Real estate investment trusts (REITs) afford individuals the opportunity to invest in real estate. Typically REITs are massive in scale and are income producing. REITs can be diverse or focus on a specific segment. Some may concentrate on residential buildings and can narrow the focus between high-income and low-income; others may be commercial, industry-specific or land-based.
It’s been proven historically that real estate tends to be a safe investment during times of recession and inflation. With so many options available, how do you know which to choose? It’s important to do your research, but narrowing down options by industry may be a good starting point. Consider some of these unique industries and specific REITs to get you started.
With marijuana now legalized in 37 states and regulated for medical use in the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands, marijuana is more readily available than ever before. The U.S. cannabis sector is thriving, with legal cannabis sales reaching $25 billion in 2021. That marked an increase of about 40% from 2020, according to market research firm BDSA. The biggest names for marijuana-focused REITs follow.
Innovative Industrial Properties Inc. IIPR is perhaps the biggest name and has been around the longest. It was founded by Alan D. Gold and Paul E. Smithers in 2016 and is based out of Park City, Utah. The company engages in the acquisition, ownership and management of cannabis-focused industrial properties.
NewLake Capital Partners Inc. NLCP just announced that its Q2 revenue grew 59% YoY. Anthony Coniglio, president and CEO, stated, “We continue to be pleased with our AFFO growth, which has allowed us to increase our dividend for the fifth consecutive quarter.”
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Because the amount of land is finite, it may be wise to invest in your own property or in a REIT that focuses on land. A particular segment of land real estate that has its own unique characteristics is forestry. Forestry investments require patience, as they focus on the physical and economic growth of trees. Additionally, the housing market is a big driver of lumber prices, making timberland REITs another way to invest in housing. Given the housing market and current mortgage rates, now may be a good time to make a move on timberland REITs. Consider the following big names in the timberland industry.
Weyerhaeuser Co. WY manages private commercial forestland worldwide and engages in growing and harvesting trees for lumber, building, pulp, paper and other wood products. The wood products segment delivers lumber, structural panels, engineered wood products and complementary building products for residential, multi-family, industrial and light commercial applications. The company is massive as it owns 11 million acres of timberland in the U.S. and manages land in Canada under long-term licenses, giving it access to another 14 million acres.
Potlatchdeltic Corp. PCH operates through the following segments: timberlands, wood products and real estate. The Timberland segment sells delivered logs, pulpwood, sawlogs and stumpage. With land ownership in Alabama, Arkansas, Idaho, Louisiana, Minnesota and Mississippi — and various businesses and sales programs — its diversified operation has paid off. Because of its structure and strategy, the company has had sustainable dividend growth for years. High lumber prices in 2021 even allowed the company to pay a significant special dividend to its shareholders.
Cellphones are attached to our hips. Everywhere you go, young and old, you’ll notice people glued to the screen. People use cell phones, but what do cell phones use? In part, mobile towers. Mobile towers send and receive signals to and from cell phones. With so many cellular devices, this segment has to be massive, right? Wrong. A few key players dominate the market. According to the WirelessEstimator.com database, as of Sept. 27, 2021, 131 companies with 130,597 total towers exist in the United States and more than 400,000 mobile wireless cell sites and antennas. The top five own nearly 85% of them. The biggest names in the game follow.
American Tower Corp. AMT is an owner and operator of wireless and broadcast communications infrastructure in several countries worldwide and is headquartered in Boston, Massachusetts. It is ranked 410th on the Fortune 500. Founded in 1995 and currently operated by CEO Thomas Bartlett, AMT currently trades at over $275 per share.
Crown Castle Inc. CCI engages in the provision of access to wireless infrastructure via long-term contacts. It operates through the following segments: towers and fiber. Morningstar published recently that “Crown is virtually assured stable growth in its tower business. It holds long-term leases with contractual rent escalators, and its costs have similar certainty and are highly leverageable.”
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