It’s often said that successful investing involves buying high-quality stocks and holding them for the long term. But it’s not just about what stocks you buy. It’s also when you buy them that determines your total return. If high-quality stocks are in a sector that is out of favor, it could still be a long time before the investor sees a profit.
For investors in real estate investment trusts (REITs), holding these stocks long term through 2022 and part of 2023 has been difficult. Even stalwart retail REITs like Realty Income Corp. O, WP Carey Inc. WPC and Simon Property Group Inc. SPG have produced negative total returns for most of that time frame.
But what may be less apparent is that for the most part, the retail REIT subsector bottomed out on March 23. And since that time, there are some retail REITs, other than the three stalwarts above, that have performed quite well.
Take a look at three retail REITs whose performances in recent months have the look of a long-term rebound following long declines in share prices.
Kimco Realty Corp KIM is a Jericho, New York-based retail REIT that owns and operates 529 open-air, grocery store-anchored and unanchored properties with 90 million square feet of leasable space as well as ground leases. Kimco Realty was founded in 1958, is a member of the S&P 500 and has been publicly traded on the New York Stock Exchange (NYSE) since 1991.
Diversity is key for Kimco Realty, whether it’s in tenant numbers (over 5,000), lease terms (five to 30 years) or geographic locations spread across most of the U.S. in fast-growing areas. Its current operating portfolio occupancy is 95.8%.
On April 27, Kimco Realty reported first-quarter earnings. Funds from operations (FFO) of $0.39 was in line with the first quarter of 2022. Revenue of $442.89 million was 3.66% above sales of $427.25 million in the first quarter of 2022.
Kimco Realty is up 6.74% since its March 23 bottom. It pays a quarterly dividend of $0.23 and the annual dividend of $0.92 presently yields 4.95%.
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Site Centers Corp. SITC is a Beachwood, Ohio-based retail REIT that owns 105 shopping centers, 66% of which are anchored by grocery stores or high-quality discount stores. Its stores are concentrated in affluent suburban areas with an average annual household income of $112,000. By contrast, the national average for all shopping centers is $67,000. Most of its portfolio is in the Southeastern U.S.
Site Centers was trading up near $14 in early February before a six-week decline took it down to $11.25. But since March 23, Site Centers has risen 6.11%.
On April 25, Site Centers reported first-quarter earnings. FFO of $0.30 per share was a penny above the first quarter of 2022, and revenue of $136.83 million was 3.45% higher than revenue of $131.06 million in the first quarter of 2022. Site Centers also lifted its full-year 2023 operating FFO per share outlook from a range of $1.10-$1.16 to $1.11-$1.17.
No recent analyst ratings for Site Centers have been released. It pays a quarterly dividend of $0.13, and the annual dividend of $0.52 yields 4.35%.
Tanger Factory Outlet Centers Inc. SKT is a Greensboro, North Carolina-based retail REIT that owns 37 shopping centers with 14 million square feet and over 2,700 stores. Many of its shopping centers are outlet malls.
On April 11, Tanger increased its quarterly dividend by 11.3% from $0.22 to $0.245 per share. The annual dividend of $0.98 presently yields 5.05%.
On April 27, after the market closed, Tanger reported first-quarter operating results. Not only did Tanger beat the analysts’ estimates on funds from operations and revenue, but it also raised its full-year 2023 guidance for core FFO per share.
Between November 2021 and October 2022, Tanger Factory Outlet Centers declined by approximately 34%. After a rally lifted it to $20 by January, it slid back some 15% before bottoming out on March 23. It’s rebounded by 6.37% since then. In addition, Tanger Factory Outlet’s total return year to date is 12.06%.
Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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