The majority of real estate investment trusts, or REITs, specialize in a single property type. For example, National Retail Properties invests in single-tenant retail real estate, and Public Storage invests in self-storage facilities.
However, diversified REITs do exist, and some of them are rather attractive investments from a long-term perspective. Here are five diversified REITs you might want to take a look at, followed by some information about each.
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1. W.P. Carey
W.P. Carey (NYSE: WPC) is a net-lease REIT, which means that its tenants are responsible for variable expenses such as property taxes, building insurance, and maintenance. This is in contrast to, say, apartment buildings, where these expenses are the landlord's responsibility.
The company currently owns 900 properties totaling 87 million square feet, most of which fall into the categories of industrial, office, retail, or warehouse properties. There are 214 separate tenants, and the properties have an impressive 99.1% occupancy rate. About two-thirds of the properties are in the U.S., but W.P. Carey also has significant foreign (especially European) exposure.
Examples of top tenants in W.P. Carey's properties include U-Hall, Marriott, and TrueValue, just to name a few. No tenant makes up more than 5% of the total rental revenue. And tenants sign long-term leases, virtually all of which have annual rent increases built right in, minimizing turnover risk and income volatility.
2. EPR Properties
Not only is EPR Properties (NYSE: EPR) diversified, but it invests in some rather unique types of real estate -- entertainment, recreational, and educational properties, to be exact. Its entertainment and recreational properties include multiplex cinemas, waterparks, and golf facilities such as Topgolf. The idea here is that millennials prefer to experience things rather than simply buying things, and as the millennial generation ages, they'll have more money to spend on the experiences offered by these properties.
EPR's education properties include public charter schools, private schools, and early childhood education facilities, all of which have exciting growth opportunities going forward. For example, there are currently more than 1 million students on charter school waiting lists, and demand is still growing faster than supply.
3. Vornado Realty Trust
Vornado Realty Trust (NYSE: VNO) is one of the largest REITs of any kind, and it focuses its efforts in the New York City area. The portfolio is made up of office and retail real estate; Vornado is actually the No. 1 operator of NYC street retail, with a major presence in areas like Fifth Avenue and Times Square.
New York City has one of the strongest real estate markets in the country for both commercial and residential properties. In fact, Class A office buildings in NYC have roughly doubled in value every decade.
4. Empire State Realty Trust
Because of its name, it shouldn't come as a surprise that the Empire State Building is part of Empire State Realty Trust's (NYSE: ESRT) portfolio. In all, the company owns a total of 10.1 million square feet of rentable space in the New York City area, mostly in Manhattan.
Empire State Realty Trust is not quite as diversified as the other companies on this list. The company's primary property type is office, which makes up 93% of the portfolio, with the rest composed of retail properties.
The company sees several opportunities to grow in the coming years, specifically in terms of leasing up its vacant space (over 1 million square feet) and maximizing the income from its properties. In the first quarter of 2017, Empire State Realty Trust's releasing spread was 22.4% -- about the highest I've ever seen, and nearly double its peer group average.
Like W.P. Carey, VEREIT (NYSE: VER) is a net-lease REIT. The company owns more than 4,100 properties, most of which are retail, restaurant, office, or industrial. VEREIT's highest concentrations are retail and restaurant properties, which make up more than 3,800 of the properties in the portfolio.
It's no secret that the retail sector isn't in the best shape right now, and to be clear, this does add an element of risk to VEREIT as an investment. However, most of its properties are service-based (like restaurants), discount-oriented, or non-discretionary in nature, and all three of these categories have little to worry about from e-commerce competitors.
VEREIT's occupancy is above 98%, with economic occupancy of 99.6% among the retail portfolio. There are nearly 10 years left on the average lease, and VEREIT's 6.6% dividend yield will pay you nicely while the retail-sector drama plays out.
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Matthew Frankel has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Marriott International. The Motley Fool recommends Amerco. The Motley Fool has a disclosure policy.