REITs worth bragging about
3 hard-working real estate trusts that pay over 5%.
By Brad Thomas
It's time for report cards! No, not the ones that my kids get each semester, but the annual progress reports that provide a written evaluation of the best and worst companies across the land.
Of course, in the world of REITs (real estate investment trusts), we investors are looking for the best landlords who have a proficiency in one subject matter: paying out dividends. After all, the best kids are generally the ones that have the highest grades and also maintain them consistently.
That's why I wanted to brag about some of the more exceptional REITs -- ones that have earned a reputation for paying out nice fat dividends north of 5% -- and also for producing consistency in the classroom.
For the combined attributes of high returns and repeatable income is what I believe "intelligent REIT investing" is all about. Let's take a look at the hard-working bunch.
Medical Properties Trust (MPW): Birmingham-based Medical Properties Trust turned in an exceptional strong year-end report card. The pure-play hospital landlord reported that its fourth-quarter Normalized Funds from Operations (or FFO) per diluted share was 25 cents, an increase of 32% over 2011 FFO of 19 cents per diluted share. For the full-year 2012, MPW reported 90 cents Normalized FFO per share representing a 27% increase over the 71 cents per share in 2011.
Also, MPW announced that the company had the highest annual acquisition volume recorded as the REIT managed to purchase over $800 million in investments during 2012, including more than $168 million in the fourth quarter of 2012. MPW paid a 2012 fourth quarter cash dividend of 20 cents per share, resulting in a dividend payout ratio of a very well-covered 80% of Normalized FFO.
MPW has a market capitalization of $1.974 billion and shares are trading at $14.40 per share. The current dividend yield is 5.56% and the year-over-year total return is 60.36%.
Healthcare Trust of America (HTA): Based in Scottsdale, Ariz., Healthcare Trust of America also turned in an exceptional report card (keep in mind that this is the first year-end earnings report since HTA listed its shares on June 6, 2012). The pure-play medical office building (or MOB) REIT reported its Normalized FFO increased by 23.1% to 16 cents per share ($34.2 million) as compared to Q4 2011. Also, Same Property Cash NOI increased by $1.6 million or by 3.8%, compared to Q4 2011.
For the full year, HTA reported Normalized FFO of $0.61 per share, or $135.3 million, an increase of nine cents per share, or 17.3%, compared to 2011. In addition, HTA announced that Same Property Cash NOI was $172.6 million, an increase of $3.4 million, or 2.0%, compared to 2011. For the year, HTA acquired $294.9 million of high quality on-campus or aligned medical office buildings. The acquisitions totaled over 1.3 million square feet and were over 99% occupied at acquisition. HTA's current occupancy rate is 91.1% of the company's gross leasable area (GLA).
HTA has a market capitalization of $2.447 billion and shares are trading at $11.40 per share. The current dividend yield is 5.04% and the year-over-year total return (partial year) is 17.91%.
STAG Industrial (STAG): Based in Boston, STAG Industrial continues to turn in straight A's. The tier-2 (B-market) Industrial REIT recently announced that its fourth quarter FFO was $14.0 million compared to $5.3 million for Q4-2011, an increase of 163%. During the fourth quarter STAG closed on 40 properties for a total cost of around $212.8 million with an average cap rate of 9%.
STAG's year ending occupancy increased 190 basis points to 95.1% from 93.2% for the year ended 2011. Also STAG declared a fourth quarter dividend of 27 cents per share, an annualized rate of 6.0% on the quarter ended share price of $17.97.
STAG has a market capitalization of $881 million and shares are trading at $20.87 per share. The current dividend yield is 5.17% and the year-over-year total return is 81.32%.
At the time of publication the author had no position in any of the stocks mentioned.
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