The Best-Performing REITs In August
The waning days of summer proved to be difficult for U.S. markets and real estate investment trusts (REITs). Many popular REITs produced double-digit losses for the month, but some lesser-known REITs managed to produce healthy gains.
Healthcare, office and hotel REITs were among the best-performing subsectors, but a few of the top performers achieved that ranking simply from being acquisition targets.
Take a look at the best three well-performing REITs for August (closing prices as of Aug. 30) as well as several others that also produced excellent results.
Hersha Hospitality Trust (NYSE:HT) is a Harrisburg, Pennsylvania-based hotel (REIT) that owns luxury and lifestyle hotels in large cities across the U.S. Its portfolio includes 25 hotels with 3,811 rooms.
On Aug. 28, Hersha Hospitality Trust announced it will merge with KSL Capital Partners. Under terms of the agreement, KSL Capital Partners will acquire all outstanding common shares of Hersha for $10 per share in an all-cash transaction of $1.4 billion. This is a 60% premium over Hersha Hospitality's closing price on Aug. 25.
On Aug. 29, Barclays analyst Anthony Powell upgraded Hersha Hospitality from Underweight to Equal-Weight and raised the price target from $8 to $10. Ironically, on the same day, Jefferies analyst David Katz downgraded Hersha Hospitality from Buy to Hold.
Hersha Hospitality Trust was the top-performing REIT in August with a total gain of 57.03%. But most of that gain was on the day the merger was announced.
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Diversified Healthcare Trust (NASDAQ:DHC) is a Newton, Massachusetts-based healthcare REIT that owns 376 healthcare-related properties valued at approximately $7.1 billion in 36 states and Washington, D.C. In addition to over 100 life science and medical offices, Diversified Healthcare Trust also has 27,389 senior living community units in its portfolio.
Opposition from Flat Footed LLC and other shareholders to the proposed acquisition of Diversified Healthcare Trust by Office Properties Income Trust seems to be propelling the stock price higher. Perhaps investors are speculating that a better offer will soon be forthcoming. The stock price was also lifted this month by some controversial insider buying, which arose after the announcement of the sale.
On Aug. 30, Diversified Healthcare Trust announced that its special meeting of shareholders with Office Properties Income Trust scheduled for that day will convene, but the board of directors will immediately adjourn the meeting until Sept. 6, so that ongoing discussions among representatives of both REITs and shareholders can continue.
Diversified Healthcare Trust rose 42.58% in August. But keep in mind it's only a $3 stock, so it's subject to a great deal of volatility.
Hudson Pacific Properties Inc. (NYSE:HPP) is a Los Angeles-based office REIT with 49 office properties and four studio properties with an emphasis on centers of innovation for media and tech companies in California, Washington and Vancouver, British Columbia.
Hudson Pacific Properties was founded in 2006 by Chairman and CEO Victor Coleman. Soon after its creation, it began purchasing motion picture studios and office buildings on the West Coast. Hudson Pacific Properties went public in 2010. It has a market cap of $690.43 million. The 52-week range is $4.08 to $16.31.
This was the second consecutive stellar month for Hudson Pacific Properties. Hudson Pacific led all REITs in performance for July with a gain of 38.11% and came right back in August with another 16.35% gain.
Other solidly performing REITs in August were:
STOCK | SYMBOL | AUGUST GAIN |
NewLake Capital Partners Inc. | NLCP | 9.52% |
DigitalBridge Group Inc. | DBRG | 7.99% |
Western Asset Mortgage Capital Corp. | WMC | 7.79% |
Global Net Lease Inc. | GNL | 7.02% |
Vornado Realty Trust | VNO | 6.63% |
Necessity Retail REIT Inc. | RTL | 6.2% |
Innovative Industrial Properties Inc. | IIPR | 6.1% |
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