Research - MAY 8, 2017

Specialty REITs are making a name for themselves

by Larry Gray

While there are approximately 170 listed equity REITs in the marketplace that fall into nice property sector categories such as office, retail, industrial, and residential, there are nine REITs that are so unique and different that the National Association of Real Estate Investment Trusts (NAREIT) lumps them together in a “specialty” sector.

This group of “outsiders” consists of CoreCivic, EPR Properties, Farmland Partners Inc., Gaming and Leisure Properties, Inc., The GEO Group, Gladstone Land Corporation, Iron Mountain, Lamar Advertising Co., and OUTFRONT Media Inc.

These REITs invest in a wide variety of assets, ranging from farmland to movie theaters to correctional facilities to roadside billboards. Each of these companies offers a different investment opportunity, but like all REITs they are required to pay at least 90 percent of taxable income in the form of shareholder dividends each year. The average dividend yield for specialty REITs was a healthy 5.8 percent at the end of April. In addition, the sector recorded a total return of 19.95 percent in 2016, and year-to-date through April, the sector has posted a total return of 14.28 percent.

While these REITs may not conform to any standard industry labels and might not be on the radar of most investors, their recent performances merit some further research and attention.

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