3 Low-Priced REITs With Big Recent Gains

Investors always want to buy low and sell high. Many dream of buying a low-priced stock and riding it up for gains of 50% or 100%. 

This isn’t always so easy — most of the time low-priced stocks are cheap for a reason, like poor earnings or dividend cuts. But sometimes the low-priced stocks bounce back significantly, especially if they announce a positive new development. So it’s worth noting when former laggards begin to show signs of life.

Take a look at three low-priced real estate investment trusts (REITs) that have recently bounced higher and could be poised for more solid gains:

Sotherly Hotels Inc. SOHO is a Williamsburg, Virginia-based hotel REIT that was founded in 1957 and has a focus on hotels in the Southeastern U.S.

Sotherly Hotels’ preliminary fourth-quarter, same-store occupancy results of 10 properties indicate a 50% occupancy rate — not great by any means, but up 7.3% year-over-year. Results were hurt by Hurricane Nicole in South Florida. Revenue per available room (RevPAR) was $101.52, up 19.8% year over year.

On Jan. 24, Sotherly Hotels announced its reinstatement of quarterly preferred dividends for its 8% Series B, 7.875% Series C and 8.25% Series D cumulative redeemable perpetual preferred stock. That announcement precipitated a 25% gain in one day.

Sotherly Hotels, like many low-priced stocks, is a high-risk, high-reward play. Shares slipped 14.22% in 2022, but the reinstatement of its quarterly preferred dividends seems to have brought new life to its shares. Its $0.13-per-share quarterly dividend was eliminated in 2020 as COVID-19 crushed its business. Perhaps Wall Street is speculating that the regular quarterly dividend may also be reinstated soon.

Uniti Group Inc. UNIT is a Little Rock, Arkansas-based specialty REIT that acquires and constructs mission-critical communications infrastructure in the form of fiber optics, copper and coaxial broadband networks. Its broad-based services include wholesale dark fiber, private wave channels and wholesale IP transit. Some of its enterprise business solutions are E-Rate services, internet services and networking services.

Uniti Group owns and operates over 129,000 fiber route miles covering 270,000 commercial buildings, with most of its network in the Eastern and Midwestern portions of the U.S. It’s one of the 10 largest fiber providers in the U.S. today. Its fiber optic leasing to anchor customers generates about 70% of its total revenue.

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Uniti Group pays a quarterly dividend of $0.15 per share. Its $0.60 annual dividend yields 9.7% at a recent closing price of $6.17.

After losing 55.87% in a horrendous 2022, Uniti Group bounced back in January to gain 7.3%. It has done this without any major positive news, so while there may be something brewing, investors should be careful and give this bounce a bit more time to make sure it’s genuine.

AG Mortgage Investment Trust Inc. MITT is a New York-based mortgage REIT (mREIT) that invests in residential properties with nonqualifying mortgages, nonowner-occupied loans, land financing, agency residential mortgage-backed securities and commercial investments.

Last year was also brutal for AG Mortgage Investment Trust, losing 40.87%. Shares touched a low of $3.52 in October, and the $0.21 quarterly dividend was even cut in December to $0.18 per share.

But since the beginning of the new year, AG Mortgage Investment Trust has been the king of mREITs, rising 18.69%. Its $0.72 quarterly dividend now on its recent closing price of 6.54 yields 11.0% annually. 

Third-quarter operating results were mixed. Earnings per share (EPS) of negative $0.03 missed estimates by $0.22. Book value per share declined from $11.48 in June to $11.02. However, total interest income of $15.49 million was up 24.6% year-over-year and was $0.56 million above analysts’ expectations.

AG Mortgage Investment Trust continues to buy back its shares, as it did throughout 2022. It recently repurchased 400,000 shares at an average cost of $6.08 per share.

Investors should be advised that while large gains can be made on improving low-priced stocks, these stocks still remain a higher risk until proven otherwise. They may not be feasible for all investors.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has been working hard to identify the greatest opportunities in today’s market, which you can gain access to for free by signing up for Benzinga’s Weekly REIT Report.

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