As the saying goes, theres nothing safer than bricks and mortar butnot all investors have the financial fire-power behind them to include physical property in their portfolio.
Real estate investment trusts provide a viable alternative. REITs give investors access to regular income streams, diversification and long-term capital appreciation. Here are five of the best REITs on the market today.
eCommerce
Londonmetric Property(LSE: LMP) is a great play on the commercial property sector but its also a play on the online retail market as the company has re-aligned itself over the past year or so.
Management haschanged the companys property portfolio so that its now focused oneCommerce through retail-led distribution assets. These assets includethe 1m sq ft pre-let distribution warehouse in Islip, and the 690,000 sq ft pre-let distribution warehouse in Warrington. Londonmetric currently offers a dividend yield of 4.4% and trades at a slight premium to net asset value, which stands at 129p per share.
Healthcare facilities
Primary Health Properties(LSE: PHP) is another play on the non-residential sector. Primary Health, as its name suggests, is theUKs leading investor in modern primary healthcare facilities. This is a long-term, defensive business and the groups portfolio has a 99.7% occupancy rate with anaverage unexpired lease term of 16 years. Primary Health offers a dividend of 5.2% with a NAV of 308p per share.
That being said, Primary Healths dividend is not yet covered fully by earnings per share at present, although management is working towards full cover.
London property
Shaftesbury(LSE: SHB) is, without a doubt, a play on Londons buoyant property market. The company owns14 acres of land in the heart of the West End and comprises some 580 shops, restaurants, cafes and bars. Unfortunately, this kind of premium exposure doesnt come cheap. Shaftesbury currently trades at a premium of 33% to its NAV and only supports a yield of 1.6% at current levels.
Great Portland Estates(LSE: GPOR) is anothercentral London property investment and development company. However, unlike Shaftesbury, the company only trades at a 20% premium to NAV but Portlands yield is a disappointing 1.1%.
Nevertheless, Portlands prime property portfolio, as well as the groups strong balance sheet are two qualities that are worth paying for. At the end of September 2014 the company had a net debt to property value of 22%.
And finally, you cant go wrong with one of the biggest REITs in the UK,British Land(LSE: BLND).
British Land has exposure to the London property market as well as other developments outside the capital. The group currently supports a dividend yield of 3.3% andreported a NAV of 769p per share at the end of the first half of last year.
But while British Land is trading at a slight premium to NAV, it has a strong pipeline of projects under development, including a40-acre site at Canada Water and80,000 sq ft refurbishment opportunity at 338 Euston Road, Regents Place. So, theres plenty of potential for British Lands NAV to receivea boost from new projects over time.
Dependable Dividends
REITs like British Land, Primary Health and Londonmetric offer dividend yields that could re-energise your income portfolio and there are plenty of other attractive income investments out there. With that in mind, The Motley Fool’s analysts went lookingfor other companies that would make perfect income picks.
The companies they found are market leaders,have the best long-term prospects,illustrious histories andpaydependable dividends.
Thereport is completely freeand is only available for a limited time. So there’s no time to wait around.
So if you’re intrigued and want to discover the fiveshares we’re recommending, justclick herenow!
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
