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3 Sturdy REITS That Could Survive a Recession

Christopher Liew, CFA
Real Estate Investment Trust REIT on double exsposure business background.
Real Estate Investment Trust REIT on double exsposure business background.

Real estate investment trust (REIT) stocks make up a large portion of income investors’ portfolios, because this asset class is among the highest dividend payers on the stock market. You don’t care as much about the share price as long as the dividends are sustainable.

You could depend on Automotive Properties (TSX:APR.UN), BTB (TSX:BTB.UN), and NorthWest Healthcare (TSX:NWH.UN) for income as the REITs could survive a recession.

Growth oriented

Automotive Properties is one of the sector’s steady performers. It is up 37.8% year to date and is close to hitting its 52-week high. With its juicy dividend of 6.93%, your investment could double in 10-and-a-half years.

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The real estate portfolio of this $463.65 million REIT consists of 61 automotive dealership properties that you can find in strategic locations in the urban centres of Canada. Automotive Properties has strong fundamentals because of its unique asset class and attractive lease profile.

As of June 30, 2019, the weighted average of the lease term is 13.7 years, which means business growth will continue. Likewise, the Canadian automotive retail industry is flourishing, which augurs well for Automotive Properties.

The dealership segments range from the mass market to luxury brands. Among the prominent property brands are Kia, Honda, GMC, and Porsche, among others. If you’re looking for growth potentials, this REIT stock has plenty.

Niche player

BTB owns a total of 66 commercial, office, and industrial properties; its leasable area is more than 5.7 million square feet. The diverse portfolio of this $294.4 million REIT generates stable and growing cash distributions on a tax-efficient basis. Its primary focus is in the province of Québec.

This REIT stock is relatively cheaper compared with industry peers. For less than $5 per share, you will earn 8.79% dividends. The business will continue to flourish because of BTB’s accretive acquisition program. Expanding the real estate asset base is ongoing and should increase the income available for distribution.

BTB focuses on the income-producing, mid-market office, retail, and industrial property segments. Aside from the favourable risk/return investment environment, there are fewer national competitors in the segments. As an investor, there is an assurance to continue to receive attractive yields for several years.

Specialist real estate investor

NorthWest Healthcare is a fixture in the healthcare industry. This $1.6 billion REIT is the largest non-government owner and manager of healthcare facilities and medical office buildings throughout Canada. It also leases properties in Australia, Brazil, Germany, and New Zealand.

If you want to have access to a portfolio of high-quality healthcare real estate properties, then invest in NorthWest Healthcare. This REIT stock pays a hefty 6.75% dividend. You would have the opportunity to be a quasi-landlord in 149 income-producing properties.

NorthWest Healthcare has become a significant partner of healthcare operators. This REIT has the capacity for future growth, given the combination of a successful management platform and quality healthcare real estate infrastructure assets.

Dependable REITs

Automotive Properties, BTB, and NorthWest Healthcare, are attractive investment options for income investors. You’re looking at an average yield of 7.5% if you invest in these REIT stocks, which would hold up in the case of a recession.

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of AUTOMOTIVE PROPERTIES REIT. NorthWest Healthcare is a recommendation of Stock Advisor Canada. Automotive Properties is a recommendation of Stock Advisor Canada and Dividend Investor Canada.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019