Kalkine Media lists 5 US real estate stocks to watch in 2023

December 08, 2022 12:24 AM PST | By Rupam Roy
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  • Revenue of VICI Properties (VICI) jumped 100 per cent YoY in Q3 FY22.
  • Kite Realty Group Trust (NYSE: KRG) raised its quarterly cash dividend by 22 per cent YoY.
  • The IRM stock added around 17 per cent YoY.

The real estate sector is comprised of firms that own, manage and operate real properties. The sector is generally seen as a hedge against inflation. However, this year has been full of surprises for the investors as maceconomic factors increased the volatility in the market. 

Now, given the soaring prices and sharply increasing interest rates, the investors grew concerned over a potential recession.

On the other hand, some also anticipate stagflation in the economy in the coming times, like the 1970s. Notably, the real estate sector was the top-performing segment last time when the economy witnessed stagflation.

Meanwhile, one of the major parts or categories of the real estate sector is the real estate investment trusts or REITs. The companies under the REITs category own real estate properties.

While investing or owning real properties could be costlier and more difficult, investors typically explore opportunities in the industry through REIT stocks. 

REIT companies tend to pay out a major part of their income as dividends to investors. Hence, the sector is considered a safer industry by some compared to the growth segments. 

Many investors spend in the real estate sector to diversify their portfolios while distributing the risks. The dividend yields of these real estate firms tend to be higher than the other traditional segments, though it is not a hard and fast rule.

In 2022, the housing sector came under pressure from the Fed's aggressive monetary campaign, and high inflation. The housing prices have stayed at the elevated level due to the increasing costs, and other uncertainties in the market.

Here, we would be exploring five REITs stocks, which include VICI Properties Inc. (NYSE: VICI), Kite Realty Group Trust (NYSE: KRG), Iron Mountain Incorporated (NYSE: IRM), Omega Healthcare Investors, Inc. (NYSE: OHI), and Agree Realty Corporation (NYSE: ADC), and see how they have performed in recent months:

VICI Properties Inc. (NYSE: VICI)

The leading REIT firm that specializes in casino-related properties, VICI Properties Inc holds a dividend yield of 4.58 per cent. The US$ 32.77 billion market cap REIT firm's stock, which owns and manages properties in gaming, hospitality, and other leisure industries, gained over 13 per cent YTD and around 24 per cent YoY.

On a QTD basis, the VICI stock soared over 14 per cent. Meanwhile, VICI Properties currently owns a 50.1 per cent interest in the joint venture that owns MGM Grand Las Vegas and Mandalay Bay Resort.

The company, on December 1, said that it has entered into a definitive merger agreement to acquire the remaining 49.9 per cent in the joint venture for cash consideration of around US$ 1.27 billion.

In Q3 FY22, VICI Properties Inc noted a YoY growth of 100 per cent in its revenue of US$ 751.5 million, and its net income totaled US$ 0.34 per share, up from US$ 0.28 apiece in Q3 FY21.

Kite Realty Group Trust (NYSE: KRG)

The full-service, vertically integrated REIT firm, Kite Realty Group Trust holds a dividend yield of 3.88 per cent. The stock of the REIT firm, which primarily focuses on owning and operating high-quality neighborhood and community open-air shopping centers, surged four per cent YTD and about 10 per cent YoY.

The KRG stock added over 31 per cent QTD through the start in December and was at its 52-week low of US$ 16.42 on September 29, 2022. The Indianapolis-based REIT firm announced a quarterly cash distribution of US$ 0.24 per common share for the quarter ending on December 31, 2022.

The dividend, which would be paid on January 6 next year, represents an increase of nine per cent QoQ and 22 per cent YoY. In Q3 FY22, Kite Realty Group Trust's net loss was US$ 7.72 million on revenue of US$ 200.31 million, against a loss of US$ 6.82 million on revenue of US$ 71.46 million in the year-ago quarter.

Iron Mountain Incorporated (NYSE: IRM)

Iron Mountain Incorporated operates as a REIT firm. The firm's dividend yield was 4.49 per cent and its stock jumped five per cent YTD and about 17 per cent YoY.

The IRM stock gained more than 25 per cent QTD through November end. Revenue of Iron Mountain Incorporated rose 14 per cent YoY on a reported basis to US$ 1.28 billion, and its adjusted EPS surged 20 per cent YoY to US$ 0.48 apiece in Q3 FY22.

Omega Healthcare Investors, Inc. (NYSE: OHI)

The healthcare-focused REIT firm, Omega Healthcare Investors Inc's market cap was US$ 7.14 billion. The stock of the triple-net, equity REIT firm, having a dividend yield of 8.87 per cent, added over two per cent YTD and around six per cent YoY.

The revenue of Omega Healthcare Investors Inc was US$ 239.43 billion in Q3 FY22, down from US$ 281.67 billion in Q3 FY21, and its net income decreased to US$ 105.06 million, from US$ 142.83 million in the year-ago period.

Third quarter earnings highlights of Agree Realty Corporation (ADC)Source: ©Kalkine Media®; © Canva Creative Studio via Canva.com

Agree Realty Corporation (NYSE: ADC)

The REIT firm that acquires and develops properties net leased to the US retailers Agree Realty Corporation's dividend yield was 4.07 per cent. The stock of the retail sector-focused REIT firm traded flat YTD and rose around three per cent YoY.

Agree Realty Corporation's net income was US$ 39.57 million on revenue of US$ 110.06 million in Q3 FY22, against an income of US$ 36.83 million on revenue of US$ 87.53 million in Q3 FY21.

Bottom line:

Market research and consulting firm, Grand View Research estimates the global real estate market size to be around US$ 5.85 trillion through 2030 with a CAGR of 5.2 per cent from 2022.

Considering the metrics, several analysts still see growth opportunities in the sector in the long run. However, the equity market is unpredictable, and given the persisting volatility, it is hard to predict the future performance of any segment.

But the recent economic data came in as more positive than anticipated, showing that the inflation cooled off in October. In addition, the policymakers also indicated that they would start to ease their rate hike momentum in the coming days.

The S&P 500 real estate segment fell around 19 per cent YoY and about 25 per cent YTD, while the broader index dropped by 11 per cent YoY and 14 per cent YTD.

Keeping the performance and hovering uncertainties in the market, investors should tread cautiously with their investment plans while adding new assets to their portfolios.


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