These REITs Just Trounced Analyst Estimates: Should You Own Them?

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Another week of second-quarter earnings reports for real estate investment trusts (REITs) is now in the books. Although many investors focus each quarter on whether the company beat analyst estimates, it's also important to note whether the company has improved its numbers from the same quarter a year ago. The best REITs will have improving company earnings as well as topping estimates.

Over a dozen REITs beat the analyst consensus estimates on second-quarter earnings last week and improved upon year-over-year results. Take a look at the four that performed the best and could continue that dominance in the months ahead:

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Clipper Realty

Clipper Realty Inc. (NYSE:CLPR) is a small, New York-based, self-administered, self-managed REIT that owns, manages and operates 11 multifamily residential and commercial properties in the New York City area. It was formed in 2017.

On Aug. 1, Clipper Realty declared its second-quarter 2024 operating results. FFO of $0.17 per share was 41.67% above the consensus estimate of $0.12 and was a 30.77% increase over FFO of $0.13 in Q2 2023. Revenue of $37.346 million beat the estimate of $36.008 million and topped its Q2 2023 revenue of $34.543 million.

On Aug. 2, Clipper Realty declared a quarterly dividend of $0.095 per share, in line with its previous dividend, payable Aug. 22 to shareholders of record August 15. The annualized $0.38 dividend yields 8.83%.

The dividend is well covered, with a forward payout ratio of 67.86%. However, the dividend has remained constant for several years.

Clipper Realty has produced a total gain of 16.85% since July 1, but given the recent earnings, this high-yield REIT that still trades below $5 a share could continue to appreciate in the months ahead.

National Health Investors

National Health Investors Inc. (NYSE:NHI) is a Murfreesboro, TN-based health care REIT that specializes in sale-leaseback, joint-venture, mortgage and mezzanine financing of senior housing and medical investments. Its portfolio of 194 properties with 32 operating partners across 33 states consists of Senior Housing, Skilled Nursing Facilities and specialty hospitals. National Health Investors was incorporated in 1991.



On Aug. 1, National Health Investors released its second-quarter operating results. Normalized FFO of $1.18 per share was 7.2% above the estimated $1.10 and 11.3% better than FFO of $1.06 per share in Q2 2023. Revenue of $84.97 million was ahead of the estimate of $81.34 million and topped its revenue of $77.87 million in Q2 2023.

National Health Investors also raised its Normalized FFO outlook for the full year 2024 from $4.37-$4.43 to $4.52-$4.56, besting the street estimate of $4.41.

The Senior Housing sector has been improving this year and with Baby Boomers aging, these REITs should continue to perform well for many years.

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Equinix

Equinix Inc. (NASDAQ:EQIX) is a Redwood City, CA-based specialized REIT that owns and operates a network of over 250 data centers across 71 major metropolitan areas. It provides critical infrastructure to over 10,000 customers and 260 Fortune 500 companies across 32 countries. Founded in 1998, Equinix has 456,000 total interconnections.

On Aug. 7, Equinix reported its second-quarter earnings. AFFO of $9.22 per share was well ahead of street estimates of $8.86 and topped FFO from Q2 2023 of $8.04. Revenue of $2.16 billion edged the estimate of $2.15 billion and easily bested revenue of $2.01 billion in the second quarter of 2023.

On Aug. 8, TD Cowen analyst Michael Elias maintained Equinix with a Buy rating and raised the price target from $859 to $865.

Some investors who like to buy at least 100 shares of stock may shy away from Equinix because of its high price – it recently closed at $818.88. Others may find a dividend yield of 2.08% to be too low. However, this is a REIT that's appreciated tremendously through the years and continues to surpass Wall Street's expectations quarter after quarter.

Armada Hoffler

Armada Hoffler Properties Inc. (NYSE:AHH) is a vertically integrated, diversified owner and manager of 6.4 million square feet of class A office, mixed-use retail and Class A multifamily properties throughout high-demand areas in eight states in the mid-Atlantic and Southeastern U.S. The small-cap Virginia Beach-based company was founded in 1979 by executive chairman Daniel Hoffler.

On Aug. 7, Armada Hoffler announced its Q2 2024 operating results. FFO of $0.34 per share beat the estimate of $0.31 by 9.6% and topped its Q2 2023 FFO of $0.32. $63.26 million was ahead of Wall Street estimates of $61.92 million and bested revenue of $59.95 million in the year-ago same quarter.

Armada Hoffler also maintained its Normalized FFO per share guidance at $1.21-$1.27. Wall Street analysts are looking for $1.25.

This is the second consecutive quarter that Armada Hoffler has made Wall Street estimates look silly. With a recent closing of $11.41, Armada Hoffler continues to be overlooked by investors, largely because of its almost 60% exposure to office properties. The dividend yield of 7.18% is well covered by a payout ratio of 65.0% and the REIT has a Price/FFO ratio of 9.10, well below the median average of 13.67 for Diversified REITs.

Armada Hoffler has recently seen some insider buying. This could be a good opportunity for investors to join the insiders in purchasing Armada Hoffler shares.

Better YieldsThan Some REITs?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through REITs.

Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.

As long-term rates go down and short-term rates stay high, there’s a unique chance to invest in fix & flip loans before yields drop. Check out Benzinga's favorite high-yield offerings.

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