Business & Investment

Two REIT stocks for riding a real estate bull

Demand for real estate is so high that organizations like RE / MAX Canada believe the Canadian housing market is at a critical point. The bulls are still going on, with home prices likely to rise 20% by the end of 2021, the Canadian Real Estate Association (CREA) said.

Home sales in August fell 0.5% compared to July, but average selling prices rose 13.3%. Due to an unprecedented imbalance between supply and demand, CREA estimates an average price of $ 680,000. A recent report predicts that house prices will rise 5.6% in 2022, bringing the national average to $ 718,000.

Real estate investors should refrain from buying real estate given the volatile market conditions such as soaring prices.if you want to Earn income like rentConsider investing in a real estate investment trust (REIT). Nexus (TSX: NXR.UN) and Summit Industrial (TSX: SMU.UN) is a top performer and reliable Income stock..

Leading growth-oriented REITs

Nexus made its debut at TSX on February 4, 2021. As of September 17, 2021, real estate stocks were trading at $ 12.89 per share, up 60.56%. The current dividend yield is 4.96%. An investment of $ 125,000 will generate $ 6,200 in passive income, equivalent to $ 516.67 each month.

The $ 564.16 million REIT owns a high-quality portfolio of industrial, office, and retail real estate. However, the focus of this growth-oriented REIT is on the industrial sector. Approximately 61.5% or 56 of the assets that generate 91 income are industrial property. Nexus also acquired 13 this year.

Nexus’s industrial portfolio contributes 68% to net operating profit (NOI), followed by retail (20%), with tenants across the country providing products and services as needed. In addition to long-term and stable cash flow, the lease agreement has an annual rent increase clause.

Real estate revenue, NOI and net income in the second quarter of 2021 increased by 24.4%, 24.6% and 781% compared to the second quarter of 2020. According to Nexus CEO Kelly Hanczyk, industrial weights should soon increase to over 70% of REITs’ NOIs. The company has a strong pipeline of potential acquisitions at various stages.

Proactive leasing program

Industrial REITs are flourishing due to the e-commerce boom. Summit Industrial is enjoying a significant boost, as evidenced by its most recent quarterly financial results. The NOI of real estate, which is the same as the net rental income in the second quarter of 2021, increased by 19.3% and 5.5% compared to the second quarter of 2020. In terms of liquidity, Summit cash has exceeded $ 800 million since the first half of the year.

The $ 3.66 billion REIT has had no problems collecting rent throughout the pandemic and maintains a high occupancy rate of 98.8%. The Summit owns and operates 158 industrial real estate. The high value general purpose space of its portfolio is a competitive advantage.

In addition to low operating and maintenance costs, REITs are less volatile in market rents for commercial, office, and commercial real estate. The weighted average period for properties under the Progressive Lease Program is approximately 5.7%.You get Value of money $ 21.70 per share, a solid dividend of 2.6%.

Affordable crisis

CREA Chairman Cliff Stephenson said the COVID-19 pandemic has put a big spotlight on the red-hot housing market in the last 18 months. In the election, candidates shared ideas for modifying the housing market. RE / MAX Canada needs a condominium strategy to thwart an affordable crisis. The result should be a more normal rhythm with the economy.

Real estate investors can take clues and instead invest in Nexus or Summit Industrial to earn rental income.

This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Services or Advisors. We are Motley! Asking investment treatises, even our own treatises, can help you think critically about your investment and make decisions to be smarter, happier, and richer. As a result, we may publish articles that may not match recommendations, rankings, or other content. ..

Stupid contributor Christopher Liu There are no positions in any of the listed stocks. Motley Fool recommends SUMMIT INDUSTRIAL INCOMEREIT.

Two REIT stocks for riding a real estate bull Two REIT stocks for riding a real estate bull

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