REITs are excellent vehicles that allow investors to participate in income-generating real estate. A real estate investment trust owns and operates an income-generating real estate portfolio in wide-ranging areas like commercial real estate, warehousing, healthcare facilities, residential real estate, etc. The pandemic has hurt the commercial real estate industry significantly. However, there are some REIT sectors that continue to shine. Self-storage REITs are one of the best REIT stocks to buy now.
What Makes EXR Among The Best REIT Stocks To Invest In 2020
Extra Space Storage (EXR) is the second-largest self-storage REIT in the US. It owns more than 1800 properties translating into 135 million square feet of leasable space. The company does a mix of self-owned properties, third-party management, and joint ventures. It has a presence in 40 states. Self-storage, as a sector, has performed well during the pandemic. The demand for self-storage units primarily stems from people moving homes. Such movement happens when a family member passes away, when there is a job change/loss, or there is a significant life event like marriage. The pandemic has led to a few such events all over the US.
Financial performances of self-storage REITs
The two biggest names in the self-storage segment are Extra Space Storage and Public Storage. CubeSmart and Life Storage complete the list of the top 4 REITs in this segment. Public Storage (PSA) is up 43% since the March market crash. However, on a 5-year basis, the stock is flat. The current dividend yield is a healthy 3.47%.
Extra Space Storage (EXR) is up 55% since the March market fall. On a 5-year basis, the stock is up 43% and is much better placed than Public Storage. Extra Space Storage currently trades at a dividend yield of 3.1%. Cubesmart has returned 61% since the March lows and 21% over the past 5 years. Life Storage, meanwhile, has returned 60% since March and 20% on a 5-year basis.