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Why I'm Thankful For These 3 REITs

By Liz Brumer-Smith – Nov 12, 2021 at 8:25AM

Key Points

  • Federal Realty Trust is adapting and expanding in the retail sector.
  • Innovative Industrial Properties continues to achieve stellar growth.
  • Digital Realty Trust provides an accessible opportunity to invest in the growing data center industry.

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I was fortunate to invest in high quality real estate assets in a growing market.

The last year and a half have brought a lot of challenges -- a global pandemic, an economic recession, and rapidly rising inflation. It hasn't exactly been rosy. At first glance, it may not seem like there's a silver lining, but even in challenging times, there are still things to be grateful for. With Thanksgiving right around the corner, I thought it would be a great time to reflect on some of the wins I've personally had in my investment portfolio, and share why I'm thankful for these three real estate investment trusts (REITs) this year.

1. Federal Realty Trust

Federal Realty Trust (FRT), a retail REIT that specializes in open-air shopping centers and mixed-use retail centers in high-density metro markets across the United States, was hit hard at the start of the pandemic. In the March 2020 crash, its stock plummeted as concern for the future of retail took hold of the marketplace. While it wasn't an easy year, Federal Realty Trust has made an impressive comeback. The company quickly pivoted to meet the rapid changes in the marketplace and continue to expand its portfolio while improving its existing performance.

I bought shares of FRT shortly after the crash when prices were just over half of what current share prices are trading at today. Meaning in just over a year, I was able to double my money -- something I'm definitely grateful for. While I still strongly believe in the quality of the company's portfolio, I decided to sell my shares in FRT to recapitalize my investment. Based on its latest earnings report, which shows positive growth in its funds from operations (FFO), leasing levels, and net income per share, I definitely see the momentum continuing.

Person looking out of window gratefully.

Image source: Getty Images.

2. Innovative Industrial Properties

Innovative Industrial Properties (IIPR -1.22%) is one of the companies everyone is talking about. Specializing in leasing medical marijuana facilities to licensed operators, the company has grown to incredible heights since first going public. It seems every quarter, IIPR shares stellar results in terms of growth, and its room for expansion is only just beginning as more and more states start to legalize medical marijuana. Its latest Q3 earnings showed a 57% increase in revenues from the same quarter a year prior and a 28% increase in dividend payments year to date.

Like with FRT, I was fortunate enough to purchase shares of Innovative Industrial Properties early on. My original investment has already multiplied more than eight times with room to grow.

3. Digital Realty Trust

Datacenter REITs, including up-and-coming operators like Digital Realty Trust (DLR -0.70%), have been receiving a lot of attention lately. As we transition into a more technologically dependent world than ever before, data centers are quickly becoming the backbone of our world's infrastructure and it's a major reason I'm bullish on data center REITs like this one. Digital Realty Trust certainly isn't the biggest or best-performing data center REIT in the market today, but it's an approachable REIT, largely because of its more affordable share prices given that it's still a smaller company. Being smaller also means there is a lot of room for growth. The company currently owns, leases, or operates 280 facilities across six continents. This is one of my latest acquisitions and is one I plan to hold for the long term.

Why I give thanks for REITS

These are just three of the REITs I'm thankful for this season, but they definitely aren't the only ones. Nearly all REIT investments have done tremendously well as of late, thanks to a rapidly recovering real estate market. While there are risks to consider when investing in REITs, particularly which REIT to invest in, I'm thankful that I have the opportunity to invest in such high-quality real estate assets in a wide range of real estate industries through REITs and look forward to seeing where the industry goes in 2022.

Liz Brumer-Smith owns shares of Digital Realty Trust and Innovative Industrial Properties. The Motley Fool owns shares of and recommends Digital Realty Trust and Innovative Industrial Properties. The Motley Fool has a disclosure policy.

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