{"id":58421,"date":"2023-03-30T10:17:20","date_gmt":"2023-03-30T14:17:20","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58421"},"modified":"2023-03-30T10:22:04","modified_gmt":"2023-03-30T14:22:04","slug":"finding-a-good-reit-for-todays-market","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/03\/finding-a-good-reit-for-todays-market\/","title":{"rendered":"Finding A Good REIT For Today's Market"},"content":{"rendered":"

Editor\u2019s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we\u2019re going to pick one of those stocks and use Magnifi Personal<\/em> to compare it with its peers or competitors. Here we go\u2026<\/em><\/p>\n

\n

Real estate investment trusts, or REITs, have existed here in the U.S. since the 1960s. The mature American market means there are some interesting subsectors where investors can gain exposure.<\/p>\n

One such asset class is infrastructure. American Tower (AMT), Crown Castle (CCI), and SBA Communications (SBAC) are the second-, fourth- and 11th-largest U.S. REITs. All three own communication towers across the country, which are leased out to mobile phone services providers, radio and TV broadcasters, government bodies, and other companies.<\/p>\n

The other type of infrastructure popular in the REIT space is data centers. The third- and 10th-largest REITs, Equinix (EQIX) and Digital Realty (DLR), both own and lease data centers to technology companies requiring immense amounts of digital storage space.<\/p>\n

However, the data center REITs have come under criticism. In 2022, well-known short seller Jim Chanos said he was raising money to bet against such companies, predicting that the tech giants currently renting the space would look to develop their own data centers going forward.<\/p>\n

As Chanos put it, \u201c\u2026although the cloud is growing, the cloud is their enemy, not their business. Value is accruing to the cloud companies, not the bricks-and-mortar legacy data centers.\u201d<\/em><\/p>\n

Chanos also pointed to a wider issue in the REIT space: the risk that many are overvalued.<\/p>\n

According to numbers compiled by FactSet, the average S&P 1500 REIT is priced at 2.39 times net asset value (NAV) and 40.2 times earnings. Also, the average S&P 1500 REIT\u2019s net debt is 1.36 times its NAV.<\/p>\n

However, the high multiples on REIT shares come from the fact that they have lots of exposure to high-growth sub-sectors, such as self-storage, healthcare, student accommodation, and the aforementioned infrastructure.<\/p>\n

What we want to do this week is to compare a REIT in the sub-sector that Chanos doesn\u2019t like \u2014 Digital Realty \u2014 and the largest of the communications tower REITs, American Tower.<\/p>\n

The easiest way to do that is to ask Magnifi Personal<\/em> to do it for us. It\u2019s as simple as asking this investing AI to \u201cCompare AMT to DLR<\/a>.\u201d <\/p>\n

\"Compare<\/a><\/p>\n

This is an example of a response using Magnifi Personal. This image is not a recommendation or individual advice. Please see bottom disclaimer for additional information, including INO.com\u2019s relationship with Magnifi.<\/em><\/p>\n

To have Magnifi Personal<\/em> run similar comparisons for you, or to dive deeper into this one and compare the two REITs using different criteria, get access to Magnifi Personal<\/em> completely free-of-charge - just click here<\/a>!<\/p>\n

As you can see, over three years, AMT comes out on top in terms of both returns and volatility.<\/p>\n

This ability to have an investing AI pore over reams of data for you in seconds and spit out an easy-to-understand comparison of two or more stocks is an invaluable tool in deciding where to invest next.<\/p>\n

We highly recommend you try it out. Click here to see how.<\/a><\/p>\n

Magnifi Personal<\/em> makes research like this as simple as typing a question. You can easily do this yourself, or ask Magnifi Personal<\/em> to add other measures to the comparison, including dividend, valuation metrics such as P\/E or P\/B ratios, gross margin, and more. Just click here<\/a> to see how to set up your Magnifi Personal<\/em> account.<\/p>\n

Latest from Magnifi Learn<\/a>: Taxes are important! They fund our education system, roads, and investments in the future of our country. But when you are investing, you need to keep costs in mind and every investment has costs - opportunity costs, fees, and potential losses to name a few.<\/p>\n

\n

INO.com, a division of TIFIN Group LLC, is affiliated with Magnifi via common ownership. INO.com will receive cash compensation for referrals of clients who open accounts with Magnifi.<\/span><\/p>\n

Magnifi LLC does not charge advisory fees or transaction fees for non-managed accounts. Clients who elect to have Magnifi LLC manage all or a portion of their account will be charged an advisory fee. Magnifi LLC receives compensation from product sponsors related to recommendations. Other fees and charges may apply.<\/span><\/p>\n

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.<\/span><\/p>\n

Mutual Funds and Exchange Traded Funds (ETFs) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.<\/b><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Editor\u2019s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we\u2019re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go\u2026 Real estate investment trusts, […]<\/p>\n","protected":false},"author":41,"featured_media":49997,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32058,32059,32025,32046,7570],"class_list":["post-58421","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-american-tower-corp-amt","tag-digital-realty-trust-inc-dlr","tag-magnifi-personal","tag-midweek-matchup","tag-reits"],"yoast_head":"\nFinding A Good REIT For Today's Market - INO.com Trader's Blog<\/title>\n<meta name=\"description\" content=\"Let's compare a REIT in the sub-sector that Chanos doesn\u2019t like - Digital Realty - and the largest of the communications tower REITs, American Tower.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2023\/03\/finding-a-good-reit-for-todays-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Finding A Good REIT For Today's Market - 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