My Favorite REIT: The Washington Real Estate Investment Trust

How can you make money by investing in the White House? Well, you really can’t invest directly in the President’s abode, but you can get darn close!

The Washington Real Estate Investment Trust (WRE) is my favorite REIT, and has become more of a value in recent weeks as the sector has taken a hit from investors.

Why Choose The Washington REIT?

The Washington REIT is a diversified trust that invests in Real Estate in the Washington D.C area.

Let’s face it, we aren’t getting any less government employees, so residential property in the area should be a solid investment for the long term. In respect to office properties, the government occupies more office space in the Washington area than the vast majority of private companies.

In fact, as of December 31, 2006, the Company’s portfolio was 94% leased. Federal government tenants in aggregate, accounted for approximately 2.3% of the Trust’s total revenue during 2006.

Some of Washington REIT’s Federal government tenants include the United States Department of Defense, the United States Patent and Trademark Office, the Federal Bureau of Investigation, the Office of Personnel Management, the Secret Service, the Federal Aviation Administration, and the National Institutes of Health.

That said, there probably isn’t too much to worry about in terms of tenants not paying the bills on time!

Some numbers from the Trust:

The trust’s P/E ratio (~38) is slightly higher than the industry average, but I believe that is warranted due to the quality of its earnings given all of the Washington REIT’s government tenants.

However, the dividend yield of 5.10% is actually higher than the industry average of 4.26%, which makes it even more attractive.

For those of you with a rather low risk tolerance or if you are looking for a defensive income producing holding for your portfolio, Washington REIT’s Beta is a mere 0.49, which should assist it in weathering a market downturn.

Some facts about the Washington REIT:

The Washington Real Estate Investment Trust (the Trust) is a self-administered, self-managed, equity real estate investment trust (REIT).

The Company’s business consists of the ownership, operation, and development of real properties in the greater Washington/Baltimore region.

As of December 31, 2006, the Trust owned a diversified portfolio of 82 properties which included 24 office buildings, 13 medical office buildings, 14 retail centers, nine multi-family buildings and 22 industrial/flex properties. The WRE also holds land for development.

With the recent drop in share prices across the industry, the WRE looks like an attractive value, and poses an opportunity to add a quality REIT to one’s portfolio.

Disclosure: The author does own shares of WRE.

WRE 1-yr chart: