated, maintaining a Hold rating. Earnings update shows muted AMR growth in Texas markets, with supply pressures persisting. Valuation indicates a lack of margin of safety, with BSR trading at 104% of revised NAVPU estimate, maintaining a cautious Hold rating.
BSR REIT focuses on multifamily assets in high-growth markets like the Texas Triangle, benefiting from job growth and migration trends. Despite a temporary slowdown in rent growth due to new supply, BSR REIT's strong financial results and discounted share price make it an attractive investment. Speculation on potential value based on recent industry transactions suggests BSR REIT's portfolio may be undervalued, providing potential for future growth.
BSR Real Estate Investment Trust (OTCPK:BSRTF) Q2 2024 Earnings Conference Call August 7, 2024 12:00 PM ET Company Participants Dan Oberste - President and CEO Susie Rosenbaum - Chief Operating Officer and Interim CFO Conference Call Participants Sairam Srinivas - Cormark Securities David Chrystal - Ventum Capital Markets Dean Wilkinson - CIBC Jonathan Kelcher - TD Cowen Mike Markidis - BMO Capital Markets Brad Sturges - Raymond James Kyle Stanley - Desjardins Jimmy Shan - RBC Capital Markets Matt Kornack - National Bank Financial Himanshu Gupta - Scotiabank Operator Good afternoon. My name is Ludie, and I will be your conference coordinator today.
There is an arbitrage opportunity between private and public real estate. Savvy investors are selling private real estate and buying REITs. I explain why this makes sense today.
REITs are priced at near their lowest valuations in 16 years. But the window of opportunity could be closing soon. I highlight 3 REITs that could enjoy 50%+ upside potential.
REITs are finally surging! Interest rates are expected to be cut significantly in the near term. I explain why I think that this is just the beginning of the rally.