Investing in REITs during the pandeminc part 2

In my previous article I discussed the benefits of REITs and exactly which categories are safer in my opinion to invest in. Without further ado, I present them here with a small description and comment. This list was comprised especially for the readers of the newsletter through searching almost all worldwide REITs that have a reasonable market capitalization. Keep in mind that the idea of diversification applies and I hand-picked a list that includes Europe, Canada, USA, Australia and Japan so I also diversify in currencies.

Residential REITs

We are careful here because there is the effect of the pandemic and work from home that drives people to the outskirts of cities combined with mortgage defaults and people that don’t have enough to pay the rent. So the choices are handpicked and low risk.

  • Vonovia (VNA) has residential properties in Germany and it’s very diversified. They don’t specialize in big expensive cities and the best of all is that almost every pension fund in Europe has exposure to them. That means government help if needed and strong hands that don’t panic sell.sun communities
  • Sun Communities (SUI) specializes in manufactured housing and recreational vehicles spaces. Think of retirees that have guaranteed pension and also people with financial trouble that will leave expensive cities. The P/E is a bit high but in principle FFO is more important in REITs.
  • LEG IMMOBILIEN (LEG) is again a German REIT also very diversified and with the same properties as VNA. They do hold some offices which is not very good at the moment but so be it.
  • European Residential (ERE.UN) is a Canadian company that has bought a lot of Dutch properties for rent all over the place and mostly in up and coming areas since the major cities are in my opinion borderline overvalued. The Netherlands has a very buy happy population and a big shortage of properties.
  • Camden Property Trust (CPT) has residential properties in the mid-range price diversified across mostly the southern part and the coastal areas.

Industrial, logistics & other

This is primarily my focus because of the pandemic. The industrial sector first took a big hit in March 2020 but since then recovered fully because goods still are being transferred. REITs that have contracts with e-commerce companies did especially well and will continue to do so. There are some odd ones in this lot with a sound justification.

  • Warehouse De Pauw (WDP) is in Belgium and have warehouses,storehouses and logistics centers. Europe is very active and Belgium is a trading hub also for shipping.
  • AEDIFICA (AED) is in Belgium and has apartment buildings and senior housing. Trust me, pensions are good in Europe and nobody is getting evicted. They also took a hit so there is space to move upwards.
  • Tritax Big Box (BBOX) is a London based logistics and warehousing for all the major e-commerce sites and has been on a tear.
  • MONTEA (MONT) operates in Belgium, Netherlands and France with logistics,warehouses and semi-industrial spaces.
  • Target Healthcare (THRL) own healthcare facilities and senior housing in the UK. Again the pandemic and population aging will expedite the need for this type of buildings.
  • AMT,CCI,SBAC,PLD are USA plays on cell towers, 5G tech and they are not going anywhere. Solid choice so I group them all together since most investors are familiar with them.
  • Dream Industrial (DIR.UN) is a Canadian industrial REIT that operates worldwide so we get the diversification benefit of exposure to both CAD currency and geolocation.
  • CATENA (CATE) is a Swedish company diversified into many non-residential such as cold storage, logistics, offices and others. This is a bet on Sweden and their efficiency and good economy.
  • Innovative Industrial (IIPR) is a play on the weed mania. Ya man. Why bet on weed stocks when everyone will need to grow it somewhere and pay rent and facilities? 😉
  • Granite (GRT.UN) is an industrial REIT operating in North America and Europe with a good dividend yield.
  • First Industrial (FR) doesn’t need a lot of explanation. It’s the biggest in USA.
  • Americold (COLD) operates temperature controlled warehouses in the states. Nice moat there.
  • SEGRO (SGRO) is UK based but operates industrial and data center warehouses all around Europe so it’s not affected (hopefully) too much from the coming Brexit.
  • Assura (AGR) operates primary care facilities in the UK. Again I am bullish on healthcare in general because unfortunately this is not a good period and also the population is aging.
  • Gecina (GFC) has mostly offices and student housing. There is a reason why it made the list although I avoided offices,malls and retail like the plague. The own properties in the center of Paris and they will never be empty. In case everyone is cybering in a couple of years while working they will just convert the spaces. And it’s Paris..
  • XIOR has student housing in the Netherlands, Belgium and expanding in Spain now. There is a huge shortage of housing and cheap student apartments especially there and I expect them to grow very fast because they are relatively young still.
  • STAG is my preferred industrial REIT in the States. They have huge names signed up for the e-commerce boom and have a beautiful graph that just keeps going up and up.

Conclusion

There is a strategy to the madness. I think real estate can generate very good results long term but it’s smart to avoid the sectors that we are unsure of such as retail, malls, offices, business centers and expensive city centers. Given the low interest rates and inflation that is coming (?) this is a safe bet to diversify your positions.

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Disclaimer: The information on this site is for informational purposes and isn’t financial advice. We cannot guarantee that you will have the same results as we have nor can we guarantee that the information shared here is appropriate for you. This is not financial advice and not given by professionals.

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