When a real estate investment trust (REIT) trades below book value, it’s in the bargain basement of stock market offerings. When that REIT offers a dividend, the investor receives payment just for holding the cheap security. It can be a sweet combination of factors — as long as other important metrics align favorably.
Here are four REITs that seem to fit that bill:
New York-based Blackstone Mortgage Trust Inc. BXMT is a mortgage REIT. As the company puts it on its website, Blackstone “is a real estate finance company that originates senior loans collateralized by commercial real estate in North America, Europe and Australia.”
Blackstone Mortgage Trust is paying a 10.55% dividend and trades at 86% of book value.
Medical Properties Trust Inc. MPW is a healthcare facilities REIT with 434 properties in 10 countries and a total portfolio amounting to $21.1 billion. The Birmingham, Alabama-based company is trading at an 8% discount from its book value and paying an 8.45% dividend. In mid-November, Bank of America Securities upgraded Medical Properties from Neutral to Buy and upped its price target from $13 to $16.
Ready Capital Corp. RC is a mortgage real estate investment trust based in New York, New York. The REIT’s website says the company “originates, acquires, finances and services small to medium-sized balance commercial loans.” The company’s shares are available for purchase at 82% of book value, and the dividend comes to 12.76%. Ready Capital is relatively lightly traded for a New York Stock Exchange-listed security with an average daily volume of 850,000 shares.
Starwood Property Trust Inc. STWD is another mortgage REIT, this one with headquarters in Greenwich, Connecticut. The company has a portfolio of over $27 billion “across commercial and residential lending, infrastructure lending, investing and servicing and property business segments,” according to its website. Starwood pays a dividend of 9.39% and trades at a 3% discount to its book value.
These are rate-sensitive REITs so investors should keep a close eye on the Federal Reserve’s actions relative to interest rates.
Not investment advice. For educational purposes only.
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