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4 REITs Your Black Friday Shopping Cart Must Have

Americans celebrated nature’s bounty on Thanksgiving Day. Now, Black Friday will kick off the annual holiday shopping season, giving retailers the chance to take advantage of bountiful sales. And why not? With rising incomes supported by wage compensation and heavy savings accumulated during the pandemic, consumers are ready to splurge.

According to the National Retail Federation’s (“NRF”) Chief Economist, Jack Kleinhenz, “The unusual and advantageous position in which we find ourselves is that households have increased their spending vigorously for most of 2021 and retain a sufficient shopping during the holidays”.

In fact, NRF’s projections paint an encouraging picture, holiday retail sales – excluding restaurants, car dealerships and gas stations – are expected to climb 8.5% to 10.5% from the previous year. ‘previous year to reach a total of 843.4-859 billion, suggesting the highest holiday. recorded retail sales. Online and other non-store sales are estimated to increase 11-15% to a total of $218.3-226.2 billion, up from $196.7 billion recorded during the same period last year.

While e-commerce is expected to remain a big contributor, people are expected to opt for a more traditional holiday shopping experience this year and return to in-store shopping. In anticipation, hiring for positions in brick-and-mortar stores and warehouses and distribution centers has picked up steam.

This optimism would translate into greater benefits for the real estate sector, especially REITs. Higher retail sales – whether online or in physical stores – generate huge profits for these REITs. Increased footfall in malls and malls would create additional demand for space. Selling online also needs real storage space and efficient distribution.

Additionally, retailers are using last-mile stores as much-needed fulfillment and distribution centers to serve the nearby dense population and are outperforming pure e-commerce players in terms of delivery times and profitability. Additionally, curbside pickup, combined with click-and-pickup options, should continue to command attention in the current environment and even in the post-Covid era. And REITs that make efforts in this direction are likely to add a competitive advantage today.

Choice of actions

To capitalize on this trend, we’ve selected four stocks for your Black Friday shopping cart. In addition to having strong fundamentals, these higher ranked REITs have a strong chance of outperforming the market over the next 1-3 months. These stocks are also experiencing positive estimate revisions, reflecting analysts’ optimism.

We suggest you invest in Simon Real Estate Group SPG, which is a juggernaut in the retail REIT sector and boasts a portfolio of high-end retail assets in the United States and abroad. Adopting an omnichannel strategy and successful tie-ups with high-end retailers helped Simon Property Group. It is also tapping into growth opportunities by helping digital brands build their physical presence, as well as capitalizing on the purchase of bankrupt household brands.

Additionally, Simon Property is exploring the mixed-use development option, which has gained immense popularity in recent years among those who prefer to live, work and play in the same neighborhood. Moreover, with a strong balance sheet and available capital resources, SPG appears poised to ride this growth curve and capitalize on opportunities arising from market dislocations.

In the third quarter, Simon Property saw increases in letting volumes, occupancy gains, buyer traffic and retail sales. Additionally, management raised the funds from operations (FFO) per share forecast for 2021 to the range of $11.55 to $11.65 from the range of $10.70 to $10.80 previously projected. , suggesting an increase of 85 cents at the midpoint. Simon Property announced a 10% sequential increase in its dividend in the fourth quarter of 2021. The company will now pay $1.65 per share, up from $1.50 previously paid. The increased dividend will be paid on December 31 to its shareholders of record as of December 10, 2021.

Simon Property Group currently carries a Zacks Rank #2 (Buy). Over the past month, Zacks’ consensus estimate for 2021 FFO per share has been revised up 3.8% to $11.28, reflecting analysts’ bullish outlook.

Another retail owner is Federal Real Estate Investment Trust FRT, a North Bethesda, MD-based retail REIT with a portfolio of high-end retail assets – primarily located in key coastal markets from Washington, DC to Boston, San Francisco and Los Angeles – as well as a diverse tenant base, both national and local.

Federal Realty has strategically selected the inner ring suburbs of nine major metropolitan markets. Due to the high demographics and infill nature of its properties, the company has been able to maintain a high level of occupancy over the years. Additionally, its focus on the open-air format and “The Pick-Up” concept has positioned it well to attract tenants even amid the current health crisis. Additionally, with the economy recovering, widespread vaccination and solid consumer spending, the retail REIT is poised to benefit from its superior assets in high-end locations and the experience of improving rental environment.

Currently, FRT carries a #2 Zacks rank and has a long-term growth rate of 8.4%. Additionally, for 2021, the stock saw the Zacks consensus estimate for FFO per share revised 4.9% higher to $5.36 in the past month. It also suggests an 18.6% year-over-year increase.

Our next pick is an industrial REIT stock – Rexford Industrial Realty, Inc. REXR – which is focused on acquiring, owning and operating industrial properties located in the Southern California infill markets. Recently, Rexford announced a $125.9 million disbursement to acquire five industrial properties in key Southern California infill submarkets.

With these buyouts, Rexford’s acquisition activity in 2021 reached $1.4 billion. Additionally, more than $300 million of acquisitions are under contract or have accepted an offer. Southern California is considered a popular industrial real estate market with supply constraints in the United States.

Currently, Rexford wears a Zacks Rank #2 (Buy). The Zacks consensus estimate for FFO per share for the current year has been revised up 2.5% over the past 30 days. This also indicates an expected increase of 23.5% year over year.

The basket will be incomplete without another industrial REIT. A promising on the shelf is based in Bellevue, WA Terreno Real Estate Company TRNO, which targets functional buildings on filling sites, which benefit from high population densities and are located near high-volume distribution points.

Terreno Realty recently paid $7.7 million to purchase an industrial property in Los Angeles, California as part of its acquisition-driven growth strategy. Supported by expansion efforts, TRNO is well positioned to enhance its portfolio in the six major US coastal markets – Los Angeles, Northern New Jersey/New York, San Francisco Bay Area, Seattle, Miami and Washington. , DC – which are showing strong demographic trends and witnessing healthy demand for industrial real estate.

Terreno Realty currently carries a Zacks rank of 2. The Zacks Consensus Estimate for current year FFO per share has been revised up slightly to $1.72 over the past 30 days. That calls for a 19.4% year-over-year increase.

Here’s how the stocks above have performed over the past three months.

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Image source: Zacks Investment Research

To note: All EPS numbers presented in this article represent funds from operations (“FFO”) per share. FFO, a measure widely used to assess the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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Simon Property Group, Inc. (SPG): Free Inventory Analysis Report

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Rexford Industrial Realty, Inc. (REXR): Free Inventory Analysis Report

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