3 REITs That Beat Earnings Estimates This Week

Investors looking for stocks that can appreciate in price along with paying strong dividends should look at stocks that have just beaten Wall Street estimates on earnings and/or revenue. It's a plus if the earnings and revenue are also improvements over the year-ago quarter.

Real estate investment trusts (REITs) have been reporting earnings over the past few weeks and so far, the results have been somewhat mixed. Take a look at three REITs that did well this week with fourth-quarter earnings and have seen price appreciation as a result. 

Simon Property Group Inc. SPG is an Indianapolis-based retail REIT that owns and leases over 250 properties, consisting of shopping malls, restaurants, outlet centers and entertainment venues. It has locations in the top 25 population markets across the U.S. Simon Property Group was founded in 1960 and launched its initial public offering (IPO) in 1993. Its occupancy rate for its U.S. malls and premium outlets at the end of the fourth quarter of 2023 was 95.8%, up from 94.9% in the fourth quarter of 2022

On Feb. 5, Simon Property Group reported fourth-quarter operating results. Funds from operations (FFO) of $3.69 per share, handily beating the estimates of $3.34 and FFO from a year ago of $3.40. Revenue of $1.53 billion beat analysts' estimate of $1.36 billion by 12.38% and was a 9.07% increase over revenue of $1.4 year over year. Note that analysts expected revenue to be lower than it was a year ago, but Simon dispelled that idea.

The only blemish on the report was Simon's full-year 2024 FFO guidance range of $11.85-$12.10 was below 2023 full-year guidance of $12.14-$12.22.  

In addition, Simon raised its quarterly dividend from $1.90 per share to $1.95 per share. It's the third raise over the last year. One year ago, the quarterly dividend was $1.80 per share. The annual dividend of $7.80 presently yields 5.43% on its recent closing price of $143.39.

Shares have rallied about 5% since the earnings report was released.

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Douglas Emmett Inc. DEI is a diversified REIT, founded in 1971. It has 18 million square feet of Class A office space within 70 properties and 4,576 apartment units in 14 premium buildings in Southern California and Honolulu. Douglas Emmett points to higher rent growth and lower volatility in these two markets, compared to other areas of the U.S.

On Feb. 7, Douglas Emmett reported its fourth-quarter operating results. FFO of $0.46 beat the estimates of $0.42 but was below the fourth-quarter 2022 FFO of $0.51. Revenue of $259.28 million was ahead of analysts' estimates of $252.77 million and improved on revenue of $254.14 million in the fourth quarter of 2022.

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Douglas Emmett pays a $0.19 quarterly dividend. The annual dividend of $0.76 yields 5.97% on its recent closing price of 12.73.

Shares rose over 4% on the morning of the earnings report.

Highwoods Properties Inc. HIW is a Raleigh, North Carolina-based office REIT that owns, develops, acquires, leases and manages properties in the Southern cities of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Tampa and Richmond. It was founded in 1978 and had its IPO in 1994.

Highwoods owns 28.5 million square feet of office space. As of Sept. 30, its occupancy rate was 88.7% and its weighted average lease term (WALT) was six years. Highwoods' tenant base is well diversified by industries, and its top 10 tenants include Bank of America Corp., the federal government, MetLife Inc., Bridgestone Americas Inc. and PPG Industries. It also owns about 120 acres of land.

On Feb. 7, Highwoods Properties reported its fourth-quarter operating results. FFO of $0.99 per share trounced analyst estimates of $0.91 per share and was above FFO of $0.96 in the fourth quarter of 2022. But revenue of $206.86 million was slightly below the street estimate of $207.83 million and a decline from $211.71 million in the fourth quarter of 2022. 

On Jan. 30, Deutsche Bank analyst Omotayo Okusanya initiated Highwoods Properties with a Buy rating and announced a price target of $28.

Highwoods pays a quarterly dividend of $0.50. The $2 annual dividend yields 9.2% on its recent closing price of $21.64.

Shares were trading over 2% higher following the earnings announcement.

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