Real estate investment trusts (REITs) provide investors with the unique opportunity to invest in real estate without having to purchase a property on their own. They’re publicly traded, making it easier to buy and sell, and often expose investors to a wide portfolio of real estate properties.
Some investors may be looking for REITs that purchase property in a specific location. For example, New York City is a booming hub of business and real estate. Many REITs focus on buying properties in NYC. If you’re looking for exposure to the NYC real estate market, you’ll want to check out these five New York City REITs.
Understanding New York City REITs
New York City REITs focus on buying properties within the city. This opportunity is attractive to many people because of the number of high-end businesses headquartered in NYC and luxury residences. NYC REITs are a great way for investors to gain exposure to the NYC real estate market.
Top 5 New York City REITs
Are you ready to add NYC real estate to your portfolio? Check out these five NYC REIT stocks.
1. American Strategic Investment Co. (NYSE: NYC)
This REIT is headquartered and buys stock in New York City. It’s trading between $7-$8, meaning the minimum investment cost is very low. This REIT manages a portfolio of $854.2 million invested in high-end office, retail and condominium properties. It could offer low-stakes exposure to the NYC real estate market with the potential to grow.
2. Vornado Realty Trust (NYSE: VNO)
Vornado Realty Trust manages over 20.6 million square feet of Manhattan properties, primarily focused on office spaces and residential locations. Trading for $19-$21, this REIT is accessible to most investors. This investment also provides NYC REIT dividends of $0.375, a dividend yield of about 11%. This may not seem like a lot, but it has the potential to grow back to pre-pandemic highs.
3. Empire State Realty Trust Inc. (NYSE: ESRT)
This New York-based REIT owns many office, retail and residential properties throughout NYC. It’s named for the most famous building in its portfolio — the Empire State Building. Empire State Realty Trust has a focus on sustainability, striving for quality leadership and implementing energy-efficient solutions throughout its properties. This REIT trades for around $8 and is paying quarterly dividends of about $0.03.
4. SL Green Realty Corp. (NYSE: SLG)
SL Green Realty Corp. calls itself New York City’s largest owner of real estate, and its REIT is focused on acquiring, managing and maximizing the value of its New York properties. SLG is trading for around $35 and pays monthly dividends of about $0.27 per share, a yield of around 9%. SL Green Realty is also focused on improving sustainability throughout New York City, by embracing energy-efficient solutions in its properties.
5. AvalonBay Communities Inc. (NYSE: AVB)
AvalonBay Communities owns and manages a wide portfolio of apartment communities and homes. This REIT isn’t exclusive to properties in New York City, but a wide portion of its portfolio is invested in NYC, as well as New England, the Mid-Atlantic and other regions across the country. AVB is selling for around $190, making it the highest-value REIT on this list. It also provides its investors quarterly dividends of around $1.50-$1.60.
Where to Invest in New York City REITs
Many New York City REITs are traded on public exchanges, so investors can easily buy and sell them through their brokerage platform or their financial adviser. All the REITs listed above can be found on the New York Stock Exchange (NYSE). You can also compare leading brokers here.
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How to Invest in New York City REITs: 7 Steps
If you want to add an NYC REIT stock to your portfolio, you’ll want to follow these seven easy steps to start investing.
1. Determine Investment Objectives
Before choosing an investment, first, clarify your goals for a New York City REIT investment. Are you looking to grow your wealth in the long term? Do you hope to get passive income from dividends? You’ll also want to think about your risk tolerance. Some REITs come with a higher level of risk than others, and you want to ensure you don’t take on more risk than is appropriate for your situation. These considerations will help you select an investment that aligns with your goals.
2. Conduct Market Analysis
After clarifying your goals and risk tolerance, conduct a market analysis. Research the trends and demands of specific investment opportunities you’re interested in as well as the overall real estate market within NYC. Factors you should keep an eye on include vacancy rates, rental growth and development plans to determine whether the real estate market is currently an attractive opportunity.
3. Identify New York City REITs
Next, you’ll want to find specific New York City REITs that could be a potential addition to your portfolio. Research their market performance, as well as the REIT’s portfolio, leadership team, dividends and average yield. You can find NYC REIT stocks from the list above or by conducting your own research.
4. Review Dividend Yield
Dividends are one of the most attractive components of a REIT investment. If dividends are a high priority for you, you’ll want to review your potential investments' dividend yield and payout. NYC REIT dividends can seem insignificant, so you’ll want to assess the potential for them to provide substantial income over time as the stock grows and you increase your number of shares.
5. Assess Risk Factors
Before investing, you’ll need to consider the risks associated with that opportunity. For New York City REITs, investors should consider real estate market volatility, interest rate changes, regulatory changes and the macroeconomic environment. Then, you should ensure that the level of risk fits within your portfolio and investment goals.
6. Consult with Financial Advisers
It’s always a good idea to consult with financial advisers before making changes to your portfolio. A registered adviser will be able to give you more insight into available investments, as well as how they’ll impact your financial goals. The adviser can provide objective opinions that you can use to create a well-balanced portfolio.
7. Understand Tax Implications
REIT dividends are taxed differently than those of traditional stocks. Dividends from REITs are generated as ordinary income, so they’d be included on top of any income you receive from work. It’s important to discuss with a financial adviser or tax professional how this will income will affect your overall taxes.
Gain Exposure to New York Real Estate
New York City REITs can be a great way to diversify your portfolio in the NYC real estate market with a fairly liquid investment traded on the public market. It has the potential to grow your portfolio while providing dividends that can supplement your income. Consider these top five NYC REIT stocks and discuss with your adviser how they might benefit you.
Frequently Asked Questions
What is a NYC REIT?
A New York City REIT is a portfolio of real estate properties, primarily or solely in NYC, that investors can purchase shares of, giving them exposure to real estate in their portfolio.
Are New York City REITs a good investment?
An NYC REIT may be a good investment for investors who have the appropriate risk tolerance and whose long-term goals align with the investment opportunity. A financial adviser can give further insight into how they’ll impact your portfolio.
What is the largest REIT in NYC?
One of the largest NYC REITS is the SL Green Realty Corp. REIT, which claims to be the largest owner of NYC real estate.
About Savannah Munholland
Savannah Munholland is an investment writer passionate about helping people learn more about accessible alternative investments. She has more than three years of writing experience, focusing on alternative and traditional investing, technology, and education. Her expertise in writing about art and wine investments is grounded in an MFA with knowledge of and immersion in a wide range of art-related topics. She uses her skills in creative writing to bring an appealing level of interest to her journalistic work, shifting even the most basic financial and investment topics from humdrum to compelling. Her work has been published on Benzinga, FreightWaves, and Study.com.