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The 7 Top Performing REITs of 2021

By Liz Brumer-Smith - Feb 1, 2022 at 7:00AM
Gold lettering spelling out 2021 against shimmering background.

The 7 Top Performing REITs of 2021

A closer look at 2021's leading REITs

After a tough run in 2020, thanks to the coronavirus pandemic, real estate came back with a vengeance in 2021. Publicly, real estate investment trusts (REITs) saw huge boosts in share prices and performance as confidence and demand returned to the marketplace. That helped REITs grow to record levels over the past year -- several companies even achieved triple-digit year-over-year (YOY) growth.

For those considering diversifying their portfolio by adding some real estate or looking to expand their portfolio into new real estate industries, here's a look at the top-performing REITs from 2021.

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Apartment building under a blue sky.

1. Preferred Apartment Communities

The Sun Belt region of the United States is booming. Ample job opportunities, favorable year-round weather, and access to more affordable housing have caused people to move down South in droves.

Preferred Apartment Communities (NYSE:APTS) directly serves this growing region, providing multifamily housing, student housing, office space, and grocery-anchored retail centers across major markets in the Sun Belt.

Preferred Apartment Communities is shifting toward being a residential-only REIT. The company sold most of its office assets in 2021 and reallocated that money into multifamily, so it has some growing pains to work through. But those growing pains didn't stop the company from seeing share prices grow 144% while investors achieved a 159% return on investment in 2021.

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A hotel bed next to two suitcases.

2. CorePoint Lodging

Hotels and lodging REITs were among the hardest-hit industries when the pandemic started. But travel and hotel demand are back, meaning Corepoint Logic (NYSE:CPLG) -- which operates 155 midscale hotels, including the national brand La Quinta Hotels -- saw a big boost in revenues per available room (RevPAR).

As of the third quarter of 2021, RevPAR increased 71.4% YoY, while share prices increased 128.2%. But investors shouldn't get too excited about this company's growth prospects after the November release announced the company would be acquired and taken private.

ALSO READ: CorePoint Logic Is Being Acquired: What Does This Mean For Shareholders?

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People inside an industrial building.

3. Plymouth Industrial REIT

Industrial real estate demand is through the roof right now. Supply chain challenges, increased costs for shipping and fuel, continued growth of e-commerce, and a lack of inventory have created the perfect conditions to drive up demand.

Plymouth Industrial REIT (NYSE:PLYM) is one of the smaller industrial operators specializing in small industrial bays and warehouses in second-tier markets across the United States. Plymouth has outperformed the S&P 500 for the past three years, but it's far outpaced its peers in the industrial space, having a total return of 121%. Share prices have grown 113% YoY as demand for industrial space continues.

While the company still has a ways to go for long-term profitability, it's headed in the right direction with a lot of room to grow.

ALSO READ: Investing in Industrial REITs

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Apartment buildings with trees and flowers along a city sidewalk.

4. Independence Realty Trust

Independence Realty Trust (NYSE:IRT) is a smaller, up-and-coming multifamily REIT. The company, which specializes in Class B apartments in suburban submarkets across the Sun Belt, more than doubled its portfolio after merging with Steadfast Apartments.

The merger was completed at the end of 2021, giving the company roughly 127 apartments in its portfolio. Specializing in less competitive submarkets allowed the company to achieve stellar growth while also accessing properties with less of a premium and far less competition. The total return in 2021 was 97%.

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Inside of a self-storage facility.

5. Extra Space Storage

Self-storage is consistently one of the top-performing REITs. Historically, this industry has outperformed all other sectors of equity REITs. Extra Space Storage (NYSE:EXR), one of the leading providers in the space, outperformed even mega-giant Public Storage (NYSE:PSA) after its revenues increased 18.4% YoY.

Demand for storage has increased since the start of the pandemic, helping give the company a nice boost. Business from new customers was 43% higher than Q3 2020 and 41% higher than Q3 2019, and its share price grew nearly 96% in 2021 because of it.

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Crowd of shoppers walking around at an outdoor mall.

6. Tanger Factory Outlets

Share prices of Tanger Factory Outlets (NYSE:SKT), a premier outlet retail operator, plummeted at the start of the pandemic. Mandated closures and lack of foot traffic pushed retail to serious lows.

As stores recovered and demand slowly returned, so did Tanger's revenues. Its 2021 performance was positive, and while its performance wasn't stellar, it was definitely much better than 2020. Occupancy for its 36 retail centers is 94.6%, and its net operating income (NOI) grew 19.7%. The total 2021 return for investors was 93%.

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Person packing a box in a self-storage unit.

7. Life Storage Inc.

Life Storage (NYSE:LSI) comes last on this list, but not because of poor performance. This self-storage REIT performed incredibly well in 2021, with same-store revenues up 17.4%. Like Extra Space Storage, the company benefited from increased demand as people relocated and downsized across the country.

But Life Storage also benefits from using strategic joint ventures to acquire properties and third-party management for 357 facilities. The total return for Life Storage in 2021 was 95%, while share prices jumped 92%.

ALSO READ: Why Self-Storage Is a Smart Buy in 2022

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2022 written on a highway surrounded by a forest.

Past performance doesn't guarantee future results

These are the top-performing REITs of 2021. Just because they performed admirably over the past year, though, doesn't mean the same growth opportunities lie ahead. A shaky 2020 pushed many share prices down, leaving a lot of room for growth as they recovered.

Some companies on this list never really took a beating and are simply benefiting from some of the outcomes of our pandemic times. Investors should carefully consider today's market conditions, risks, and opportunities as they keep an eye out for 2022's best-performing REITs.

Liz Brumer-Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends Independence Realty Trust, Inc. and Plymouth Industrial REIT, Inc. The Motley Fool recommends Life Storage Inc and Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.

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