In this article, we will take a look at the 8 high growth real estate stocks that are profitable in 2024.
Real Estate Sector at a Glance: Recent Updates
In the week ended October 4, the average contract rate on a 30-year fixed-rate mortgage rose 22 basis points as stated by the Mortgage Bankers Association which marks the highest weekly increase in more than a year. As the 30-year fixed rate hit 6.36%, applications to refinance a home loan dropped 9% for the week while applications for a mortgage to purchase a home were reported to be flat, declining by 0.1% from the prior week. Relative to 1 year ago, refinance applications were up 159% and purchase applications were up 8%.
With the Fed cutting rates, many homebuyers who were on the sidelines for long are returning to the market with a rise in homebuying demand and purchase applications. Glenn Kelman, Redfin CEO, believes the Fed rate cut was late for the current season to have a major impact but would help many homebuyers in 2025. He told CNBC that only 2.5% of American homes changed hands within the last 12 months which indicates so many being locked into low mortgage rates. Thus, the market is still struggling with low inventory which is exactly going to be the gating factor for home sales in 2025. While the market looks forward to further rate cuts, Kelman thinks of inventory as a major long-term problem that remains unaddressed.
Another factor currently impacting US real estate is natural disasters such as hurricanes hitting Florida. In an interview with CNBC, Eddie Shapiro, Nest Seekers International president and CEO, discussed the state of the housing market in this regard. In his opinion, Florida is a rather strong and resilient market and hence the rebuilding and recovery would be quicker. Even with one rate cut, he views the momentum to be positive across the market. While the firm recorded its greatest August and September in a really long time, the overall market is entering a sweet spot for mortgage rates which are now in the 6% range.
With that being said, let’s move to the 8 high growth real estate stocks that are profitable in 2024.
Our Methodology:
In order to compile a list of the 8 high-growth real estate stocks that are profitable in 2024, we created an initial list of 30 companies with the biggest market caps in the sector. Moving on, we screened out those that had a positive net income in the last twelve months and a positive 5-year net income CAGR. Additionally, these companies were deemed high growth since they had their 5-year net revenue CAGR higher than 10%. Finally, we ranked the shortlisted companies in ascending order of their hedge funds, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 High Growth Real Estate Stocks That Are Profitable in 2024
8. Realty Income Corporation (NYSE:O)
5-Year Net Income Growth: 16.67%
5-Year Revenue Growth: 27.50%
TTM Net Income: $838.38 Million
Number of Hedge Fund Holders: 19
Realty Income Corporation (NYSE:O) invests in diversified commercial real estate. The company has a portfolio of 15,450 properties in all 50 US states, the UK, and six other countries in Europe.
Realty Income Corporation is one of the largest REITs with a growing global presence. The firm’s real estate portfolio stands diversified spanning 1,551 clients and 90 industries. The growth thesis for the firm is extensive 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.
The company is positioned for growth with an estimated global net lease addressable market of approximately $14 trillion. Another reason investors should consider Realty Income Corporation (NYSE:O) is that the firm has a strong dividend track record with 29 consecutive years of rising dividends. Recently, the REIT announced the 652nd consecutive common stock monthly dividend.
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, and 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) serves as a real estate partner to the leading companies in the world. The firm has a diversified real estate portfolio, an expanding footprint, and a strong growth trajectory to follow. Furthermore, the REIT has shown stable growth in fluctuating environments.
7. Essential Properties Realty Trust, Inc. (NYSE:EPRT)
5-Year Net Income Growth: 50.35%
5-Year Revenue Growth: 27.74%
TTM Net Income: $193.06 Million
Number of Hedge Fund Holders: 20
Essential Properties Realty Trust, Inc. (NYSE:EPRT) owns, acquires, and manages single-tenant properties in the US. These properties are net leased on a long-term basis to companies operating in service-oriented or experience-based businesses. These businesses include automotive services, restaurants, convenience stores, medical services, health & fitness, entertainment, early childhood education, and other service industries.
The firm’s diversified portfolio comprises 2009 freestanding net lease properties spanning 49 states. The portfolio remains 99.8% leased while same-store rent growth has averaged 1.4% over the last 4 quarters. The firm tends to focus on businesses with favorable growth characteristics and insulation from the e-commerce pressure. Furthermore, Essential Properties Realty Trust follows a disciplined external growth approach with investment activity being healthy at attractive cap rates. The tenant roster is strong as well and stands at 395 as of June 30, up 195% since IPO.
Essential Properties Realty Trust, Inc. (NYSE:EPRT) reported second-quarter AFFO per share of $0.43 which increased by 5% as compared to the second quarter of fiscal 2023. Since the company is raising and deploying capital into attractive investments, it closed investments of $333.9 million at an 8.0% weighted average cash cap rate.
With over 100 years of management’s collective net lease experience, an established portfolio diversified across geography and tenant industry, and a well-positioned balance sheet, Essential Properties Realty Trust, Inc. (NYSE:EPRT) continues to successfully execute its business plan while pursuing promising growth opportunities.
6. Rexford Industrial Realty, Inc. (NYSE:REXR)
5-Year Net Income Growth: 40.01%
5-Year Revenue Growth: 29.63%
TTM Net Income: $256.41 Million
Number of Hedge Fund Holders: 23
Rexford Industrial Realty, Inc. (NYSE:REXR) focuses on creating value by investing in and operating industrial properties throughout infill Southern California. The firm has been structured as a real estate investment trust. Rexford’s portfolio comprises 422 properties with approximately 49.7 million rentable square feet.
Rexford’s has an irreplaceable portfolio in the largest, most sought-after industrial property market in the US. The firm has been driving an industry-leading performance with average annual FFO per share growth (5-year) surpassing the peer average. The exclusive focus on Southern California enables outperformance with net effective leasing spreads exceeding the peer average and driving an NOI margin expansion. Thus, the firm targets an attractive market with a scarce supply and a growing tenant demand. There is virtually no threat of new competition in this high-barrier market with scarce developable land.
For the second quarter, Rexford Industrial Realty, Inc. (NYSE:REXR) reported a core FFO of $0.60 per diluted share, up 11.1% year-over-year. Net income attributable to common stockholders for the quarter was $79.8 million as compared to $51.6 million for the prior year quarter. The consolidated portfolio NOI and Cash NOI rose 20.9% and 21.7% respectively, year-over-year.
In conclusion, Rexford Industrial Realty, Inc. (NYSE:REXR) has a high-quality portfolio that is appealing to a diverse and strong tenant base. The firm’s portfolio remains insulated due to the long-term scarcity of supply in infill Southern California. Its premium infill locations are essential for serving regional consumption.
5. CubeSmart (NYSE:CUBE)
5-Year Net Income Growth: 18.07%
5-Year Revenue Growth: 11.47%
TTM Net Income: $403.8 Million
Number of Hedge Fund Holders: 23
CubeSmart (NYSE:CUBE) is a self-administered and self-managed real estate company that focuses on the ownership, acquisition, operation, and development of self-storage facilities in the US. Thus, the company provides affordable and easily accessible storage space for residential and commercial customers.
CubeSmart has the privilege of being one of the largest owners and operators of self-storage properties in the nation with over 1,200 self-storage properties. The firm has a high-quality portfolio in an attractive industry with high margins and dynamic demand. CubeSmart boasts an extensive national footprint spanning 185 markets across 40 states and the District of Colombia and hence, remains diversified. The firm further diversifies its portfolio by exposure to secondary and tertiary markets through its third-party management programs and joint ventures.
During the fiscal second quarter, CubeSmart (NYSE:CUBE) benefitted from a marginally stronger seasonal uplift in demand. The firm reported FFO, as adjusted, of $146.0 million for the quarter as compared to $149.5 million for the second quarter of 2023. While the firm opened for operation two development projects in New Jersey and New York, it added 39 stores to its third-party management platform.
CubeSmart (NYSE:CUBE) is a leading player in self-storage with a focus on submarkets with attractive demographics for long-term demand trends. With the consistent growth in CubeSmart stores, its customer base has also substantially expanded over time. Furthermore, the firm’s external growth strategy remains robust through high-quality acquisitions and value-added joint ventures.
4. Public Storage (NYSE:PSA)
5-Year Net Income Growth: 4.10%
5-Year Revenue Growth: 10.21%
TTM Net Income: $1.88 Billion
Number of Hedge Fund Holders: 30
Public Storage (NYSE:PSA) is a leading owner, operator, and developer of self-storage facilities. The company opened its first self-storage facility in 1972 and has grown over the years to become the largest owner and operator of self-storage facilities globally. It has numerous locations across Europe and the US and serves as one of the biggest landlords globally with over 170 million net rentable square feet of real estate.
Public Storage (NYSE:PSA) has maintained a leadership position in the self-storage market for nearly half a century. With half of the U.S. population residing within a Public Storage trade area, the firm has an unmatched owned scale. As compared to the self-storage REIT peer average, PSA has demonstrated consistently optimized occupancy and rent leadership.
For the second quarter, the firm recorded net income allocable to common shareholders of $468.4 million. FFO was $4.30 per diluted common share relative to $4.29 for the same period in 2023, slightly up 0.2% year-over-year. The firm also acquired two self-storage facilities with 0.1 million net rentable square feet other than opening two newly developed facilities and completing various expansion projects which added 0.4 million net rentable square feet together.
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. Public Storage (NYSE:PSA) is an iconic brand that has delivered industry-leading revenue, NOI performance, and cash flow generation. With high-growth lease-up properties now making 22% of the total portfolio and growing, the future growth potential is vast.
3. VICI Properties Inc. (NYSE:VICI)
5-Year Net Income Growth: 35.58%
5-Year Revenue Growth: 33.19%
TTM Net Income: $2.64 Billion
Number of Hedge Fund Holders: 33
VICI Properties Inc. (NYSE:VICI) is an experiential real estate investment trust. The firm owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations in the US. This portfolio includes 93 experiential assets across a diverse portfolio comprising 54 gaming properties and 39 other experiential properties across the US and Canada. The company’s strategy involves partnering with quality experiential place makers and operators to create the highest quality experiential real estate portfolio.
VICI is one of the largest triple net lease REITs with $3.1 billion of annualized cash rent. Since the gaming regulatory environment creates high barriers to entry, the firm benefits from a 100% occupancy rate as tenant’s ability to move locations is limited. The firm has also demonstrated growth by announcing approximately $37 billion of domestic and international investments across gaming and other experiential assets since its founding in 2017. VICI also remains diversified with multiple revenue streams i.e. hotel rooms, meeting and convention space, gaming space, entertainment venues, and retail outlets.
For the second quarter, the firm’s total revenues rose 6.6% year-over-year to $957.0 million. AFFO attributable to common stockholders climbed 9.6% year-over-year. Net income attributable to common stockholders increased 7.3% as compared to the prior-year period. Furthermore, VICI committed up to $950 million of capital into existing high-quality partnerships.
VICI Properties Inc. (NYSE:VICI) is a world-leading gaming and experiential REIT with a significant scale and a track record of growth. The firm sets it apart from traditional net lease REITs with assets having high barriers to entry and high financial transparency.
2. Digital Realty Trust, Inc. (NYSE:DLR)
5-Year Net Income Growth: 28.87%
5-Year Revenue Growth: 10.86%
TTM Net Income: $1.08 Billion
Number of Hedge Fund Holders: 44
Digital Realty Trust, Inc. (NYSE:DLR) owns, operates, and invests in carrier-neutral data centers. The firm brings companies and data together by delivering 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 global data center footprint of over 300 facilities in more than 50 metros across over 25 countries on six continents. 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.
The continued strength of demand for data center capacity was evident in DLR’s recent quarterly results as it marked one of the top quarters in its history with $164 million of new leasing executed in Q2. The firm reported revenues of $1.4 billion, a 2% increase from the previous quarter. 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.
With a leading global data center platform and a growing global demand from a diversified customer base, Digital Realty Trust, Inc. (NYSE:DLR) is poised to grow. The firm also has durable competitive advantages in the form of a global footprint catering to the full customer spectrum. As of Q2, the stock is held by 44 hedge funds.
1. Prologis, Inc. (NYSE:PLD)
5-Year Net Income Growth: 10.96%
5-Year Revenue Growth: 19.47%
TTM Net Income: $2.82 Billion
Number of Hedge Fund Holders: 56
Prologis, Inc. (NYSE:PLD) serves as a global leader in logistics real estate which leases modern logistics facilities to more than 6,700 customers across business-to-business and retail/online fulfillment categories. For more than 40 years, the company has created a legacy by acquiring, developing, and maintaining the largest collection of high-quality logistics real estate in the world.
As a leader, Prologis, Inc. (NYSE:PLD) has a global scale and expertise. The company’s portfolio remains unmatched. Prologis owned or had investments in properties and development projects totaling approximately 1.2 billion square feet in 19 countries, as of June 30. With 2.8% of the global GDP flowing through the company’s distribution centers annually, its standing as a leading global company is evident.
For the fiscal second quarter, the firm reported a Core FFO per diluted share of $1.34. It leased 52 million square feet in its portfolio during the second quarter. Although the customer demand was subdued, Prologis benefits from the embedded NOI potential of its premier global portfolio. Simultaneously, the firm is also capitalizing on the growth prospects in data centers and energy.
Prologis, Inc. (NYSE:PLD) is a promising and profitable real estate stock with over 40 years of real estate expertise, a leading position in logistics real estate, and an unrivaled portfolio. The firm has a solid market cap of $110.04 billion. As of Q2, the stock is held by 56 hedge funds.
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