3 Up-and-Coming REITs in Growing Market Segments

The REIT sector is evolving, with increasing investor interest in specialized market segments. Amid market volatility, the REIT sector offers a beacon of stability, with specialized segments like industrial, commercial real estate financing, and healthcare facilities showing strong growth potential.

Thus, investors could consider buying quality REITs STAG Industrial (STAG), Ladder Capital Corp (LADR), and Global Medical REIT (GMRE).

The growth in warehousing and storage facilities, driven by e-commerce, the rise of self-storage services, and vertical integration by e-commerce companies, are boosting the REITs sector. Offering liquidity and flexibility, REITs remain an appealing option for institutional and individual investors looking to access income-producing real estate without direct property management.

Further, fueled by demand for assets offering dividend income and capital appreciation, the global REIT market is anticipated to grow by $350.20 billion by 2028, exhibiting a CAGR of 2.9%.

Considering these conducive trends, let’s examine the REIT stocks in detail.

STAG Industrial, Inc. (STAG)

STAG is an industrial REIT that specializes in acquiring, owning, and operating industrial properties across the United States, offering warehouse/distribution, light manufacturing, and flex/office spaces. The end users include diverse tenants from various industries, ensuring a balanced and resilient portfolio.

STAG’s revenue has grown at a CAGR of 11.3% over the past three years and its operation income has risen at a CAGR of 18.1% over the same time frame.

On October 9, 2024, STAG announced the continuation of its monthly common stock dividend at $0.123333 per share, reflecting the company's commitment to consistent shareholder returns. It pays an annual dividend of $1.48, which translates to a dividend yield of 4.1% at the prevailing price levels.

During the fiscal third quarter that ended September 30, 2024, STAG’s total revenue increased 6.4% year-over-year to $190.74 million. Its core FFO rose 1.8% and 1.7% from the previous-year quarter to $110.77 million and $0.60 per share.

Analysts expect STAG’s FFO and revenue for the quarter ended December 31, 2024, to increase 1.12% and 5.9% year-over-year to $0.60 and $194.02 million, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is promising.

STAG has plunged marginally over the past year to close the last trading session at $35.99.

STAG’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

STAG has a B grade in Stability. It is ranked #11 out of 18 stocks in the REITs - Industrial industry.

Beyond what we have stated above, we also have given STAG grades for Growth, Value, Momentum, Sentiment, and Quality. Get all the STAG’s ratings here.

Ladder Capital Corp (LADR)

LADR is an internally-managed REIT, operates through Loans, Securities, and Real Estate segments, offering commercial mortgage loans, structured finance products, and investments in securities and real estate properties.

LADR’s revenue has grown at a CAGR of 18.7% over the past three years and its net Income has risen at a CAGR of 75.8% over the same time frame.

On September 13, 2024, LADR declared a quarterly dividend of $0.23 per share of Class A common stock, payable on October 15, 2024.

It pays an annual dividend of $0.92, which translates to a dividend yield of 7.92% at the prevailing price levels.

In the fiscal third quarter ended September 30, 2024, LADR’s net interest income increased 11.9% year-over-year to $38.42 million. Moreover, its net income and EPS stood at $27.56 million and $0.22, respectively.

Street expects LADR’s revenue for the quarter ending December 31, 2024, to increase 13.5% year-over-year to $68.68 million. Its EPS for the same quarter is likely to be $0.29. It surpassed the consensus EPS estimates in all of the trailing four quarters.

The stock climbed marginally year-to-date and 4.8% over the past year, to close the last trading session at $11.61.

LADR’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

It has a B for Sentiment and Quality. It is ranked #2 out of 43 stocks in the REITs - Diversified industry.

To access LADR’s Growth, Value, Momentum, and Stability ratings, click here.

Global Medical REIT Inc. (GMRE)

GMRE is a net-lease REIT specializing in owning and acquiring healthcare facilities, which it leases to physician groups and regional and national healthcare systems.

GMRE’s revenue has grown at a CAGR of 7.3% over the past three years and its EBITDA has risen at a CAGR of 4.3% over the same time frame.

It pays an annual dividend of $0.84, which translates to a dividend yield of 9.72% at the prevailing price levels.

GMRE’s total revenue year-over-year was $34.26 million in the fiscal 2024 third quarter, which ended on September 30, 2024. AFFO attributable to common stockholders and noncontrolling interest stood at $15.35 million and $0.22 per share. Additionally, its adjusted EBITDAre amounted to $24 million for the quarter.

Street expects GMRE’s revenue for the fiscal fourth quarter (ending December 2024) to increase 6.8% year-over-year to $35.19 million. Its EPS for the same quarter is expected to grow 7.9% from the prior year to $0.21. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is promising.

Shares of GMRE declined 3.4% over the past six months and closed the last trading session at $8.64.

GMRE’s bright prospects are apparent in its POWR Ratings. Within the REITs - Healthcare industry, it is ranked #2 out of 14 stocks.

Click here to see GMRE’s ratings for Growth, Value, Momentum, Stability, Sentiment and Quality.

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STAG shares were trading at $36.14 per share on Thursday morning, up $0.15 (+0.42%). Year-to-date, STAG has declined -4.86%, versus a 25.58% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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