In this article, we will discuss the 13 most profitable real estate stocks now.
Real Estate and the Aftermath of the Fed Rate Cut
As reported by Redfin, buying a home has gotten affordable for the first time since 2020 as homebuyers need to earn $115,000 to afford the typical home. While Senior Economist Elijah de la Campa thinks this could be a good time to buy a home with housing affordability improving for the first time in four years, he thinks the market won’t be cheaper in the near future. This is because the Fed’s recent rate cut and the following rate cut plans have already been priced into the mortgage rates since they were highly anticipated.
Another optimistic news for homebuyers on the sidelines was the housing payments witnessing the biggest decline in 4 years ahead of the Fed’s historic rate cut. These payments have gone down by almost $300 from April’s all-time high. The median housing payment was reported to be $2,534 during the four weeks ending September 15, down 2.7% year-over-year. With lower mortgage rates and less inventory, the housing market is still unaffordable for many but it is as good as it gets in the words of Orphe Divounguy, Zillow’s senior economist.
Regarding the aforementioned optimism for homebuyers, Robert Reffkin, Compass founder and CEO, stated that homebuyers are much more active than they were before. In his opinion, consumers react more to the change in mortgage rates rather than the absolute rate itself. He told CNBC that buyers now know not to take a relatively lower rate for granted after being through a period of elevated mortgage rates. Meanwhile, the major issue has been the lock-in effect during the preceding 2 years since 75% of the homeowners were locked into 4% mortgage rates or below, a percentage which is now approaching 50%. With declining mortgage rates, he expects the lock-in effect to drop and the housing inventory to grow.
With the declining mortgage rates, refinancings have surged. Mortgage applications hit the highest levels since July 2022 as the rates dropped. According to the Mortgage Bankers Association, applications to refinance or purchase a home in the week that ended September 20 increased 11% week-over-week while the refinancing applications climbed 20% during the period. This marks the 2nd consecutive week of double-digit gains in applications. Overall, the refinance activity is still modest with seasonally slow homebuying complemented with high home prices and a shortage of inventory.
Now that we have analyzed how the market has unfolded since the Fed rate cut, we can move to the 13 most profitable real estate stocks now.
Aerial view of a real estate complex with several residential lots under construction.
Our Methodology:
In order to compile a list of the 13 most profitable real estate stocks, we created an initial list of 30 companies with the biggest market caps. Moving on, we screened out those companies that had a positive net income in the last twelve months and had grown their net income positively over the past 5 years. For the 5-year net income growth, we have considered the compound annual growth rates on a TTM basis. Finally, we ranked the shortlisted companies in ascending order of their hedge funds, as of Q2 2024.
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13 Most Profitable Real Estate Stocks Now
13. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 19
5 Year Net Income Growth: 16.67%
Realty Income Corporation (NYSE:O) serves as a real estate partner to leading firms. The company was founded in 1969 and invests in diversified commercial real estate. As of June 30, the company owned or held interests in 15,450 properties in all 50 US states, the U.K., and six other countries in Europe.
Realty Income Corporation (NYSE:O) is one of the largest REITs with a growing international presence. Its 55 years of operating history and 15,450 commercial real estate properties define its scale and size. Its real estate portfolio stands diversified spanning 1,551 clients and 90 industries. The growth potential of the firm is vast with a $5.4 trillion total addressable market in the US and an attractive growth avenue with limited direct competition in Europe. Furthermore, it has delivered nearly 5% AFFO growth in both higher and lower interest rate environments.
With a 5% median AFFO per share growth since 1996 and 27 of 28 years of positive earnings per share growth, the stability and growth of the firm is evident. The company is positioned for further growth with an estimated global net lease addressable market of approximately $14 trillion. The established portfolio of commercial real estate has historically provided dependable rental revenue supporting the payment of monthly dividends. The firm has a strong dividend track record with 29 consecutive years of rising dividends.
During the second quarter, the firm’s AFFO per share increased 6.0% to $1.06 as compared to the prior year period. With a portfolio of leading clients, a strong liquidity position, as well as a stable and growing cash flow, Realty Income Corporation (NYSE:O) is set to continue the business momentum through 2024.
Realty Income Corporation (NYSE:O) benefits from the structural advantage as investment spreads persist even with rising interest rates, something that is not a significant earnings headwind to the net lease business model. Thus, Realty Income Corporation is another profitable and promising real estate stock now.
12. Extra Space Storage Inc. (NYSE:EXR)
Number of Hedge Fund Holders: 25
5 Year Net Income Growth: 13.24%
Extra Space Storage Inc. (NYSE:EXR) is a fully integrated, self-administered, and self-managed real estate investment trust headquartered in Salt Lake City. The firm owns and operates more than 3,500 self-storage properties, comprising over 2.5 million units and over 275 million square feet of rentable storage space. Customers can select from a variety of conveniently located and secure storage units across the US including boat storage, RV storage, and business storage.
Extra Space Storage Inc. (NYSE:EXR) dominates by serving as the largest operator of self-storage properties in the United States. The firm managed 1,423 stores for third-party owners and 472 stores owned in unconsolidated joint ventures, for a total of 1,895 stores under management, as of June 30, 2024. It recorded one of the strongest first halves of the year by adding 86 net stores to the platform. Thus, Extra Space Storage’s track record reflects its massive scale and the consistent growth of its geographically diverse portfolio.
Despite the fiscal second quarter being plagued with a challenging demand and new customer rate environment, the firm was successful in maintaining strong occupancy levels in the Extra Space and Life Storage same-store pools. This led to positive revenue growth in both pools, with Extra Space’s same-store revenue increasing 0.6% and Life Storage’s same-store revenue climbing 1.8%, year-over-year.
The REIT had previously taken a major step towards achieving a transformative scale and synergy opportunities through its merger with Life Storage in July 2023. 2023 was a year of operational excellence for the firm with same-store revenue growth of 3.1% while the balance sheet grew through the aforementioned merger. The favorable performance resulted in a positive total shareholder return of 12.5% for the year while the firm raised the dividend by 8%.
Extra Space Storage Inc. (NYSE:EXR) remains profitable. Over the past 5 years, the firm has expanded its net income by 13.24% and its revenue by 20.59%. Among other self-storage real estate companies, the firm has a solid market cap of $40.39 billion. With a strong balance sheet, robust occupancy gains, massive scale, and disciplined growth through accretive acquisitions and strong partnerships, the REIT is in a good position in a highly fragmented sector. As of Q2, the stock is held by 25 hedge funds.
11. Equity Residential (NYSE:EQR)
Number of Hedge Fund Holders: 30
5 Year Net Income Growth: 5.13%
Equity Residential (NYSE:EQR) focuses on the acquisition, development, and management of residential properties located in dynamic cities that attract affluent long-term renters. The firm owns or has investments in 299 properties comprising 79,738 apartment units, with a strong presence in major cities including Boston, New York, Washington, D.C., Seattle, San Francisco, and Southern California, and a growing presence in Denver, Atlanta, Dallas/Ft. Worth and Austin.
Equity Residential started off in 1993 as a portfolio of about 20,000 apartment units positioned primarily in garden-style properties in the Midwest and South. The company’s high-quality, well-located apartment properties continue to capture a strong demand. The firm has positioned this portfolio of urban and suburban properties in places that attract a resident demographic that chooses to rent for lifestyle reasons and due to less housing affordability.
Equity Residential (NYSE:EQR) takes advantage of a general undersupply of housing for both renting and owning. Its markets have a high cost of single-family housing which creates a robust demand to rent. The firm’s apartment business also benefits from its prime demographic opting for marrying later and having children later than previous generations. The firm focuses on the affluent renter who is well employed with rising wages, a dynamic that supports rental growth.
During 2023, Equity Residential witnessed an all-time high same-store revenue growth of 5.6%. The company has been witnessing the same positive momentum in 2024. The second quarter highlight for the firm includes same-store revenue increasing by 2.9%. This revenue rise was motivated by strong demand and modest supply across the majority of the markets.
The firm is simultaneously unlocking growth opportunities since it recently agreed to acquire a $964 million apartment portfolio from Blackstone Real Estate. These properties are situated in Equity Residential’s expansion markets of Atlanta, Dallas/Ft. Worth and Denver, and are attractive to the firm’s higher-end renter demographic, thereby boosting its growth in these markets. Amidst favorable demographics complementing a strategically positioned and well-established portfolio, Equity Residential (NYSE:EQR) is poised to grow. The stock is held by 30 hedge funds, as of Q2 2024.
10. Public Storage (NYSE:PSA)
Number of Hedge Fund Holders: 30
5 Year Net Income Growth: 4.10%
Public Storage (NYSE:PSA) is an owner, operator, and developer of self-storage facilities. The company opened its first self-storage facility in 1972 and has become the largest owner and operator of self-storage facilities globally. It also serves as one of the biggest landlords across the world with more than 170 million net rentable square feet of real estate.
Clearly, Public Storage (NYSE:PSA) is a self-storage industry leader. With 51 years in operation, 3,369 properties, $4.5 billion in 2023 revenues, and thousands of locations across the US and Europe, the company has a significant presence in the industry. With half of the US population residing within a Public Storage trade area, the firm has an unmatched owned scale and locations as its competitive advantage. The income growth profile also outpaces the wider real estate space.
Since the beginning of 2019, the firm’s portfolio size has expanded by 35% through $11 billion of investment and an addition of 56 million square feet. Resilient income generation, a growth-oriented balance sheet, and the potential for robust external growth make Public Storage (NYSE:PSA) an iconic brand with consumer recognition.
As of Q2, the REIT is held by 30 hedge funds. Among self-storage REITs, the firm exceeds the market cap of many known peers including Extra Space Storage, Digital Realty Trust, and Crown Castle. The stock ranks 10th among the 13 most profitable real estate stocks now.
9. Invitation Homes Inc. (NYSE:INVH)
Number of Hedge Fund Holders: 31
5 Year Net Income Growth: 40.84%
Invitation Homes Inc. (NYSE:INVH) is the largest single-family home leasing and management company in the US. The firm offers various options for leasing an updated home in a desirable neighborhood. With top-level property management, homes in desirable neighborhoods, Smart Home technology features, and its proactive maintenance program, the company sets itself apart from the competition.
Invitation Homes Inc. (NYSE:INVH) has an attractive position as the premier single-family home leasing company in the country. It has an unmatched scale with its portfolio predominantly focused on infill locations which provide better insulation from new supply. The scale is evident from the average of nearly 5,300 wholly-owned homes across the company’s 16 core markets. Simultaneously, almost all of the nearly 25,000 JV and third-party managed homes are positioned in the core and identified target markets. Furthermore, it is 33% more affordable to home leasing as compared to home buying in 16 of its core markets.
Invitation Homes has accretive homebuilder relationships and a high-margin third-party management business which helps it deliver outsized AFFO growth. During the year’s second quarter, the firm’s total revenues increased 8.8% year-over-year to $653 million while AFFO per share increased 4.1% to $0.40. Invitation Homes entered into contracts with its homebuilder partners to construct over 1,000 newly built homes. It also started providing third-party property and asset management services for a portfolio of 3,000 single-family homes for lease which brought the company’s total number of managed-only homes to 17,261 as of June 30, 2024.
Therefore, Invitation Homes Inc. (NYSE:INVH) remains well-positioned to continue its industry-leading occupancy and strong growth. As of Q2, the stock is held by 31 hedge funds thereby ranking among the 13 most profitable real estate stocks now.
8. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 33
5 Year Net Income Growth: 35.58%
VICI Properties Inc. (NYSE:VICI) owns one of the largest high-quality portfolios of market-leading gaming, hospitality, and entertainment destinations. The company owns 93 experiential assets across a diverse portfolio which comprises 54 gaming properties 39 other experiential properties, and four championship golf courses positioned across the US and Canada.
VICI Properties Inc. (NYSE:VICI) serves as one of the largest triple net lease REITs which reflects its significant scale. The company has also shown a track record of growth and tenant diversification. As compared to traditional net-lease REITS, the firm’s assets have high barriers to entry and high financial transparency. The REIT has also diversified itself with other revenue streams by being the largest owner of hotel room real estate and privately owned meeting, convention, and event space in America.
During the second quarter, the REIT recorded a 6.6% year-over-year revenue growth. Net income rose 7.3% to $741.3 million while AFFO attributable to common stockholders increased 9.6%, year-over-year. Simultaneously, the company announced up to $700 million in investment through VICI’s Partner Property Growth Fund strategy to fund extensive reinvestment projects at The Venetian Resort Las Vegas. With the increasing share of consumer discretionary income spent on experiences, the experiential real estate industry presents the firm with favorable secular trends.
A sustainable growth pattern with quality tenants in durable sectors across attractive geographies deems VICI Properties Inc. (NYSE:VICI) as a top experiential real estate firm. As of Q2, the stock is held by 33 hedge funds.
7. Crown Castle Inc. (NYSE:CCI)
Number of Hedge Fund Holders: 38
5 Year Net Income Growth: 10.06%
Crown Castle Inc. (NYSE:CCI) owns, operates, and leases over 40,000 cell towers and nearly 90,000 route miles of fiber supporting small cells and fiber solutions across every major US market. The company was founded in 1994 with an initial portfolio of 133 cell towers. In 1998, it went public with approximately 1,400 towers. The firm’s national portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless services.
Crown Castle Inc. (NYSE:CCI) is the nation’s largest provider of shared communications infrastructure which is set to benefit from the long-term US wireless data demand growth. The company is meant to offer the US wireless carriers with the prime real estate they require to run their networks. Even emerging markets such as 5G, the Internet of things, and smart city technologies which are to stay, require the firm’s infrastructure solutions.
The durability and consistency of the firm’s business were reflected in its second-quarter results. Crown Castle is just on the right path to deliver its full-year outlook for organic revenue growth of 4.5% in towers, 2% in fiber solutions, and double digits in small cells. While the firm believes that there is demand to grow small cell business revenues by double digits over the next few years, the fiber solutions business delivered growth above its 3% expectation.
With the growing demand for data and information, the firm’s unique combination of assets is ready to serve. Therefore, Crown Castle Inc. (NYSE:CCI) remains in an ideal position to continue its strong, steady trajectory with new growth opportunities for the coming years. As of Q2, the stock is held by 38 hedge funds.
6. Simon Property Group, Inc. (NYSE:SPG)
Number of Hedge Fund Holders: 38
5 Year Net Income Growth: 2.10%
Simon Property Group, Inc. (NYSE:SPG) is a real estate investment trust that engages in the ownership of premier shopping, dining, entertainment, and mixed-use destinations, which primarily include malls, Premium Outlets, and The Mills. The company’s properties span North America, Europe, and Asia. The firm owned or held an interest in 195 income-producing properties in the US, which comprised 93 malls, 69 Premium Outlets, 14 Mills, six lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico, as of December 31, 2023. Globally, Simon had ownership interests in 35 Premium Outlets and Designer Outlet properties located in Asia, Europe, and Canada.
With three decades in operation, Simon has demonstrated growth, resilience, and innovation by becoming the preeminent owner and operator of best-in-class retail real estate properties, with scale. The firm serves as one of the largest landlords to the world’s most important retailers. Simon’s portfolio remains differentiated by product type, geography, and tenant mix. This portfolio is irreplicable as it includes properties like shopping centers, many generating $100 million or more in annual NOI. Thus, no other real estate type can match the longevity, embedded future growth, and NOI generation of these centers.
The management was pleased with the firm’s second-quarter results. Net income attributable to common stockholders was $493.5 million as compared to $486.3 million in 2023. Funds From Operations (FFO) was $2.90 per diluted share relative to $2.88 per diluted share in the prior year period. The development activity also remained robust. While construction began on a new, 234-unit luxury residential development at Northgate Station, Tulsa Premium Outlets was planned to open with 338,000 square feet.
Based on 30 years of proven experience and performance, Simon Property Group, Inc. (NYSE:SPG) remains strong and poised for future growth. As of Q2, the stock is held by 38 hedge funds and ranks on our list of the most profitable real estate stocks now.
5. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 44
5 Year Net Income Growth: 28.87%
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust that owns, operates, and invests in carrier-neutral data centers. The company supports leading enterprises and service providers and delivers the full spectrum of data center, colocation, and interconnection solutions. The firm was incorporated in Maryland in March 2004.
Digital Realty Trust, Inc. (NYSE:DLR) has an extensive footprint with its global data center platform delivering value and security in six continents, over 25 countries, and more than 50 global metros. The growth pattern for the firm has also been strong with 20 years of consecutive revenue growth. The firm’s leading data center platform benefits from the growing global demand from a diversified customer base while digital transformation is expected to drive a stronger demand.
Digital Realty Trust, Inc. (NYSE:DLR) recently marked one of the top quarters in its history with $164 million of new leasing executed in Q2. With record new log-ins and near-record bookings in each of the zero-to-one-megawatt and interconnection categories, the company also recorded one of the strongest quarters ever in the zero-to-one-megawatt plus interconnection segment.
Digital Realty Trust, Inc. (NYSE:DLR) is set to expand and grow its business based on a favorable demand environment for data center capacity, especially for larger capacity blocks in its core markets. The company expects to accelerate top-line and bottom-line growth for the remainder of 2024. Therefore, Digital Realty Trust is another profitable real estate stock.
4. SBA Communications Corporation (NASDAQ:SBAC)
Number of Hedge Fund Holders: 45
5 Year Net Income Growth: 31.41%
SBA Communications Corporation (NASDAQ:SBAC) is a leading owner and operator of wireless communications infrastructure throughout the Americas, Africa, and Asia. The company was formed in 1989 and is based in Boca Raton, Florida. It generates revenue from two primary businesses including site leasing and site development.
SBA Communications Corporation (NASDAQ:SBAC) is one of the largest real estate investment trusts based on market cap. The firm has a robust business model which capitalizes on the exponential growth in mobile data consumption. With 8.9 billion global mobile subscribers, the market opportunity is vast. Thus, the firm benefits from an established and proven business model in a thriving market.
The financial results for the firm’s second quarter were solid. The firm recorded industry-leading AFFO per share of $3.29, a 1.5% increase as compared to the prior-year period. While the new business execution in the US remains modest, the positive sign for the company is a pick-up in new leasing activity internationally.
As of June 30, 2024, the firm owned or operated 39,744 communication sites, 17,461 of which are located in the US and its territories and 22,283 of which are located internationally. A leading position in the global wireless communications infrastructure market deems SBAC attractive and ranks it among the most profitable real estate stocks. The stock is held by 45 hedge funds, as of 2024’s second quarter.
3. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 56
5 Year Net Income Growth: 15.83%
Equinix Inc. (NASDAQ:EQIX) serves as the world’s digital infrastructure company which specializes in Internet connection and data centers. The company came into being in 1998 as a vendor-neutral multitenant data center provider and currently operates in 33 countries. It allows businesses to scale across the world’s biggest network of interconnected data centers.
Equinix Inc. (NASDAQ:EQIX) occupies a strong competitive position through its global ecosystem, which is bigger than its next 10 competitors combined. The firm provides customers access to over 2,000 network services, over 3,000 cloud and IT services, over 450 content and digital media services, and over 4,800 enterprises. With 86 consecutive quarters of top-line revenue growth, the firm demonstrates profitability. In 2023, Equinix had $8.1 billion in global revenues.
During the second quarter, the firm’s adjusted EBITDA exceeded the $1 billion quarterly threshold for the first time. Net income rose by 45% year-over-year to $301 million. Equinix Inc. (NASDAQ:EQIX) has 54 major projects underway across 24 countries. Leveraging the growing digital opportunity of the fast-growing Southeast Asia region, the company has announced its entry into the Philippines while expanding into Malaysia and Indonesia.
Equinix Inc. (NASDAQ:EQIX) is in an attractive spot to further drive its growth and profitability. Over the past 5 years, the firm has expanded its revenue by 8.59% and its net income by 15.83%. As of Q2, the stock is held by 56 hedge funds.
2. Prologis, Inc. (NYSE:PLD)
Number of Hedge Fund Holders: 56
5 Year Net Income Growth: 10.96%
Prologis, Inc. (NYSE:PLD) is a global leader in logistics real estate which focuses on high-barrier, high-growth markets. The firm leases modern logistics facilities to 6,700 customers across two categories including business-to-business and retail/online fulfillment. It has built its legacy through the acquisition, development, and maintenance of the largest collection of high-quality logistics real estate globally.
Prologis, Inc. (NYSE:PLD) has a leading position in industrial real estate alongside a global impact. 2.8% of the global GDP flows through the company’s distribution centers globally. The firm has an irreplaceable portfolio of over 1.2 billion square feet located in the world’s most vibrant centers of commerce. It is also the preferred real estate partner for the top retail, e-commerce, and logistics companies. Amazon, FedEx, DHL, and Maersk have trusted the firm as their real estate partner.
The REIT leased 52 million square feet in its portfolio during the second quarter representing a 27% increase over the first quarter and one of its highest quarters in the past years. While the customer demand was subdued, it is improving and is expected to continue improving which is a positive omen for Prologis. The firm also sees its future growth in opportunities in data centers and energy.
Prologis, Inc. (NYSE:PLD) maintains one of the largest global portfolios of logistics real estate and an industry-leading position. The stock ranks second among the 13 most profitable real estate stocks now. As of Q2, the stock is held by 56 hedge funds.
1. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 63
5 Year Net Income Growth: 11.10%
American Tower Corporation (NYSE:AMT) provides infrastructure for modern digital communications. The firm is an independent owner, operator, and developer of multi-tenant communications real estate. Other than leasing space on its communications sites to tenants, it offers customized services and solutions including site acquisition, zoning and permitting, and structural analysis.
American Tower Corporation (NYSE:AMT) remains uniquely positioned as one of the largest publicly held global real estate investment trusts. The firm has the kind of portfolio that has resulted in a footprint across diverse geographies. This portfolio is well-established and comprises 224,000 communications sites, including almost 43,000 properties in the United States and Canada and over 181,000 properties internationally. The ongoing exponential growth in mobile data consumption has driven performance in the United States.
2024 has been promising for American Tower Corporation. Highlights from the firm’s recent second quarter include over 5% Organic Tenant Billings Growth in its US & Canada segment, positive collection trends in India, and the second-highest quarter of signed new business achieved by CoreSite. The strong performance led to a 13.5% attributable AFFO growth in the quarter.
The company is pursuing long-term growth by managing its diverse markets. AMT has planned to reduce its exposure to emerging markets which are more vulnerable to the macro environment as the firm continues to focus on incremental investments in developed economies. The firm recently closed the sale of its operations in India to Data Infrastructure Trust, an Infrastructure Investment Trust sponsored by an affiliate of Brookfield Asset Management.
The established market position combined with the strong underlying demand for its communication asset portfolio and a clear trajectory for future growth makes American Tower Corporation (NYSE:AMT) an attractive real estate stock. As of Q2, the stock is held by 63 hedge funds.
While we acknowledge the potential of AMT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than AMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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