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3 REITs that performed best during rate hikes


Most people would agree that 2022 is a brutal year for real estate investment trusts (REITs). Inflation and the Federal Reserve’s interest rate hike are the two main causes. Since March 17, 2022, the Federal Reserve has raised interest rates six times for a total of 3.75 basis points.

Most REITs have been underwater since the Fed’s first rate hike, some as high as 30% to 40% although the sector has been consolidating recently. But not all REITs perform poorly. Some of them have performed quite well during that time and displayed above-average relative strength.

Here are three REITs that have generated the best total returns relative to the rest of the industry between March 17 and November 10, 2022. (Note: only REITs with a stock price of 12 or more. dollars or more are selected for this analysis).

Getty Real Estate Group (NYSE: GTY) is a retail REIT based in Jericho, New York that owns, leases, and funds 1,021 independent auto-related properties across 38 states and Washington, D.C.

Approximately 73% of Getty Realty properties are gas stations and convenience stores, 12% are car washes, 11% are auto repair shops, the remainder are auto service and auto parts stores . Currently, it has owned 99.6% of assets.

Q3 revenue was $41.97 million, up from $40.10 million in Q2 2022. Working capital (FFO) was $0.54, up 4 cents from the previous year’s Q3 quarter. and also 4 cents higher than estimates.

Getty Realty has gained 18.69% since the Fed’s first rate hike. In addition, a dividend paid of $1.23 brought the company’s total profit to 21.76%.

VICI Attribute Company (NYSE: VICI) is a New York-based experiential REIT that owns and operates gaming, hospitality and entertainment properties. Its three-network portfolio includes popular Las Vegas hotels such as Caesars Palace, MGM Grand, and Venetian Resort. In total, Vici Properties’ portfolio includes 43 gaming establishments, with 58,700 hotel rooms and more than 450 restaurants, bars and nightclubs.

During the rate hike in 2022, VICI Properties gained 19.53%. It also paid out $1.11 in dividends for a total return of 21.29%. One major reason VICI Properties was able to perform well during periods of high interest rates is that more than 40% of the company’s leases have escalators for rent because of inflation.

The third quarter business results were also positive with total revenue increasing by 100% over the same period last year. FFO for the quarter was $0.49, up a cent from Q3 2021. VICI Properties also raised its previous annual FFO guidance from the range of $1.89 to $1.92. $1.91 to $1.92.

Agent Center Tanger Factory Inc. (NYSE: SKT) is a Greensboro, North Carolina retail REIT that specializes in outdoor shopping malls. Tanger Factory Outlet Centers owns or has partial ownership of 37 shopping centers across 20 states and Canada, with more than 600 companies in more than 2,700 stores.

While most retail REITs did not perform well during this time of rising interest, Tanger Factory Outlet Centers bucked the trend, up 15.18%. It has also paid $0.62 per share since then for a total return of 18.86%.

One of the reasons for its performance is the vastly improved operating results compared to the previous year. Tanger Factory Outlet Center recently released its third quarter results. Net income of $0.22 per share doubled from last year’s Q3 results of $0.11. The FFO is $0.47 per share, compared with $0.16 per share in the third quarter of 2021. The annual forward FFO of $1.80 easily pays out a $0.88 dividend. current per year with a payout ratio of 48.8%.

While these REITs are doing well for now, that could easily change in the next quarter. Since stocks are traded on a daily basis, there is always a chance that your portfolio could plummet in just 24 hours. However, if you want to explore passive real estate investments that are not volatile, check out Benzinga real estate offer screener.

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