When investors consider purchasing real estate investment trusts (REITs), they often look for popular issues that have been performing well recently. But it’s not always the most well-known REITs that outperform their peers.
That was the case in March, as the three best-performing REITs last month were less well-known issues, and two of the three scarcely had any news to report. Take a look at the three best-performing REITs during the month of March.
Life Storage Inc. (NYSE: LSI) is a Buffalo, New York-based self-storage REIT with approximately 1,200 facilities encompassing 68 million square feet in 37 states and Washington, D.C.
In February, Life Storage gained 11.4% following a report that Public Storage (NYSE: PSA) had offered to acquire it for $11 billion. But 10 days later, Life Storage turned down Public Storage’s offer, saying it diminished the value and future potential of Life Storage.
That potential was confirmed on Feb. 23, when Life Storage released its fourth-quarter operating results, in which it beat analysts’ estimates on both funds from operations (FFO) and revenue.
Life Storage began March with a share price of $122. On March 22, Extra Space Storage (NYSE: EXR) announced it was weighing an offer to buy Life Storage. Investors rushed to buy Life Storage, sending it up over $6 to $131.09 by the end of March. Then on April 3, it was formally announced that Extra Space Storage was acquiring Life Storage in an all-stock deal, valuing Life Storage at $145.82 per share.
Life Storage led all REITs in March with a total return of 7.45%.
PotlatchDeltic Corp. (NASDAQ: PCH) is a Spokane, Washington-based specialty REIT that invests in timberland and manufacturing facilities across six Southern states that produce lumber and plywood. PotlatchDeltic owns nearly 2.2 million acres of timberland in Arkansas, Georgia, Alabama, Mississippi, South Carolina and Louisiana.
President and CEO Eric Cremers and Vice President and Chief Financial Officer Jerald Richards attended two investor conferences in early March. Investors must have liked what they heard because PotlatchDeltic finished the month with a total return of 7.35%, making it the second-best-performing REIT in March.
Lumber prices were fairly soft in March because builders were playing it safe and not stocking much inventory. But perhaps investors were looking ahead with hopes that the Federal Reserve is done raising interest rates, thereby spurring a better housing market for the rest of 2023.
Analysts are somewhat mixed on PotlatchDeltic. There have been eight new analyst ratings over the last 90 days, with four Strong Buys, one Buy and three Holds.
PotlatchDeltic has announced it will release first-quarter 2023 earnings on April 24.
Tanger Factory Outlet Centers Inc. (NYSE: SKT) is a Greensboro, North Carolina-based retail REIT that specializes in open-air outlet malls. Tanger Factory Outlet Centers owns or has part ownership of 36 outlet malls across 20 states and Canada. The malls house over 600 companies in more than 2,700 stores. Tanger Factory Outlet Centers has been in business over 42 years.
There wasn’t much news during March to propel Tanger Factory Outlet higher, but the shares managed to rally anyway. Tanger Factory Outlet had a total return of 4.75% for the month.
One reason may have been the fourth-quarter 2022 operating results on Feb. 21, in which both FFO and revenue increased from the fourth quarter of 2021. Another catalyst was on March 21 when Goldman Sachs analyst Caitlin Szczupak (Burrows) reinstated a Buy recommendation on Tanger Factory Outlet and announced a $22 price target. The stock finished March at $19.63.
Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.
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