The U.S. housing market was red-hot last year, with existing home sales reaching their highest level in approximately 15 years. Moreover, historically low mortgage rates amid the supply shortage led to a dramatic rise in home prices. On the other hand, lack of housing affordability and the desire of remote workers to relocate and take advantage of their flexibility led to rents skyrocketing.
The cost of rent was 10.1% higher last year, growing five times faster than 2020. December 2021 marked the sixth-straight month of double-digit annual increases in national rents. In addition, Realtor.com expects rents to continue to rise this year, fuelled by limited supply and excess demand. The organization forecast national rent growth of 7.1% in 2022, growing even faster than home prices.
Given this backdrop, real estate stocks Newmark Group, Incorporation (NMRK), Preferred Apartment Communities, Incorporation (APTS) & BRT Apartments Corporation (BRT) could be ideal bets now.
Newmark Group, Incorporation (NMRK)
NMRK is a leading provider of commercial real estate services worldwide. The company’s services and products include capital markets, such as investment, property management, valuation and advisory, and commercial real estate consulting and advisory services.
NMRK announced its agreement with Budapest-based VLK Consulting this month, which will become Newmark VLK Hungary. VLK has established a strong track record as one of Hungary’s leading commercial real estate services firms. NMRK intends to leverage VLK’s expertise in strengthening its foothold in Central and Eastern Europe. In addition, NMRK announced another agreement with a leading commercial real estate group in Poland to be operating as Newmark Polska. This agreement is expected to bolster its presence throughout Europe, the Middle East, and Africa.
NMRK’s total revenues increased 80.8% year-over-year to $788.13 million for the fiscal third quarter ended September 30. Its net income available to common stockholders grew 70.6% from the year-ago value to $128.55 million, while its adjusted EBITDA improved 229.3% year-over-year to $174.54 million. Its adjusted Earnings EPS increased 316.7% from its year-ago value to $0.50.
Street expects the company’s revenue to increase 43.6% year-over-year to $863.73 million in the fiscal fourth quarter ending December 2021. The consensus EPS estimate of $0.55 indicates a rise of 82.7% year-over-year in the same period. Also, NMRK beat Street EPS estimates in three of the trailing four quarters, which is impressive.
NMRK shares have gained 109.3% over the past year and 36.9% over the past nine months to close its last trading session at $14.57.
NMRK’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. NMRK is rated B in Growth, Value & Momentum. Within the Real Estate Services industry, it is ranked #4 of 45 stocks.
In addition to the POWR Ratings grades I’ve highlighted, you can see the NMRK’s Stability, Sentiment, and Quality ratings here.
Preferred Apartment Communities, Incorporation (APTS)
APTS is a real estate investment trust engaged in the ownership and operation of Class A multifamily properties. Its investment objective is to generate attractive, stable returns for stockholders by investing in properties and acquiring real estate loans for multifamily properties.
Last month, APTS announced the signing of a new 15-year lease at Three Ravinia in Atlanta, Georgia, with Hapag-Lloyd. The lease should diversify its tenant base and create additional cash flows.
In November, APTS closed its real estate loan investment of about $9.10 million in connection with Oxford Properties’ plans to develop Beaver Ruin Apartments, a multifamily community located in Gwinnett County, marking its second investment this year in Gwinnett County, a rapidly growing suburb of Atlanta. This real estate loan is expected to generate significant current returns and enhance the pipeline of high-quality communities in its target markets.
APTS’ operating income stood at $34.88 million, up 30.4% in the fiscal third quarter ended September 30, while net income attributable to the company increased 385.5% year-over-year to $9.98 million.
APTS’ EPS is expected to improve 15.6% year-over-year in the fiscal fourth quarter ended December 2021.
Over the past year, the stock has gained 122% to close yesterday’s trading session at $16.14. APTS shares have gained 55.2% over the past six months.
APTS’ POWR Ratings reflect its solid fundamentals. The company has an overall rating of B, which translates to Buy in our proprietary rating system. APTS has also rated a B in Growth, Value & Momentum. In the REITs- Residential industry, it is ranked #1 of 25 stocks. Click here to see the APTS’ ratings for Stability, Sentiment, and Quality.
BRT Apartments Corporation (BRT)
BRT is an internally managed real estate investment trust (REIT) primarily focused on the ownership, operation, and development of multifamily properties.
In November 2021, BRT announced an amended credit facility with VNB New York, LLC, an affiliate of Valley National Bank, which will allow to borrow up to $35 million, and up to a potential $60 million pursuant to an uncommitted accordion feature, for the acquisition of multifamily properties. “The additional capital provides us with the enhanced ability to pursue accretive opportunities that we anticipate will grow our portfolio,” Jeffrey A. Gould, Chief Executive Officer of BRT, stated.
BRT’s total revenues increased 5.5% year-over-year to $7.71 million in the fiscal third quarter ended September 30. Its adjusted funds from operations grew 15.5% from the year-ago value to $5.66 million, while its net income attributable to common stockholders improved 475.5% year-over-year to $28.11 million. The company’s adjusted fund from operations per common share increased 10.7% year-over-year to $0.31.
The consensus revenue estimate of $7.60 million in the fiscal fourth quarter ending December 2021 indicates an increase of 7.8% year-over-year. BRT’s FFO per share is expected to come in at $0.30 for the same period, indicating a rise of 3.5% year-over-year. Moreover, BRT has surpassed the consensus FFO per share estimates in three of the trailing four quarters.
The stock gained 44% over the past year and 17.6% over the past six months to close its last trading session at $20.94.
It’s no surprise BRT has an overall B rating, which translates to Buy in our proprietary rating system. The stock is rated an A in Sentiment and a B in Momentum & Stability. It is ranked #2 in the REITs- Residential industry. Get BRT’s Growth, Value & Quality ratings here.
NMRK shares were trading at $14.58 per share on Friday afternoon, up $0.01 (+0.07%). Year-to-date, NMRK has declined -22.03%, versus a -7.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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