Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
July was an excellent month for REITs overall, with about 90% of them posting positive gains. Several factors contributed to this strong performance, including a sell-off in tech stocks that sparked a money flow into dividend stocks like real estate investment trusts (REITs). Additionally, improving inflation reports increased anticipation of a potential Fed interest rate cut in September, further boosting REIT share prices.
The Vanguard Real Estate Index Fund ETF (NYSE:VNQ) was up 9.68% for the month. Interestingly, many single-digit-priced REITs also performed extremely well as investors snapped up shares of REITs that had been beaten down for months.
The strongest subsectors were office, mortgage, health care, and specialty REITs. About one-third of the best-performing 20 REITs were Office REITs.
A billion-dollar investment strategy with minimums as low as $10 — you can become part of the next big real estate boom today. This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.
Here are the four best-performing REITs of July, representing different subsectors. Only REITs trading above $10 per share have been included in this top group, but a separate list of low-priced REITs with high performance in July is also included:
KKR Real Estate Finance Trust
KKR Real Estate Finance Trust Inc. (NYSE:KREF) is a New York City-based mortgage REIT (mREIT) that provides customized and structured collateralized loans to commercial real estate projects. Its current portfolio consists of approximately 66 loans across the U.S., valued at $6.6 billion. About 60% of its loan portfolio is in multifamily and industrial properties, and 100% comprises Senior Loans.
On July 22, KKR Real Estate Finance reported its second-quarter operating results. Earnings per share (EPS) of $(1.57) beat the consensus estimate of $(1.67) but were significantly below the $0.48 per share reported in the second quarter of 2023. Revenue of $40.433 million was 9.81% higher than the estimate of $36.820 million but fell short of the $43.952 million reported in Q2 2023.
Several analysts recently weighed in on KKR Real Estate. On July 30, Keefe, Bruyette & Woods analyst Jade Rahmani maintained a Market Perform rating and raised the price target from $9.75 to $11.50, a level that KKR Real Estate has already reached.
On July 19, BTIG analyst Thomas Catherwood assumed coverage with a Buy rating and an $11.50 price target. On July 16, JP Morgan analyst Richard Shane maintained an Overweight rating but lowered the price target from $10 to $9.50.
KKR Real Estate had a total gain of 29.58% in July.
Retail Opportunity Investments Corp (NASDAQ:ROIC) is a San Diego, CA-based retail REIT that acquires, owns, leases and manages shopping centers anchored by national or regional supermarkets and drugstores. Its properties are located on the West Coast of the U.S. As of June 30, it owned 95 shopping centers with 10.7 million square feet and 2,090 tenants. Its portfolio lease rate was 97.0%. Retail Opportunity is a member of the S&P SmallCap 600 Index.
On July 23, Retail Opportunity Investments reported its second-quarter operating results. FFO of $0.25 per share matched estimates but was two cents below FFO in Q2 2023. Revenue of $83.32 million beat the forecast of $81.07 million and topped the $82.04 million reported in Q2 2023.
On July 30, a report surfaced that private equity firm Blackstone (NYSE:BX) had inquired into purchasing Retail Opportunity, sending shares soaring by 20%. These talks are in early stages, and a deal has yet to be struck, but investors eagerly bought shares in anticipation. An unnamed source also suggested that another bidder could emerge.
Retail Opportunity had a total gain of 28.07% for the month.
Peakstone Realty Trust
Peakstone Realty Trust (NYSE:PKST) is an El Segundo, CA-based, internally managed diversified REIT that owns and operates single-tenant office and industrial properties. Peakstone, branding itself as "America's Blue-Chip Landlord," had a portfolio of 67 properties with 16.6 million square feet of space across 22 states in high-growth markets as of April. Its portfolio is 96% leased, with a six-year weighted average lease term (WALT). Approximately 65% of its tenants are investment-grade companies, including PepsiCo, 3M, Amazon, and Keurig Dr Pepper. Peakstone had its IPO on April 13, 2023.
On July 20, Zacks Investment Research upgraded Peakstone Realty from Underperform to Neutral.
On July 29, Peakstone announced it had amended and extended its $907 million unsecured credit facility, with revolver and term loans extended to July 2028 and another term loan maturing in April 2026.
Peakstone has been volatile since its IPO. Between Jan. 1 and June 30, 2024, Peakstone had a total return of –40.01%. However, Peakstone Realty Trust had a total return of 27.65% in July.
Safehold
Safehold Inc. (NYSE:SAFE) is a New York-based, externally managed specialized REIT that acquires, manages, and produces income from a $6.5 billion portfolio of 135 ground net leases in 40 unique U.S. markets. Safehold diversifies across property types such as multifamily, office, hotel, retail, industrial, life science, student and senior housing.
On July 29, Safehold reported its second-quarter operating results. AFFO of $0.41 beat the street estimate of $0.36 per share by 13.89% and was up 17.14% from the $0.35 reported in Q2 2023. Revenue of $89.89 million beat the consensus estimate of $88.19 million and was ahead of the $85.66 million in Q2 2023.
In recent news, on July 8, Safehold announced it had closed on ground leases for the development of four affordable housing communities with 781 units across four locations in Northern California. Safehold has now closed $6.5 billion in ground leases in 2024.
Safehold had a total return of 24.44% for July.
Single-digit priced REITs with the best total gains in July:
· Office Properties Income Trust (NASDAQ:OPI) 32.45%
· Hudson Pacific Properties Inc. (NYSE:HPP) 27.87%
Note: Price performances are from July 1 to July 30.
Ready To Look Beyond REITs?
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields but not just through REITs. Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).
