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Ticking Time Bombs: 3 REITs to Dump Before the Damage Is Done


  • REITs are a great addition to a portfolio. Just steer clear of these companies.
  • Crown Castle (CCI): A REIT specializing in telecommunication services.
  • Medical Properties Trust (MPW) is a REIT with many medical facilities under operation.
  • Outfront Media (OUT): a specialized REIT providing brands with advertising space such as public transit and billboards.
REITs - Ticking Time Bombs: 3 REITs to Dump Before the Damage Is Done

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REITs are Real Estate Investment Trusts, and they offer unique opportunities for investors. First, REITs provide exposure to the real estate market without the need to purchase a home and otherwise get into buying some type of property, which typically comes with a considerable upfront cost.

REITs also have another advantage, which is the sector as a whole offers great dividends for investors due to the fact that to be registered as a REIT, the company must give 90% of their taxable income in the form of dividends to be paid out to investors.

Real estate, just like any other sector, is subject to downturns, with increased interest rates making home buying seem more and more out of reach for some individuals and higher rent prices, especially in growing cities, among other issues. Are making it a challenging environment for home buyers.

The great opportunities that REITs offer may not outweigh the pessimistic outlook of these companies I mention below. They have a difficult road ahead.

Crown Castle (CCI)

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Crown Castle (NYSE:CCI) is a telecommunication REIT located in Houston, Texas, with over 40,000 cell towers across the U.S. market that they operate and lease.

Over this past year, Crown Castle’s share price has fallen by approximately 40%. The decline is due to the fact that investors are currently disappointed with their potential for growth. Also, telecommunication companies as a whole are dealing with a slower rollout of various types of cellular infrastructure.

On July 19, it released second-quarter earnings, which stated a slight increase in revenue of 8%, and net income rose by 8% compared to the year before. It saw $100 million added to its site rental revenue from lease cancellations following the consolidation of T-Mobile (NASDAQ:TMUS) and Sprint.

Crown Castle also offers an annual dividend yield of approximately 6.9%, and for the second quarter, it announced a dividend payment of $1.6 per share.

Medical Properties Trust (MPW)

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Medical Properties Trust (NYSE:MPW) acquires and develops net-lease medical facilities. It has an extensive portfolio of hospital real estate with over 400 facilities in 31 U.S. States, Europe, South America, and Australia.

On August 8, Medical Properties Trust released its second quarter financial results, which stated that in Q2 2022, net income was $190 million, and for Q2 2023, it now had a net loss of $42 million. And total revenue within the same time period fell by 16%. This net loss was partially due to the fact that Steward Health Care terminated leases for five Utah hospitals.

Over the last year, its stock price has dropped by 58% due to growing profitability concerns.

Medical Properties Trust does offer a strong dividend of $0.15 per share, which equates to an annual dividend payout of 11.9%.

Outfront Media (OUT)

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Outfront Media (NYSE:OUT) It is a REIT that focuses primarily on advertising to consumers through multiple methods, including public-based sources like billboards, public transportation, and mobile assets.

Outfront Media has seen a decline in its share price of approximately 36% within the last year. Due to reduced sales growth, lower number of riders on the New York City subways, and the impact of labor strikes. Outfront Media also saw a significant drop in its overall share price following its earnings report that was released on August 3 and a subsequent downgrade from J.P. Morgan from Overweight to Neutral and a reduction in the price target for the company to $14 per share down from $20 per share.

On Outfront Media’s most recent earnings report, stated an increase in total revenue of 4%. And a net loss of $479 million.

Outfront Media also has a dividend payout of 11.9% on an annual basis and announced a dividend payment of $0.30 per share for the second quarter

As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/ticking-time-bombs-3-reits-to-dump-before-the-damage-is-done/.

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