It wouldn't be September if the markets didn't open the month with a considerable decline. September is the only month averaging a negative return over 98 years.
So, it wasn’t too surprising that yesterday’s trading saw the S&P 500 lose more than 2%, the Nasdaq more than 3%, and Nvidia (NVDA) almost 10%. Oh, the humanity.
The good news is that the median return for September is 0%, suggesting there are wins among the losses. Yesterday’s 52-week highs and lows prove that the markets are still investable.
According to StockTwits, there were 162 52-week highs in Tuesday’s trading, four times the number of 52-week lows (40). REITs accounted for 17% (27) of the 52-week highs. It seems real estate stocks are doing far better than a year ago.
Stocktwits believes that hitting a 52-week high combined with a small number of Stocktwits followers is a recipe for future gains as more investors become aware of these stocks. It’s a reasonable theory.
Here are the three REITs from yesterday’s trading that caught my attention.
InvenTrust Properties
InvenTrust Properties (IVT) hit a 52-week high of $29.81, its 21st time hitting a 52-week high over the past 12 months, with its shares up 21.5%. The stock has just 23 Stocktwits followers, the lowest of the REITs hitting 52-week highs.
The REIT focuses on grocery-anchored properties located in the Sunbelt. Currently owns 64 retail properties with 10.5 million square feet of GLA (gross leasable area). The average property is 165,000 square feet, 87% of the properties are grocery anchored, and 96.4% leased. Its average base rent per square foot is $19.71.
For all of 2024, it expects core FFO (funds from operations) of $1.71 per share at the midpoint of its guidance, up from its previous guidance of $1.69.
During its second quarter, InvenTrust acquired two properties: Moores Mill, a 70,000 square foot center in Atlanta that a Publix grocery store anchors. It paid $28 million or $400 a square foot. The other property was Maguire Groves in Kissimmee, Florida. It paid $16.1 million for the 33,000-square-foot neighborhood center ($488 per square foot), which Publix also anchors.
Its annual distribution rate of $0.91 yields 3.1%.
First Industrial Realty Trust
First Industrial Realty Trust (FR) hit a 52-week high of $57.12, its 15th time hitting a 52-week high over the past 12 months, with its shares up 9.0%. The stock has 155 Stocktwits followers.
The Chicago-based REIT owns 424 Logistics properties in 19 States. These properties account for nearly 68 million square feet of GLA. The three largest geographic regions where it owns properties are Southern California (24.4% of rental revenue), Central/Eastern Pennsylvania (11.1%), and Dallas/Ft. Worth (8.7%). California, Pennsylvania, New York, and Texas each account for more than 10% of its rental revenue.
It has 940 tenants, with the top 20 accounting for 25.7% of its rental revenue. It has a healthy occupancy rate of 95.3%, with a 2024 forecast occupancy rate of 96.25%. Since 2019, it’s grown its FFO per share by 49%, which has allowed it to raise its dividend by 61% over the same period.
The REIT has approximately $200 million in construction developments, which should add $1.50 in net asset value in 2025 and beyond.
I write about options quite a bit here at Barchart. Its put/call OI ratio is bullish at 0.37. That’s a good sign if you’re interested in industrial REITs.
Elme Communities
Elme Communities (ELME) hit a 52-week high of $17.80, its 24th time hitting a 52-week high over the past 12 months, with its shares up 16.0%. The stock has 206 Stocktwits followers.
I don’t spend much time in the REIT space, so, unsurprisingly, I hadn’t heard about Elme, which owns 28 multi-family properties in the Washington, DC area and Atlanta, Georgia, with approximately 9,400 units.
As its company profile states, it “is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience.”
The median household income of its new residents is $96,000 in DC and $72,000 in the Atlanta area, a median rent to income of 23.4%. The average age of its current residents is 37, and they’ve been residents for 2.66 years. It tends to lose more tenants in the Atlanta area who move out to buy a home than in DC.
Elme’s rental revenue strategy is focused on adding value through renovations. It’s much like Killam Apartment REIT (KMMPF) in my backyard in Halifax, Nova Scotia. Elme undertakes partial and complete renovations of its units, each costing between $4,000 and $17,000, depending on the extent of the renovations. It’s spent $5 million in renovations year-to-date through the end of June.
The average renovation generates $260 in additional monthly rent, a 17% return on its renovation investment. The renovations also increased its NOI (net operating income) margin by 700 basis points.
Of the three, this is the one that intrigues me the most. With an ongoing housing shortage virtually everywhere in North America, its renovation value-add is a wise choice.
It also yields 4.1%, the highest of the trio.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
