15 Best Real Estate Stocks for 2021

Published on August 31, 2021 at 1:30 pm by Vardah Gill in Hedge Funds, News

In this article, we will take a look at the 15 best real estate stocks for 2021. You can skip our detailed analysis and go directly to the 5 Best Real Estate Stocks for 2021.

The real estate sector lost a great deal in the face of pandemic-related restrictions in 2020. According to a report by McKinsey & Company, in the U.S., the dollar volume of commercial real estate sales in the third quarter of 2020 plummeted 57%, compared with the same period in 2019.

However, real estate stocks have always been a top choice of investors due to their durability and strength. The S&P 500 Real Estate Index has returned 9.31% in the past decade, nearly just as much as the broader market. Investors look for real estate stocks, mainly because of their long-term prospects. With well-chosen assets, investors can generate profits through rental income and other related means. REITs, especially, are regarded as the safe haven against inflation and are useful to diversify investors’ equity portfolios. Some of the notable real estate stocks gaining investors’ attention in 2021 include American Tower Corporation (NYSE: AMT), Prologis, Inc. (NYSE: PLD), Simon Property Group, Inc. (NYSE: SPG), CBRE Group, Inc. (NYSE: CBRE), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O).

As of 2021, the real estate or REITs sector is clawing back to the pre-pandemic levels, fueled by declining interest rates and a robust vaccine process. The Financial Times Stocks Exchange Nareit All Equity REITs index had a total return of 23.6% in 2021. The commercial real estate in the U.S. outpaced the pre-pandemic levels in Q2 2021, with investors buying commercial properties worth $144.7 billion, tripling the amount recorded in the same period last year. Similarly, in the first half of 2021, retail REITs gained 35.9% and the funds from operations, or FFO, from this sector, rose to 5.6% in Q1 2021.

The residential sector is also reaping profits in 2021 as people are getting back to work. The residential REITs returned 41.46% in the first half of 2021, compared with -10.69% in 2020. Despite hitting the low due to the initial jolts of the pandemic, the residential sector was valued at $2.5 trillion in 2020, bringing the total to $36.2 trillion. The need for housing and apartments will always be there and grow. According to a report by National Apartment Association, the U.S. needs at least 4.6 million new apartments by 2030.

Our Methodology:

Let’s analyze our list of the 15 best real estate stocks for 2021. We took into account hedge fund sentiments, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.

Picture by Sean Pollock on Unsplash

Why pay attention to hedge fund sentiment while choosing stocks?

Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Real Estate Stocks for 2021

15. Innovative Industrial Properties, Inc. (NYSE: IIPR)

Number of Hedge Fund Holders: 15

Innovative Industrial Properties, Inc. (NYSE: IIPR) is a real estate investment trust company that owns and leases industrial real estate assets. The company focuses on the acquisition, development, and management of industrial facilities in the regulated medical-use cannabis industry. It ranks fifteenth on our list of the best real estate stocks for 2021.

In Q2 2021, Innovative Industrial Properties, Inc. (NYSE: IIPR) posted an FFO of $1.56, beating a market consensus by $0.07. The consolidated revenue presented a 101% year-over-year growth at $48.9 million. Recently, Innovative Industrial Properties, Inc. (NYSE: IIPR) acquired a property in Maryland and has also entered into a long-term agreement with a subsidiary of Harvest Health & Recreation. Recently, Craig-Hallum lifted its price target on Innovative Industrial Properties, Inc. (NYSE: IIPR) to $240 from $175. The firm expects growth in the company’s finances due to the state legalization of medical cannabis. Innovative Industrial Properties, Inc. (NYSE: IIPR) gained 93.5% in the past year.

As of Q2 2021, 15 hedge funds tracked by Insider Monkey have positions in Innovative Industrial Properties, Inc. (NYSE: IIPR), up from 13 in the previous quarter. The total value of these stakes is over $200 million.

Like Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), Innovative Industrial Properties, Inc. (NYSE: IIPR) is one of the notable real estate stocks gaining investors’ attention in 2021.

14. STAG Industrial, Inc. (NYSE: STAG)

Number of Hedge Fund Holders: 15

STAG Industrial, Inc. (NYSE: STAG) stands fourteenth on our list of the best real estate stocks for 2021. It is a real estate investment trust that invests in single-tenant industrial properties throughout the U.S. The company offers a balance of income and growth to its investors. As of June 30, STAG Industrial, Inc. (NYSE: STAG) has an enterprise value of over $8 billion.

In Q2 2021, STAG Industrial, Inc. (NYSE: STAG) reported an FFO of $0.52, beating the consensus by $0.02. The consolidated revenue for the quarter stood at $138.4 million, presenting a 17% year-over-year growth. STAG Industrial, Inc. (NYSE: STAG) attributed the strong earnings due to the increasing demand for space in its portfolio. The company achieved an Occupancy Rate of 96.8% on the total portfolio and 97.2% on the Operating Portfolio as of Q2. Recently, RBC Capital raised its price target on STAG Industrial, Inc. (NYSE: STAG) to $46, with an ‘Outperform’ rating on the shares. The firm expects growth in the company’s earnings due to an increase in leasing activity over the past quarters. STAG Industrial, Inc. (NYSE: STAG) gained 37.5% in 2021.

Of the 873 hedge funds tracked by Insider Monkey, 15 hedge funds have positions in STAG Industrial, Inc. (NYSE: STAG), worth $232.1 million.

In addition to Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), analysts are also paying attention to STAG Industrial, Inc. (NYSE: STAG) due to the company’s long-term growth potential.

13. CubeSmart (NYSE: CUBE)

Number of Hedge Fund Holders: 18

CubeSmart (NYSE: CUBE) is a real estate investment trust that invests in self-storage facilities. The company has more than 500 stores and 37.1 million square feet of rentable space. CubeSmart (NYSE: CUBE) derives 70% of its revenue from metropolitan markets. It ranks thirteenth on our list of the best real estate stocks for 2021.

In Q2 2021, CubeSmart (NYSE: CUBE) posted an FFO of $0.50 per share, beating the consensus by $0.03. The company reported a 17.6% year-over-year growth in same-store net operating income. CubeSmart (NYSE: CUBE) generated $199.2 million in revenue in the second quarter, up from $163.7 million during the same period last year. The company attributed the revenue growth to increased occupancy and rental rates on the same-store portfolio. Recently, Raymond James upgraded CubeSmart (NYSE: CUBE) to ‘Market Perform’ and appreciated the company’s recent quarter. The stock has delivered a 65% return in the past year.

As of Q2 2021, 18 hedge funds tracked by Insider Monkey have positions in CubeSmart (NYSE: CUBE), worth $350.1 million. Diamond Hill Capital is the company’s leading shareholder, with over 3.4 million shares, worth $158.7 million.

In addition to Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), analysts are also paying attention to CubeSmart (NYSE: CUBE) due to the company’s long-term growth potential.

12. Kimco Realty Corporation (NYSE: KIM)

Number of Hedge Fund Holders: 20

Kimco Realty Corporation (NYSE: KIM) is a real estate investment trust that mainly invests in shopping centers. At the end of 2020, Kimco Realty Corporation (NYSE: KIM) owned interests in over 400 U.S. shopping centers. The company ranks twelfth on our list of the best real estate stocks for 2021.

In Q2 2021, Kimco Realty Corporation (NYSE: KIM) reported an FFO of $0.34 per share, beating the estimate by $0.03. The company generated revenue of $289 million, up from $238.9 million during the same period last year. For FY’21, the company boosted its guidance amid a strong traffic recovery for retail REITs. Recently, Capital One upgraded Kimco Realty Corporation (NYSE: KIM) to ‘Overweight’, with a $26 price target. The stock has delivered an 81.4% return in the past year.

As of Q2 2021, 20 hedge funds tracked by Insider Monkey have positions in Kimco Realty Corporation (NYSE: KIM), up from 17 in the previous quarter. The total value of these stakes is $218.9 million. With over 2.6 million shares, Arrowstreet Capital is the company’s leading shareholder.

Like Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), Kimco Realty Corporation (NYSE: KIM) is one of the notable stocks gaining investors’ attention.

11. EPR Properties (NYSE: EPR)

Number of Hedge Fund Holders: 20

EPR Properties (NYSE: EPR) is a real estate investment trust that mainly invests in amusement parks, ski resorts, movie theatres, and similar entertainment properties. The company has nearly $6.5 billion in total investments across 44 states.

In July, EPR Properties (NYSE: EPR) was listed as the top Buy-rated stock for Q3 by BofA. The company reported FFO per share at $0.71, beating the consensus by $0.11. The consolidated revenue stood at $125.3 million versus an estimate of $112.6 million, presenting a 17.9% year-over-year growth. EPR Properties (NYSE: EPR) also declared a quarterly dividend of $0.25 per share. In June, Raymond James upgraded EPR Properties (NYSE: EPR) to ‘Strong Buy’ with a $62 price target. The firm showed its confidence in the company’s future growth due to the reopening of movie theatres across the U.S. Since the beginning of the year, EPR Properties (NYSE: EPR) has delivered a return of 52.63% to its shareholders.

Of the 873 hedge funds tracked by Insider Monkey, 20 funds have positions in EPR Properties (NYSE: EPR) in Q2 2021, worth over $231 million. The number is compared with 15 hedge funds in the previous quarter.

10. Realty Income Corporation (NYSE: O)

Number of Hedge Fund Holders: 23

Realty Income Corporation (NYSE: O) is a real estate investment trust company that invests in single-tenant commercial properties in the U.S. the company has over 6,761 properties across the U.S. and the U.K. The company ranks tenth on our list of the best real estate stocks for 2021.

In Q2 2021, Realty Income Corporation (NYSE: O) reported revenue of $464.3 million, up from $414.6 million in the prior-year quarter. The company reported an FFO of $0.88, beating an estimate by $0.01. Realty Income Corporation (NYSE: O) has benefitted from its rental revenue and invested $1.13 billion in 156 properties in the second quarter. The company pays a monthly dividend and has been raising dividends for the past 95 years. In June, Mizuho upgraded Realty Income Corporation (NYSE: O) to ‘Buy’ with a $77 price target. Since the beginning of the year, the stock has delivered a 20.1% return to shareholders.

As of Q2 2021, 23 hedge funds have positions in Realty Income Corporation (NYSE: O), up from 18 in the previous quarter. The total value of these stakes is over $221.7 million.

Like Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), and Digital Realty Trust, Inc. (NYSE: DLR), Realty Income Corporation (NYSE: O) is one of the notable real estate stocks gaining investors’ attention.

9. Equity Lifestyle Properties, Inc. (NYSE: ELS)

Number of Hedge Fund Holders: 25

Equity Lifestyle Properties, Inc. (NYSE: ELS) is a real estate investment trust that invests in manufactured homes, resort cottages, and recreational vehicles, or RVs. The company has controlling interest in over 400 communities and resorts in 33 states and British Columbia.

In Q2 2021, Equity Lifestyle Properties, Inc. (NYSE: ELS) reported an FFO of $0.61 per share, beating the consensus by $0.06. The revenue for the quarter also presented 24.9% year-over-year growth at $317.4 million. Rental income accounted for $255.6 million of the gross revenue. Equity Lifestyle Properties, Inc. (NYSE: ELS) announced a quarterly dividend of $0.3625 per share.

In July, Baird raised its price target on Equity Lifestyle Properties, Inc. (NYSE: ELS) to $86, with an ‘Outperform’ rating on the shares. The firm expects growth in the company’s RV segment. Since the beginning of the year, Equity Lifestyle Properties, Inc. (NYSE: ELS) has delivered a 37.6% return to shareholders.

As of Q2 2021, 25 hedge funds tracked by Insider Monkey have positions in Equity Lifestyle Properties, Inc. (NYSE: ELS), worth $477.6 million.

Baron Funds published its Q1 2021 investor letter and mentioned Equity Lifestyle Properties, Inc. (NYSE: ELS) in it. Here is what the firm has to say:

“The Fund also has investments in REITs that would benefit from this movement out of urban areas into suburban areas. In the aftermath of the economic impact from the Coronavirus, we expect demand for affordable housing to benefit manufactured housing REIT Equity Lifestyle Properties, Inc.“

8. The Howard Hughes Corporation (NYSE: HHC)

Number of Hedge Fund Holders: 25

The Howard Hughes Corporation (NYSE: HHC) is a real estate development company that owns and manages commercial and residential properties throughout the U.S. The company ranks eighth on our list of the best real estate stocks for 2021.

In Q2 2021, The Howard Hughes Corporation (NYSE: HHC) reported strong earnings in all segments. The company posted revenue of $212 million, up 36% from the prior-year quarter. Rental revenue accounted for $88.4 million of the gross revenue. The Howard Hughes Corporation (NYSE: HHC) reported a 23.3% increase in retail net operating income from the previous year mainly due to improving rent collections. In April, Piper Sandler lifted its price target on The Howard Hughes Corporation (NYSE: HHC) to $115, with an ‘Overweight’ rating on the shares. The stock gained 59.07% in the past year.

As of Q2 2021, 25 hedge funds tracked by Insider Monkey have positions in The Howard Hughes Corporation (NYSE: HHC), worth over $1.6 billion.

In addition to Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), analysts are also paying attention to The Howard Hughes Corporation (NYSE: HHC) due to the company’s long-term growth potential.

Rhizome Partners, an investment management firm, released its Q1 2021 investor letter and mentioned The Howard Hughes Corporation (NYSE: HHC) in it. Here is what the firm has to say:

“Howard Hughes experienced strong gains during the quarter. The company’s Hawaii condo sales continue to improve. We believe that vaccinations and a lack of entertainment competition may make the Seaport in NYC a favored destination for New Yorkers in the summer of 2021. Narratives often drive stock prices. In the last few years, Howard Hughes has been link to 1) a real estate compounder 2) an oil and gas crisis 3) an event driven trade via strategic initiative 4) a pandemic and 5) a millennial homebuying and net migration story. The company has continuously developed and improved their real estate holdings while the market mostly ignored the growth in NAV. Instead, narratives drove the stock price rather than NAV or the growth in NAV over time. Wall Street is currently enamored with everything related to homebuying and net migration stories and Howard Hughes provides excellent exposure to both themes. Our job is to discover companies trading at large discounts to NAV at the start. Equally important, our job is to assess the current narrative and its trajectory and adjust our positions accordingly. We believe the current favorable narrative can last for a while.”

7. Kilroy Realty Corporation (NYSE: KRC)

Number of Hedge Fund Holders: 26

Kilroy Realty Corporation (NYSE: KRC) is a real estate investment trust that invests in Class A office properties throughout the U.S. The company has over 117 office properties across the country. It ranks seventh on our list of the best real estate stocks for 2021.

In Q2 2021, Kilroy Realty Corporation (NYSE: KRC) reported an FFO of $0.88, beating the market consensus by $0.04. The revenue for the quarter stood at $225.9 million, up 3% from the prior-year quarter. For FY21, Kilroy Realty Corporation (NYSE: KRC) expects year-end occupancy of approximately 91.5%. Recently, the company announced the expansion of its operations in Texas. In June, Wolfe Research initiated its coverage on Kilroy Realty Corporation (NYSE: KRC) with an ‘Outperform’ rating and an $88 price target. Since the beginning of the year, Kilroy Realty Corporation (NYSE: KRC) has delivered a 17.8% return to shareholders.

As of Q2 2021, 26 hedge funds tracked by Insider Monkey have positions in Kilroy Realty Corporation (NYSE: KRC), worth over $241 million. Like Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), Digital Realty Trust, Inc. (NYSE: DLR), and Realty Income Corporation (NYSE: O), Kilroy Realty Corporation (NYSE: KRC) is one of the notable real estate stocks getting investors’ attention in 2021.

6. Digital Realty Trust, Inc. (NYSE: DLR)

Number of Hedge Fund Holders: 30

Digital Realty Trust, Inc. (NYSE: DLR) is a real estate investment trust that invests in data centers and works with IT-centric businesses with a special focus on AI, digital media, and cloud software.

In Q2 2021, Digital Realty Trust, Inc. (NYSE: DLR) reported revenue of $1.1 billion, up 10% from the prior-year quarter. The company recorded an FFO of $1.54 per share. Recently, Citi lifted its price target on Digital Realty Trust, Inc. (NYSE: DLR) to $179, with a ‘Buy’ rating on the shares. The firm’s analyst Michael Rollins appreciated the company’s performance in Q2 and observed that Digital Realty Trust, Inc. (NYSE: DLR) will benefit from the ongoing bookings momentum. Since the beginning of the year, Digital Realty Trust, Inc. (NYSE: DLR) has delivered a 20.4% return to shareholders.

As of Q2 2021, 30 hedge funds tracked by Insider Monkey have positions in Digital Realty Trust, Inc. (NYSE: DLR), up from 22 in the previous quarter. The total value of these stakes is $424.7 million.

Like Jones Lang LaSalle Incorporated (NYSE: JLL), CBRE Group, Inc. (NYSE: CBRE), Simon Property Group, Inc. (NYSE: SPG), Prologis, Inc. (NYSE: PLD), American Tower Corporation (NYSE: AMT), and Realty Income Corporation (NYSE: O), Digital Realty Trust, Inc. (NYSE: DLR) is one of the notable real estate stocks gaining investors’ attention.

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