Not all REITs are created equal. REITs that have very high yields (10%+) tend to be hotly chased by investors, in the process also making them pricey. REITs that are heavily involved in derivative trading of real estate may have very high operating margins, but they can be quite volatile when market condition changes.
The following REITs have modestly high yields (between 5-8%), with expanding revenue, and have low EBITDA to debt ratio (hence smaller risk of over leveraging). They are, in other words, both safe and good yielders. Even if their shares are beaten down temporarily, it is hopefully that they will make a full come back when time is right.
Franklin Street Properties Corp. (FSP) is an office REIT company. It has a market cap of $847.62 million. This company pays a handsome dividend of 7.40%. Franklin Street Properties provides real estate and investment banking/investment services in the United States. The companys Real Estate Operations segment involves in real estate rental operations, leasing, and secured financing of real estate for interim acquisition or other property financing, as well as provides asset management, property management, property acquisitions, dispositions, and development. The companys Investment Banking/Investment Services segment involves in the structuring of real estate investments and broker/dealer services that include the organization of Sponsored real estate investment trusts (REITs), the acquisition and development of real estate on behalf of Sponsored REITs, and the raising of capital to equitize the Sponsored REITs through sale of preferred stock in private placements. Its price shows near term weakness, close to 52-week low (only 8.38% higher). While the stock appears it might have bottomed, investors should proceed with caution. Its price/book ratio is 0.93. Franklin Street Properties has an enterprise value / EBITDA ratio of 15.25. It has a profit margin of 16.33%. I like Franklin Street Properties' operating margin of 22.25%, a good sign for the company's financial health. This month, 3.53 million shares are being shorted. The short ratio of Franklin Street Properties is 15.60, accounting for 4.90% of floating shares.
Health Care REIT, Inc. (HCN) is a healthcare facilities REIT. It has a market cap of $12.08 billion. The dividend is 5.20%. Health Care REIT engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. Its stock price is about 2.50% below its 52-week high, usually a positive technical indicator on the company. Health Care REIT Inc. has an enterprise value / EBITDA ratio of 17.88. It is on the expensive side. Care REIT Inc.'s operating margin is a healthy 34.97%. Both its revenue and earnings grew in double digits over the latest quarter, by 77.20% and 82.60%, respectively.
Hospitality Properties Trust (HPT) is a retail REIT. It has a market cap of $2.93 billion. The dividend is generous at 7.60%. Hospitality Properties Trust engages in buying, owning, and leasing hotels. Hospitality Properties Trust has an enterprise value / EBITDA ratio of 9.63, low among its peers. Its operating margin of was 27.17% over the past year. Its revenue grew by 6.90%, and its net income declined by 19.00% during the most recent quarter. The recent trading volume is about average.
Liberty Property Trust (LRY) is an office REIT. It has a market cap of $4.19 billion. This company pays out a nice dividend of 5.30%. Its ex-dividend date is today, 6/27. Liberty Property Trust provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. Given that its price is only 4.11% lower than its 52-week high, the overall market sentiment appears positive. Liberty Property Trust's operating margin of 37.07% appears very healthy. Its revenue grew by 2.30%, and its net income improved by 28.30% during the most recent quarter. It operating cash flow is 334.46 million, and its free cash flow is 267.65 million. Stable trading volume suggests a relatively calm market.
Lexington Realty Trust (LXP) is a diversified REIT. It has a market cap of $1.28 billion. This company pays a handsome dividend of 6.10%. Its ex-dividend date is today, June 27. Lexington acquires, owns, and manages a portfolio of office, industrial, and retail properties net-leased to corporate tenants in the United States. It also provides investment advisory and asset management services to institutional investors in the net lease area. This company's value seems reasonable with a sub-one PEG ratio, suggesting its growth is outpacing its valuation. Lexington has an enterprise value / EBITDA ratio of 12.94. This is a reasonable valuation. I like Lexington Realty Trust's operating margin of 25.12%, a good sign for the company's financial health. It operating cash flow is 184.54 million, and its free cash flow is 243.53 million. This month, 15.15 million shares are being shorted. The short ratio of Lexington Realty Trust is 12.70, accounting for 19.30% of floating shares.
Washington Real Estate Investment Trust (WRE) is a retail REIT. It has a market cap of $1.8 billion. This company pays out a nice dividend of 6.40%. Washington Real Estate Investment Trust engages in the ownership, operation, and development of real properties. The firm invests in real estate markets of the greater Washington D.C. metro region. It focuses on office, medical office, industrial/flex space, retail, and multifamily real estate investments. Its price shows near term weakness, close to 52-week low (only 6.60% higher). Washington Real Estate Investment Trust has an enterprise value / EBITDA ratio of 16.60. It is on the expensive side. Washington Real Estate Investment Trust's operating margin is 27.57%, a good sign for the company's financial health. Both its revenue and earnings grew in double digits over the latest quarter, by 10.50% and 11.10%, respectively. It operating cash flow is 120.85 million, and its free cash flow is 105.52 million. This month, 5.05 million shares are being shorted. Comparing to 4.58 million shares shorted over the previous month, the shared short has increased by 10%. The short ratio of Washington Real Estate Investment Trust is 11.50, accounting for 9.10% of floating shares.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.