Pure-play REITs are hot. A recent article in GlobeSt.com highlighted the reasons why so many REITs are spinning off portions of their holdings into separately run businesses. The opportunities to invest in pure-play REITs have never been better.
Which should you own? Here are five pure-play REITs worth considering.
Pure-Play REITs: Weingarten Realty (WRI)
Originally founded as a real estate offshoot to Weingarten grocery stores, the real estate business became the sole focus in 1980 when the stores were sold to Grand Union. After going public in 1985, WRI is in the final stages of a five-year transformation into a pure-play retail REIT. Focusing on shopping centers with supermarket and necessity-based retail anchors, the company has disposed of $2.3 billion in industrial and nonessential retail assets. The result: Its real estate portfolio is far more productive while less reliant on its biggest customers.
Over the past two years it’s achieved year-over-year increases in same-property net operating income of 4.2%, well above its growth in previous years. Approximately 43% of its annualized base rent (ABR) is from shopping centers with national grocers such as Kroger (KR) and Whole Foods Market (WFM). In total it generates 75% of its ABR from grocer-anchored shopping centers — a setup that provides investors with stable income from tenants generally resistant to the growth in e-commerce. New developments such as The Parks at Walter Reed are examples of where WRI is headed.
I expect the next two to three years to be very good to WRI investors. As pure-play REITs go, this is a story worth following.