Five REITs Billionaires Are Fond Of

Although it has never been easy to find investment opportunities that offer high returns on capital with minimal volatility, real estate investment trusts (REITS) usually offer their shareholders exceptional dividend payouts and jaw-dropping yields. Investors are mostly attracted to REITs for their high levels of current income, as well as various opportunities for longer-term capital appreciation. These trusts generally provide high dividend payments to shareholders, along with potential for modest capital appreciation in the long-term. As a general rule, REITs buy properties, collect rent checks from tenants and ultimately pass on those checks to investors in the form of dividends or distributions. And because REITs are required by law to distribute at least 90% of their taxable income to shareholders, these firms tend to sport the highest dividend yields. However, not every REIT is a quality investment, so investors should be selective when being on the lookout for income-paying REITs. For that reason, Insider Monkey decided to compile a list of five REITs favored by the billionaire hedge fund managers monitored by Insider Monkey.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

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#5. Weyerhaeuser Co (NYSE:WY)

– Billionaires with long positions as of March 31: 6

– Aggregate value of billionaires’ holdings as of March 31: $160.50 Million

There were six billionaire funds followed by Insider Monkey with long positions in Weyerhaeuser Co (NYSE:WY) at the end of the first quarter, up from four recorded a quarter earlier. Meanwhile, the aggregate value of all those positions rose to $160.50 million from a much smaller figure of $62.11 million, partially due to a nearly 5% gain in the value of Weyerhaeuser shares. The U.S. forestry giant has seen its shares gain over 6% since the start of 2016. In late February, Weyerhaeuser merged with Plum Creek Timber Company Inc., another REIT that owned and managed timberlands in the United States. Weyerhaeuser’s current quarterly dividend of $0.31 per share gives the stock a yield of 3.89%. Recently, DA Davidson Downgraded Weyerhauser to ‘Neutral’ from ‘Buy’ with a price target of $33, citing the company’s second-quarter earnings, which included lower-than-expected revenue of $1.66 billion.

#4. Equinix Inc. (NASDAQ:EQIX)

– Billionaires with long positions as of March 31: 6

– Aggregate value of billionaires’ holdings as of March 31: $953.18 Million

The number of billionaire asset managers from our system with stakes in Equinix Inc. (NASDAQ:EQIX) decreased to six from seven during the first three months of 2016, whereas the overall value of those stakes inched up by 7% quarter-over-quarter to $953.18 million. The shares of the data center REIT have advanced by 22% since the beginning of the year. Equinix pays out a quarterly cash dividend of $1.75 per share, which equates to an annual dividend yield of 1.90%. For the second quarter, Equinix posted EPS of $0.56 on revenue of $900.5 million, which beat the estimates by $7.12 million, while Funds From Operation (FFO) went up by 38% sequentially to $290.5 million. For the full year, Equinix anticipates revenue in the range of $3.598 billion to $3.608 billion and adjusted FFO between 1.658 billion and $1.668 billion.

The second page of this article will reveal three other REITs favored by the billionaire hedge fund managers monitored by our team.

#3. American Tower Corp (NYSE:AMT)

– Billionaires with long positions as of March 31: 6

– Aggregate value of billionaires’ holdings as of March 31: $407.70 Million

American Tower Corp (NYSE:AMT) has also lost some appeal among the billionaires followed by our team, as the number of those bullish on the REIT fell to six from seven during the March quarter. Similarly, the total value of their holdings shrunk by 16% sequentially to $407.70 million despite a 6% gain in the value of American Tower shares. The owner, operator and developer of multitenant communications real estate has seen its market value increase by 20.2% since the start of 2016. American Tower Corp posted lower-than-expected adjusted FFO of $1.38 per share, versus the consensus estimate of $1.39, while revenue of $1.44 billion surged by 23.1% on the year and was in line with analysts’ forecasts. Moreover, the REIT also increased its full-year guidance and currently anticipated property revenue between $5.62 billion and $5.81 billion, consolidated adjusted FFO of $2.42 billion to $2.64 billion and net income between $965 million and $1.025 billion.

#2. Gaming and Leisure Properties Inc. (NASDAQ:GLPI)

– Billionaires with long positions as of March 31: 8

– Aggregate value of billionaires’ holdings as of March 31: $230.89 Million

Gaming and Leisure Properties Inc. (NASDAQ:GLPI) was a favorite stock among the billionaire money managers in the first quarter of 2016, as the number of billionaires from our database invested in the REIT spiked to eight from three during the January-March period. Meanwhile, the aggregate value of their holdings in GLPI grew to $230.89 million from a significantly lower value of $72.38 million recorded at the end of December. GLPI was created in early 2013 as a wholly-owned subsidiary of Penn National Gaming Inc. (NASDAQ:PENN) and was later spun-off to own Penn’s former real property assets. The REIT’s portfolio of assets includes 21 gaming and related facilities, most of which are leased back to Penn under long-term agreements. In July 2015, the REIT also agreed to acquire the real estate assets of Pinnacle Entertainment Inc. (NASDAQ:PNK) in an a deal valued at $4.75 billion. The stock of Gaming and Leisure Properties has gained over 27% so far this year and currently sports a dividend yield of 6.24%.

#1. Crown Castle International Corp (NYSE:CCI)

– Billionaires with long positions as of March 31: 12

– Aggregate value of billionaires’ holdings as of March 31: $1.14 Billion

Crown Castle International Corp (NYSE:CCI) also received some love from the asset managers with ten-figure fortunes tracked by Insider Monkey during the first quarter of 2016, when the number of investors bullish on the stock climbed to 12 from 10 quarter-over-quarter. Similarly, the aggregate value of their positions went up by 13% sequentially to $1.14 billion even though CCI shares were flat in the first quarter. The shares of the owner and operator of shared wireless infrastructure, which consists of roughly 40,000 towers and small cells supported by 16,500 miles of fiber, are up by nearly 12% so far in 2016. Crown Castle International posted second quarter FFO of $1.05 per share, which missed the consensus estimate of $1.16, but revenue of $962.4 million topped expectations by $13.55 million.

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