HomeMost Popular5 REITs with Significant Insider Purchases: A Historic Opportunity for Investors

5 REITs with Significant Insider Purchases: A Historic Opportunity for Investors

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The real estate investment trust (REIT) sector (VNQ) has experienced a decline of over 30% since the beginning of 2022, presenting a historic opportunity for investors to purchase quality real estate at significantly discounted prices.

Standing bundles of cash

However, not all REITs are equally attractive investment opportunities. Many REITs are currently facing risks due to over-leveraging, occupancy issues, or unfavorable conditions in their specific subsectors. In fact, we have previously highlighted 5 REITs that are likely to cut their dividends in the near future:

  1. BrightSpire Capital (BRSP)
  2. Blackstone Mortgage Trust (BXMT)
  3. Global Net Lease (GNL)
  4. Easterly Government Properties (DEA)
  5. Sabra Health Care REIT (SBRA)

As investors, our goal is to identify and invest in high-quality companies that are likely to perform well in the long run while minimizing risks. One valuable tool in this process is analyzing insider purchases, which provide insights into a company’s future prospects and potential value.

Agree Realty Corporation (ADC)

Agree Realty is a net lease REIT that offers a safe investment option. Unlike other net lease REITs that focus on smaller properties, ADC’s portfolio includes large box stores leased to major retailers like Home Depot and Walmart. With 68% of its tenants being investment-grade, ADC boasts one of the highest proportions of quality tenants among all REITs. Furthermore, the majority of its tenants operate in recession-resilient sectors such as grocery stores, convenience stores, and dollar stores. With a 99.7% occupancy rate and long-term leases, ADC’s risk of increased vacancy is minimal. The REIT also maintains a strong balance sheet with low leverage, no material debt maturities until 2028, and fixed-rate debt. Recent insider purchases by the management team reinforce the positive prospects of ADC.

Safehold Inc. (SAFE)

Safehold is a unique REIT that focuses exclusively on ground leases. Ground leases, where the landlord owns the land and leases it to the tenant, provide predictable rental income and offer a layer of protection in case of default. SAFE’s ground lease portfolio has an average remaining lease term of 93 years and boasts high-quality tenants. While low initial cap rates due to the long-term nature of the leases make the valuation sensitive to interest rate fluctuations, the recent insider purchase by the CEO indicates confidence in the future performance of SAFE.

American Assets Trust, Inc. (AAT)

AAT is a relatively small REIT with a diversified portfolio, consisting of offices, strip centers, and apartment communities primarily located on the West Coast and in Hawaii. While AAT’s size and exposure to certain markets may have kept it off some investors’ radar, a significant insider purchase by the CEO is worth noting. However, careful evaluation of AAT’s portfolio reveals a mix of high-quality and underperforming assets, suggesting caution when considering an investment in this REIT.

Uniti Group Inc. (UNIT)

Uniti is a specialized REIT that owns key infrastructure for the telecommunications industry, particularly fiber optic networks. Recent insider purchases by the CEO indicate confidence in the future performance of UNIT. With the growing demand for data and an expected increase in data traffic, UNIT is well-positioned for long-term growth. While the company’s leverage has raised concerns, its recent debt refinancing and commitment to reducing leverage address these issues.

Mid-America Apartment Communities, Inc. (MAA)

MAA is a major residential REIT that focuses on high-quality A-Class properties located in Sunbelt markets. With no exposure to legacy markets and a strong track record of growth, MAA has become a popular choice among investors. The recent insider purchase by a main director of the company further reinforces the positive outlook for MAA. However, it should be noted that oversupply in certain markets may pose a challenge to A-Class residential space in the Sunbelt in the next couple of years.

Bottom Line

The decline in REIT valuations presents a historic opportunity for investors. Analyzing insider purchases can provide valuable insights into companies’ prospects. While certain REITs, such as ADC and SAFE, show promising fundamentals and strong insider confidence, it is crucial to carefully evaluate each investment opportunity to ensure long-term success.

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