In 2022, a considerable amount was written in the financial media about how inflation, Federal Reserve rate hikes and a possible recession could negatively impact real estate investment trusts (REITs). Subsequently, 2022 was a year in which many REITs suffered huge losses in share values.
But so far in 2023, many of these REITs are proving the critics wrong by reporting excellent fourth-quarter 2022 operating results. In many cases, both funds from operations (FFO) and revenue are not only beating analysts’ estimates but are well above fourth-quarter 2021 levels.
Here are three REITs that recently reported formidable earnings and revenue above Wall Street’s consensus numbers:
Kite Realty Group Trust KRG is an Indianapolis-based retail REIT with open-air and mixed-use properties from Vermont to California. Its strip malls are mostly anchored by grocery stores and include other well-known tenants such as CVS Pharmacy Inc., The Fresh Market, Best Buy Co. Inc., Burlington, Ross Stores Inc. and Costco Wholesale.
On Feb. 13, Kite Realty Group reported its fourth-quarter 2022 operating results. FFO of $0.50 per share beat analysts’ estimates by $0.04 and was 94% higher than FFO of $0.03 from the fourth quarter of 2021. Revenue of $204.69 million beat the Street view by $6.11 million, up from $177.86 million in the fourth quarter of 2021.
In January, Raymond James maintained its Strong Buy rating on Kite Realty Group, although it lowered the price target from $27 to $26. Kite Realty Group has a 52-week range of $16.42 to $23.35. It was recently near $22.50.
Safehold Inc. SAFE is a New York-based diversified REIT that specializes in ground leases. It acquires land and then leases that land to companies that build on it. The typical transaction size is anywhere from $15 million to $500 million.
The types of properties that use the ground lease programs include office, multifamily, hotel, healthcare, retail, industrial, life science, student and senior housing. Safehold is well diversified and has very little recession risk.
On Feb. 14, Safehold reported fourth-quarter FFO of $0.40 per share, which beat the consensus estimates by $0.03 and is 5.2% better than FFO of $0.38 from the fourth quarter of 2021. Revenue of $73.4 million beat the estimates by $0.32 million and was 41.1% better than revenue of $52.01 million from the fourth quarter of 2021.
Safehold has a 52-week range of $23.65 to $67.01. It pays a quarterly dividend of $0.177, or $0.71 per year, for a yield of 2.19%.
Armada Hoffler Properties Inc. AHH is a vertically integrated, diversified owner and manager of 53 multitenant Class A office, mixed-use retail and Class A multifamily properties in high-demand areas in eight states in the Mid-Atlantic and Southeastern U.S. The Virginia Beach, Virginia-based company was founded in 1979 by Executive Chairman Daniel Hoffler.
On Feb. 14, Armada Hoffler Properties announced its fourth-quarter operating results. FFO of $0.35 per share beat analyst estimates by $0.03 and was 29% above FFO of $0.27 from the fourth quarter of 2021. Revenue of $55.69 million was above Wall Street’s estimate by $1.49 million and was also 12.5% above revenue of $49.46 million from the fourth quarter of 2021.
Armada Hoffler recently received its first credit rating of BBB from DBRS Morningstar, allowing the REIT to raise capital via private placements instead of borrowing money through below-investment-grade ratings, which it had previously done.
Armada Hoffler’s 52-week range is $10.04 to $15.13. It pays a $0.19 per share quarterly dividend, and its annual dividend of $0.76 per share yields 6.07%.
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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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