5 REITs Under $5 Making Huge Gains This Month
An entire stock sector may experience a significant decline in value at certain points during market cycles. But as the sector begins to rebound, some of the worst performers may outperform the rest of the group.
This trend has borne out in recent weeks as real estate investment trusts (REITs) have bounced off their lows and have been performing exceptionally well.
When stocks as a group move higher, lower-priced stocks will often make the biggest percentage gains. One reason is that it's easier to rise 20% from $3 to $3.60 than from $60 to $72. The sudden demand for lower-priced stocks in that sector, along with investors covering short positions can send them flying.
Take a look at five REITs, still trading below $5, that have made huge gains within the past five trading days, as well as within the past four weeks. Despite being poor performers over the past year, with losses ranging between 10% and 65%, these REITs have recently caught fire and could continue to appreciate substantially if the Federal Reserve maintains its pause on interest rate hikes.
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Franklin Street Properties Corp. (NYSE:FSP) is a Wakefield, Massachusetts-based office REIT that owns 19 properties in the Sun Belt and Mountain West regions of the U.S.
Although Franklin has grown its adjusted funds from operations (AFFO) from negative $0.09 in the third quarter of 2022 to $0.02 in the third quarter of 2023, revenue declined from $40,836 to $36,903, and its portfolio occupancy rate dropped from 75.9% a year ago to 74.8% at the end of the third quarter. The Street focused more on the third-quarter 2023 revenue, beating estimates by 1.4%.
On Nov. 10, Director Brian Hansen bought 75,000 shares at an average price of $2.09, worth a total of $157,320. Hansen has been buying a large number of shares throughout 2023 at very low prices.
Franklin Street has risen 13.68% over the past five days and 48.77% in the past month. The annual dividend of $0.04 yields 1.65%. Franklin Street's most recent closing price was $2.41 per share.
Cherry Hill Mortgage Investment Corp. (NYSE:CHMI) is a Farmingdale, New Jersey-based diversified, hybrid residential mortgage REIT (mREIT) that acquires and manages a diversified portfolio of mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS) and other types of residential mortgage assets. Cherry Hill Mortgage was founded in 2013. It has $1.4 billion of investable assets.
On Nov. 2, Cherry Hill Mortgage announced its third-quarter operating results. Generally accepted accounting principles (GAAP) earnings per share (EPS) of $0.49 beat the estimates of $0.24 handily. Revenue of $20.53 million was 248% higher than revenue of $3.33 million in the third quarter of 2022.
On Nov. 10, President and CEO Jeffrey B. Lown purchased 8,621 shares of company common stock for $3.474. Lown now owns 30,128 shares in total.
Cherry Hill pays a quarterly dividend of $0.15 per share and the $0.60 annual dividend yields 15.83%.
Cherry Hill's recent closing price of $3.79 was up 9.22% over the last five trading days and 25.91% higher within the last month.
Industrial Logistics Properties Trust (NASDAQ:ILPT) is a Newton, Massachusetts-based REIT that owns and leases 60 million square feet of 413 industrial and logistics properties throughout the United States. Industrial Logistics owns properties in 39 states, with 54% of those properties in Hawaii. Of its annualized rental revenue, 78% is derived from investment-grade tenants, such as Amazon.com Inc., The Home Depot and FedEx. Industrial Logistics is externally managed by the RMR Group Inc. (NASDAQ:RMR). Its occupancy is 98.9%.
On Sept. 26, Industrial Logistics appointed Tiffany Sy as its chief financial officer and treasurer effective Oct. 1.
On Oct. 25, Industrial Logistics reported third-quarter operating results. Funds from operations (FFO) of $0.12 beat the estimates of $0.11, and revenue of $110.14 million beat the estimates of $108.68 million and revenue of $103.22 million.
Industrial Logistics' recent closing price of $2.93 was up 7.33% over the past five trading days and 25.75% over the past four weeks. The annual dividend of $0.04 yields 1.43%.
City Office REIT Inc. (NYSE:CIO) is a Dallas-based office REIT with 58 buildings totaling 6 million square feet. It focuses on the Sun Belt regions, West Coast and select areas of Florida. Its most recent occupancy was reported to be 85.4%.
On Nov. 9, City Office announced its third-quarter operating results. Core FFO of $0.34 beat the estimates of $0.33 but was down from $0.39 in the third quarter of 2022. Revenue of $44.21 million beat the consensus of $43.97 million but was below revenue of $45.52 million in the third quarter of 2022.
City Office REIT has gained 10.6% over the past five trading days and 19.84% over the past month. Its annual $0.40 dividend yields 8.77%.
Ashford Hospitality Trust Inc. (NYSE:AHT) is a Dallas-based hotel REIT that owns 99 hotels with 22,122 rooms across 26 states. It focuses on upscale full-service and select-service hotels. Ashford Hospitality Trust is externally advised by Ashford Inc. (NYSEAMERICAN: AINC) and went public in 2003.
On Nov. 7, Ashford Hospitality Trust declared its third-quarter operating results. AFFO of $0.08 was down from $0.52 in the third quarter of 2022. Revenue of $343 million beat the estimate of $320.62 million and was an increase over $328.16 million in the third quarter of 2022.
In 2021, Ashford Hospitality's revenue per available room (RevPAR) was $83.20. Since then it's been steadily rising and was recently up to $111.60.
Ashford Hospitality's recent closing price of $2.35 was a gain of 14.08% over the past five trading days and 5.86% higher over the past month. But this is not a REIT for income investors, as Ashford Hospitality suspended its dividend in 2019 and has not paid one since.
Investors should use caution when considering a purchase of any of the five REITs above, as most have performed poorly for a long time and can still be quite volatile. Despite the huge recent gains, these lower-priced REITs should be regarded as speculative plays and bought on pullbacks to reduce one's risk.
Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it's too late. Benzinga's in-house real estate research team has been working hard to identify the greatest opportunities in today's market, which you can gain access to for free by signing up for the Weekly REIT Report.
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