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There’s a lot of debate about what the future looks like for property types like office, retail, and hospitality. However, it’s hard to argue with the growing demand for real estate that supports growing data needs, communication, and medical advancements. That’s why Crown Castle International (NYSE: CCI), Alexandria Real Estate Equities (NYSE: ARE) and Equinix (NASDAQ: EQIX) are safe real estate investment trusts, or REITs, for investors to buy in April.
Crown Castle International
Crown Castle is an infrastructure REIT that, as of December 31, 2020, owned over 40,000 cell towers, and over 80,000 route miles of fiber supporting roughly 80,000 small cells. As the world’s data consumption increases, the demand for these assets will continue to grow.
On top of that, the small cells the REIT owns will be a crucial part of 5G networks as they continue to roll out across the country. In fact, Crown Castle just signed an agreement with Verizon (NYSE: VZ) at the beginning of this year to develop 15,000 small cells for its 5G network, which it will lease for an initial 10-year term.
In terms of overall performance, Crown Castle has beat the S&P 500 as far as total return for the past three, five, and 10 years, with a total return over those periods of 77.77%, 140.5%, and 422.6%, respectively.
Alexandria Real Estate Equities
Alexandria Real Estate Equities is an office REIT with a growing portfolio of life sciences properties leased to some of the largest pharmaceutical companies in the world. This real estate sector is seeing a huge increase in demand, and it’s one that will continue for several years.
One of the things that sets this REIT apart from the crowd is its forward-thinking and solution-based approach to real estate. In 2019, it led the design and development of a revolutionary opioid treatment facility in Dayton, Ohio, and in 2020, it was recognized as the top real estate company in the world in the Global Real Estate Sustainability Benchmark (GRESB) 2020 Science & Technology sector.
In terms of financial health and performance, Alexandria Real Estate Equities has a solid performance history and is sitting on a healthy balance sheet that will give it a lot of room to grow at a steady pace in the coming years. The company also has an investment-grade credit rating from both S&P Global Ratings (NYSE: SPGI) and Moody’s Investor Service (NYSE: MCO).
The REIT is sitting on $4.1 billion in liquidity and doesn’t have any debt maturities until 2024. It also grew its total revenue in 2020 by over 23% from the previous year, and grew its funds from operations (FFO) per share nearly 5% over the same period. This says a lot for an office REIT in 2020.
Equinix is one of the largest data REITs, with 227 data centers across 63 markets. However, Equinix does more than simply provide server racks. It also provides some of the most advanced cloud computing technologies currently available, which gives it a strong advantage in the marketplace.
Even with a share price of $678 as of April 2, 2021, the company is in strong growth mode. It's had 18 years of consecutive revenue growth and provided a total return of almost 800% over the past 10 years.
One of the biggest criticisms the company faces from investors is its low dividend yield compared to other REITs. At 1.72%, it’s nothing to get excited about yet. However, its AFFO payout ratio is only 43%, leaving a lot of room for future dividend growth. Currently, the company is focused on reinvesting as much cash as possible to continue growing its footprint. At some point, that will slow down, and the payout ratio is likely to increase.
Overall, Equinix is a solid long-term play that will eventually provide an attractive yield to investors who get on board now.
The Millionacres bottom line
There’s still a lot of uncertainty around the commercial real estate market as a result of the COVID-19 pandemic, but these three REITs are invested in assets that are moving forward no matter what. If you’re looking for a safe, reliable REIT to add to your portfolio, you can’t go wrong with Crown Castle International, Alexandria Real Estate Equities, or Equinix.
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