Real estate has taken a beating during the pandemic. From commercial properties sitting empty to apartment complexes dealing with eviction moratoriums, REITs have been under pressure. But that pressure creates opportunity.
I've been building a diversified portfolio of Real Estate Investment Trusts throughout 2021, focusing on sectors I believe will recover as the economy stabilizes. Some of these picks are already performing well. Others are still depressed and represent potential value plays. This isn't financial advice, it's a record of what I'm doing with my own money and the research behind those decisions.
What is a REIT?
REIT stands for Real Estate Investment Trust. They were created in 1960 under President Dwight D. Eisenhower through Public Law 86-779 (which has the wonderful name "Cigar Excise Tax Extension of 1960"). The idea was to let regular investors own a piece of income-producing real estate without having to buy entire buildings themselves.
REITs get a significant tax advantage, but there's a catch: they must pay out at least 90% of their taxable income as dividends. This requirement is why REITs typically have high dividend yields compared to other stocks.
One important note: REIT dividends are not qualified dividends. You pay regular income tax on them, not the lower qualified dividend rate. This matters for tax planning.
Today, some REITs own physical properties like office buildings, apartments, or data centers. Others focus on financing real estate deals and don't hold actual property. Both types can be valuable depending on your strategy.
Why I'm Investing in REITs in 2021
Decades ago, REITs were some of my first investments. Back then, I was interested in Dividend Reinvestment Plans (DRIPs) where you could buy directly from companies, purchase fractional shares, and automatically reinvest dividends to compound returns. Before modern brokerages offered commission-free trading and fractional shares, this was one of the easiest ways to build a diversified real estate portfolio with small amounts of money.
Fast forward to 2021, and the landscape has changed dramatically. The pandemic has depressed real estate values across multiple sectors. Government stimulus payments and enhanced unemployment benefits have helped people pay rent, but eviction moratoriums have put strain on landlords and property owners. Commercial real estate has been especially hard hit as companies shift to remote work.
It's a difficult time for real estate. And that's exactly why I'm investing.
I don't believe we're the kind of country that will throw millions of people out on the street. We saw during the 2008 financial crisis just how much support the government is willing to provide to stabilize real estate markets. If the economy doesn't recover and government support disappears, REITs could drop further. But I'm betting on recovery, and I'm building a diversified REIT portfolio to capitalize on that recovery.
Here's my thinking: real estate debt is fundamental to our economy. If REITs fail completely, real estate has failed, money doesn't matter, and we're living in a Mad Max scenario. Short of that, I expect prices to eventually recover.
Why Not Fundrise or a REIT ETF?
Platforms like Fundrise have become popular for real estate investing, and REIT-focused ETFs offer instant diversification. So why am I picking individual REITs instead?
Liquidity matters. From what I've seen, platforms like Fundrise penalize you for withdrawing funds in the short term. Given how volatile markets have been, I want to invest in assets I can exit quickly without penalty if necessary. Publicly traded REITs give me that flexibility. I also prefer the transparency and regulatory oversight that comes with SEC-regulated public companies.
I want control. I'm trying to do more active investing again, and with brokerages now offering fractional shares and dividend reinvestment with no commissions, it's easier than ever to build my own custom REIT portfolio. I can choose specific sectors, adjust weightings, and make tactical decisions based on what I'm seeing in the market.
How I'm Investing in These REITs
I'm buying these positions through Robinhood because it makes fractional share purchases and dividend reinvestment simple. I'm making periodic investments at least once a month, trying to buy on dips when possible.
My expectation is that prices may drop slightly from recent highs before starting to climb around May 2021. I'm prepared to continue buying even if there's another leg down. The goal is accumulation over the course of the year, not perfect timing.
How Are These REITs Performing?
The table below shows current performance and projected gains or losses if $100 had been invested in each REIT at the time of my original analysis. Keep in mind, this is not my actual cost basis since I started buying before writing this post, and depending when you're reading this, I may have adjusted positions.
You can check for updates on my 2021 REIT Portfolio page.
14 REITs I'm Buying in 2021
These are the REITs I'm choosing to invest in throughout 2021. This list reflects my own research and risk tolerance. You should do your own analysis before investing your money.
I've selected some REITs because they've remained strong during the pandemic and offer stability. The majority, though, are picks where I believe prices are still depressed and will recover within the next two years, bringing both capital appreciation and increased dividend yields.
My gain/loss projections range from -8% to +68% across these positions. I expect prices to continue consolidating for a bit before moving upward around May. There's risk of another drop, but I plan to keep buying regardless.
EQUINIX, INC. (EQIX)
| Price: $682.39 | Predicted: $625 | Projected G/L: -8.4% |
| Dividend: $10.64 | Yield: 1.54% | www.equinix.com → |
Category: Technology REIT
EQUINIX is a technology REIT that builds and operates data centers. They've been around since 1998 and have performed well throughout the pandemic as demand for online services has surged.
I actually expect this stock to drop slightly from current levels. It doesn't offer a high dividend yield either. So why include it? Diversification. My portfolio is heavy on real estate that's been beaten down by the pandemic. EQUINIX provides balance with a stable, growing business in a sector that benefits from long-term tech trends.
Full disclosure: I might be slightly biased. There's an Equinix data center near me, and during the dotcom era I worked at a startup that housed servers at Equinix. Familiarity isn't always rational, but it helps me understand the business.
INDUSTRIAL LOGISTICS PROPERTIES TRUST (ILPT)
| Price: $21.98 | Predicted: $22 | Projected G/L: +0.1% |
| Dividend: $1.32 | Yield: 5.93% | www.ilptreit.com → |
Category: Industrial/Logistics REIT
ILPT invests in industrial logistics properties like warehouses and distribution centers. They have properties in dozens of states, with a significant presence in Hawaii.
The stock has held up well during the pandemic, so I'm not expecting dramatic price appreciation. What I'm buying is the dividend. At nearly 6%, it's solid income from a business that should benefit from the continued growth of e-commerce. The pandemic accelerated the shift to online shopping, and that trend isn't reversing.
CROWN CASTLE INTERNATIONAL CORP (CCI)
| Price: $153.06 | Predicted: $155 | Projected G/L: +1.3% |
| Dividend: $5.32 | Yield: 3.45% | www.crowncastle.com → |
Category: Technology REIT
CCI is another technology REIT, focused on wireless infrastructure. They own, operate, and lease cell towers and small cells across the United States. Like EQUINIX, this one has performed well during the pandemic. I'm not chasing growth here. I'm locking in a 3.45% yield from a company with consistent dividend growth and exposure to the ongoing buildout of 5G networks.
APARTMENT INCOME REIT CORP (AIRC)
| Price: $36.90 | Predicted: $45 | Projected G/L: +21.9% |
| Dividend: Unknown | ||
Category: Residential REIT
AIRC has an interesting backstory. When Tesla was added to the S&P 500, Apartment Investment and Management Co (AIV), also known as Aimco, was removed. It's the S&P 500, not the S&P 501, after all. Aimco split 90% of its properties into this new entity, AIRC, and after the split it was too small to remain in the index.
Because it's a new company, dividend information is uncertain. But I'm optimistic based on the track record of the parent company. This is a riskier play, but the potential for recovery as a residential REIT is what attracted me.
GAMING AND LEISURE PROPERTIES INC (GLPI)
| Price: $41.22 | Predicted: $45 | Projected G/L: +9.2% |
| Dividend: $2.40 | Yield: 5.77% | www.glpropinc.com → |
Category: Leisure REIT
GLPI owns dozens of casino properties across the United States. They operate two casinos directly (Hollywood Casino Baton Rouge and Hollywood Casino Perryville) and lease the rest to companies like Penn National Gaming, which GLPI actually spun off from years ago.
Casinos were hit hard when lockdowns forced closures, but they recovered quickly. GLPI has performed well historically and offers a strong 5.77% yield. Including a leisure REIT helps balance this portfolio, and GLPI looked like the best option in that sector.
LAMAR ADVERTISING (LAMR)
| Price: $82.20 | Predicted: $95 | Projected G/L: +15.6% |
| Dividend: $2.00 | Yield: 2.41% | www.lamar.com → |
Category: Advertising REIT
LAMR is an advertising REIT that owns billboards, transit benches, bus shelters, and other outdoor advertising assets throughout the United States. The stock price held up reasonably well during the pandemic, but the dividend decreased. I'm expecting both the dividend and share price to continue recovering as advertising budgets normalize and people spend more time outside their homes.
WP CAREY INC (WPC)
| Price: $66.37 | Predicted: $80 | Projected G/L: +20.5% |
| Dividend: $4.18 | Yield: 6.27% | www.wpcarey.com → |
Category: Commercial REIT
WPC is a commercial REIT that invests in commercial properties and leases them long-term to businesses. This is exactly the segment that's been hammered as companies shifted to remote work.
The work-from-home trend might stick around longer than people think. Academics have been recommending it for years, and the pandemic forced companies to actually try it. Many workers like it. But I don't believe the office is dead. Companies will bring workers back, even if it's in a hybrid model. WPC has continued performing reasonably well and growing its dividend even during the pandemic, which gives me confidence.
WELLTOWER, INC (WELL)
| Price: $61.18 | Predicted: $75 | Projected G/L: +22.6% |
| Dividend: $2.44 | Yield: 3.89% | welltower.com → |
Category: Healthcare REIT
WELL is a healthcare REIT focused on senior housing, assisted living facilities, post-acute care centers, and medical office buildings. They have properties in the United States and internationally.
Healthcare REITs should have thrived during a pandemic, right? Not quite. WELL took a significant hit. Senior housing was particularly affected as COVID-19 spread through facilities and occupancy rates dropped. The stock has been recovering, but there's still room to run. The dividend also took a 30% cut, which should reverse as conditions improve.
MID-AMERICA APARTMENT COMMUNITIES (MAA)
| Price: $124.21 | Predicted: $155 | Projected G/L: +24.8% |
| Dividend: $4.10 | Yield: 3.19% | www.maac.com → |
Category: Residential REIT
MAA is a residential REIT that owns apartment buildings primarily in the Southeast and Southwest United States.
A lot of my residential picks are concentrated in the Northeast and Northwest, so I wanted geographic diversification. MAA has shown strong performance with a solid dividend that continued growing even during the pandemic. That track record gives me confidence they'll keep performing.
ESSEX PROPERTY TRUST INCORPORATED (ESS)
| Price: $231.28 | Predicted: $315 | Projected G/L: +36.2% |
| Dividend: $8.31 | Yield: 3.55% | www.essexapartmenthomes.com → |
Category: Residential REIT
ESS is a residential REIT focused on apartments in California and Seattle, with one office building in the mix. They have significant exposure to San Francisco, which is a double-edged sword.
If remote work becomes permanent and tech workers leave San Francisco for cheaper cities, some ESS properties could lose value. But they hold a large, diversified portfolio across the West Coast. The stock was doing well before the pandemic and has been recovering. I'm betting on continued recovery as cities reopen and people return to urban living.
EQUITY RESIDENTIAL (EQR)
| Price: $58.05 | Predicted: $80 | Projected G/L: +37.8% |
| Dividend: $2.41 | Yield: 4.14% | www.equityapartments.com → |
Category: Residential REIT
EQR owns apartments in Southern California, San Francisco, Washington D.C., New York City, Boston, Seattle, and Denver. According to their 2019 10-K, they're one of the largest apartment owners in the United States.
They're heavily concentrated in areas where remote work policies may have reduced demand and rents. If people return to offices in major cities, EQR should see significant recovery. That's the bet.
ALEXANDER'S INC (ALX)
| Price: $266.33 | Predicted: $375 | Projected G/L: +40.8% |
| Dividend: $18.00 | Yield: 6.66% | www.alx-inc.com → |
Category: Retail/Mixed-Use REIT
If you're over 35 and lived in the New York City area, you probably remember shopping at Alexander's department stores. ALX is what remains of that retail chain, and they've actually been doing well since the stores closed.
They own retail, residential, and mixed-use buildings including the Rego Park II shopping center and the Alexander Building at 731 Lexington Avenue. Vornado Realty Trust (VNO) is a major owner and manager of ALX, which gave me additional confidence.
Honestly, part of me just wanted to own a piece of iconic New York City real estate. ALX looked more appealing than Empire State Realty Trust (ESRT), and an interview with ESRT's CEO turned me off. The dividend has been consistent even during the pandemic, which is reassuring.
UNIVERSAL HEALTH REALTY INCOME TRUST (UHT)
| Price: $64.83 | Predicted: $95 | Projected G/L: +46.5% |
| Dividend: $2.78 | Yield: 4.26% | www.uhrit.com → |
Category: Healthcare REIT
UHT is another healthcare REIT, but it hasn't recovered as much as Welltower. They own medical office buildings, acute care hospitals, a behavioral health hospital, ambulatory care facilities, a rehabilitation hospital, and childcare centers.
You'd think healthcare REITs would have thrived during a pandemic. That hasn't necessarily been the case. Elective procedures were canceled, occupancy patterns shifted, and costs increased. But as healthcare normalizes, UHT has significant upside potential.
SIMON PROPERTY GROUP (SPG)
| Price: $83.14 | Predicted: $125 | Projected G/L: +50.3% |
| Dividend: $5.20 | Yield: 6.01% | business.simon.com → |
Category: Retail REIT
SPG might not have made my list based purely on technical analysis. But there's one factor that weighed heavily: SPG or its ownership was a major contributor to Joe Biden's 2020 presidential campaign. I'm cynical about how the world works, and I pay attention to political connections. I expect them to do well. The stock hasn't performed great since 2017, but it started strong and has potential for recovery in a post-pandemic retail environment.
The Risk and the Opportunity
Every one of these picks carries risk. Real estate doesn't recover in a straight line. Interest rates, inflation, government policy, and economic conditions all affect REIT performance. Some of these bets will work out better than others.
What's your approach to REITs? Are you waiting for clearer signals of recovery, or are you buying the dip like I am? Do you prefer broad exposure through ETFs, or do you like picking individual properties and sectors? Drop a comment and let me know how you're thinking about real estate investing right now.
I like $MAC too.
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