Real estate stocks are in the spotlight as property investors weigh the possible effects of interest rate hikes. Rising interest rates give a boost to financing costs, making it expensive for property owners to refinance a building. Rising interest rates also dent the value of a property. Mizuho’s analyst Vikram Malhotra believes that the underperformance of real estate stocks is causing investors to have second thoughts about their investments.
“We are starting to get the question from investors: Is this [hedging strategy] overdone or does this have legs?” Malhotra said, according to The Wall Street Journal.
The real estate industry is one of the biggest industries in the world. In the U.S. alone, the public real estate investment trusts own more than $2.5 trillion in gross assets with a market capitalization of more than $1.35 trillion. Real estate includes anything that falls under physical property. It can consist of land, building, infrastructure, and air and subsurface rights above or below the ground, respectively. When it comes to real estate investments, the best way to invest for people from all financial classes is through Real Estate Investment Trusts.
Real estate investment trust portfolios include offices, apartment buildings, warehouses, data centers, medical facilities, and basic infrastructure for many other industries. From an investment point of view, REIT stocks are perfect for an individual’s medium and long-term capital appreciation. From 2017 to 2020, the annual return on investment average was around 11.25%.
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15 Most Valuable Real Estate Companies in the World
15. Duke Realty Corporation (NYSE:DRE)
Duke Realty Corporation is an Indiana-based company and deals primarily in industrial warehouses used for distribution and e-commerce retailers.
In the financial year 2020, Duke Realty Corporation (NYSE: DRE) had a revenue of $993 million and a net income of $300 million. The company employs around 350 people.
14. Ventas, Inc. (NYSE:VTR)
Ventas Inc. (NYSE: VTR) is a real estate investment trust headquartered in Chicago, Illinois, specializing in healthcare facilities management.
For the year 2020, Ventas Inc. owns around 1200 properties and employs 448 people. The company generated $3.795 billion in revenue in the following year with a net income of $152 billion.
13. Essex Property Trust, Inc. (NYSE:ESS)
Essex Property Trust (NYSE: ESS) is a California-based real estate investment company that primarily deals in apartments. Since December 2020, Essex Property Trust owns 60,272 apartment units across 246 apartment buildings covering around 106,000 square feet.
In the year 2020, Essex Property Trust generated $1.495 billion in revenue with a net income of $568 million.
12. Mid-America Apartment Communities, Inc. (NYSE:MAA)
Mid-America Apartment Communities (NYSE: MAA) is a real estate company based in Memphis, Tennessee. It is the largest owner of apartments in the U.S., with 100,490 apartment units across 300 apartment communities.
According to the 2020 reports, Mid-America Apartment Communities has 2530 employees, and for the same fiscal year, it generated revenue of $1.677 billion with a net income of $254 million.
11. Invitation Homes Inc. (NYSE:INVH)
Invitation Homes (NYSE: INVH) is a real estate investment trust headquartered in Dallas, Texas. It is the USA’s largest owner of single-family rental homes, with more than 80,000 homes.
According to the annual reports of Invitations Homes for the year 2020, it employs 1150 people and generated revenue of $1.822 billion with a net income of $195 million.
10. Realty Income Corporation (NYSE:O)
Realty Income (NYSE: O) is a real estate investment trust headquartered in San Diego, California. It deals in free-standing, single-tenant commercial properties in the U.S., U.K., and Puerto Rico. Instead of paying its dividends quarterly, Realty Income is one of the few companies that pays its dividends monthly.
As of June 2020, Realty Income owns around 6,500 properties with more than 106 million rentable square feet.
9. Alexandria Real Estate Equities, Inc. (NYSE:ARE)
Alexandria Real Estate Equities (NYSE: ARE) is California based real estate investment trust that invests in buildings and laboratories for science and technology students. The company is dedicated to science; it also owns a venture capital arm that invests in life science firms.
Alexandria Real Estate owns or has invested in 338 properties covering 49.7 million square feet. For the fiscal year 2020, Alexandria Real Estate Equities generated revenue of $1.885 billion with a net income of $760 million.
8. AvalonBay Communities, Inc. (NYSE:AVB)
Avalon Bay Communities (NYSE: AVB) is another real estate company on our list that deals in Apartments. It is headquartered in Arlington County, Virginia. It is the third-largest owner of apartments in the USA, with 79,856 units. Avalon Bay Communities owns apartment buildings in New York, Washington D.C., Seattle, California, and New England.
7. Welltower Inc. (NYSE:WELL)
Welltower is a REIT that deals in healthcare infrastructure and is based in Toledo, Ohio. In 2020, Welltower (NYSE: WELL) was ranked at 542th position on the Fortune 1000 list.
6. Public Storage (NYSE:PSA)
Public Storage (NYSE: PSA) is a real estate investment trust headquartered in Glendale, California, and deals in self-storage spaces. According to Public Storage’s 2020 annual report, the company owns around 175,051,000 sq. ft of net rentable space. By 2020, Public Storage (NYSE: PSA) owned 2548 properties and employed around 5400 people.
5. Equity Residential (NYSE:EQR)
Equity Residential is a real estate company that deals primarily in apartments and is the second-largest owner of apartments in the United States. According to SEC, Equity Residential has either owned or invested in 309 properties with 77,889 apartments as of December 2020. For the fiscal year 2020, Equity Residential had generated $2.57 billion in revenue with a net income of $963 million.
4. Weyerhaeuser Company (NYSE:WY)
Weyerhaeuser (NYSE: W.D.) is a real estate investment trust headquartered in Seattle, Washington. The primary operations of Weyerhaeuser revolve around Timber. The company holds 26,400,000 acres of timberland in the USA and Canada, with a total asset value of $16.35 billion. Even though the company operates as a real estate investment trust, it also produces wood products. Weyerhaeuser (NYSE: W.Y.) has employed around 9400 people and generated a revenue of $7.53 billion with a net income of $797 million for the year 2020.
3. Prologis, Inc. (NYSE:PLD)
Prologis (NYSE: PLD) is a real estate investment company with its headquarters situated in San Francisco, California. California-based Prologis focuses primarily on logistic Real Estate.
It leases logistic facilities to around 5500 customers across 19 countries in 4 continents: Americas, Europe, and Asia. Prologis tops our list, with the company owning 4715 buildings comprising 995 million square feet. This includes all the assets the company owns wholly and also co-investment with other companies.
Third Avenue Management, in its Real Estate Value Fund Q1 2021 investor letter, mentioned Prologis, Inc.. Here is what the fund said:
“Prologis, Inc. (a U.S.-based real estate investment trust that is the largest owner of modern logistic facilities with a platform that expands more than 950 million square feet of space in 19 countries globally) completing $2.0 billion USD of debt placements at a weighted average interest rate of 0.9% with an average term of more than 13 years. In the process, the company has further solidified one of the most compelling capital structures in the real estate industry with a prudent loan-to-value ratio of approximately 25% that is primarily comprised of fixed-rate debt at an average cost of 1.8% for a term that exceeds 10 years. As a result, the long-tenured management at Prologis (including one of the true leaders in the real estate space CEO Hamid Moghadam) have set up the company for what could be a very rewarding period ahead as incremental rental income and asset management fees seem likely to accrue disproportionately to shareholders on the “bottom-line” with its interest costs locked-in.”
2. American Tower Corporation (REIT) (NYSE:AMT)
American Tower Corporation (NYSE:AMT) is a real estate investment trust in Boston, Massachusetts, which also operates foundations, including most tangible assets for wireless and broadcast communications. As of December 2018, the company owns and operates around 17,700 communications sites in 4 continents, including Europe, Asia, and the Americas. American tower Corporation currently employs 5618 people. For the fiscal year 2020, the company generated revenue of $8.041 billion with a net income of $1.691 billion.
1. Brookfield Asset Management Inc. (NYSE:BAM)
Brookfield Asset Management Company (NYSE:BAM) tops our list with $626 billion worth of assets under management. Brookfield Asset Management is a Canadian company located in Toronto, Canada. Apart from Canada, the company operates in over 30 countries across five continents: the Americas, Europe, Australia, Asia, and the Middle East.
In the Q2 2021 investor letter of Baron Funds, it mentioned Brookfield Asset Management Inc.. Here is what the fund said:
“The shares of long-term holding Brookfield Asset Management Inc. gained 15% in the most recent quarter. The company is a leading alternative asset manager focused on investing in high-quality real estate and infrastructure-related assets that tend to generate predictable and growing cash flows. We remain bullish about the ongoing prospects for Brookfield given the secular growth opportunity for alternative assets, the company’s many competitive advantages including scale, global capabilities, its well known brand name, operating expertise, and performance track record. We hold management in high regard and believe the shares remain attractively valued.”
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This article is originally published at Insider Monkey.
