Apartment REITs own, manage, and rent out residential housing to tenants. They own and sometimes lease multifamily housing units to lease to people.
With rents moving higher over the past couple of years, this type of real estate investment trust (REIT) has become popular as an investment. Also, the business is resilient to recessions because of the vital nature of its service. People need places to live, and they will rent if purchasing a home is out of reach. As a result, apartment REITs may offer a decent annual dividend, growth, and some capital appreciation.
This article discusses apartment REITs and provides a list with financial data and a dividend calendar.
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What Are Apartment, Residential or Multifamily REITs?
Apartment REITs are also referred to as residential or multifamily REITs by investors. The names describe the same type of organization and investment.
They develop and own multifamily housing units known as apartment complexes. Sometimes, they acquire or lease the units from a developer or other organization. The REITs rent the residential units to tenants, usually in annual leases. The housing complexes are also typically managed by the REIT, providing security, maintenance, parking, fitness centers, and other amenities.
This type of REIT may be publicly traded or privately held. The large apartment REITs have a market capitalization of billions of dollars and own tens of thousands of units. For instance, AvalonBay Communities (AVB) owns around 90,000 units in 294 communities across a dozen states plus the District of Columbia. It has a market capitalization of nearly $25 billion.
Our list includes 20 publicly traded residential or multifamily REITs. The trusts generally focus on geographic areas like sunbelt, coastal, Midwest, metro, urban, suburban, etc.
Other Apartment Companies
Private equity firms, like Blackstone (BX), have conducted significant M&A to enter the apartment REIT space. In 2022 alone, the company acquired Bluerock Growth REIT for $3.6 billion, Preferred Apartments for $5.8 billion, and American Campus for $13 billion. The trusts and their properties were added to the Blackstone Real Estate Income Trust (BREIT) platform. These acquisitions build on the private equity giant’s holdings in New York City, where it owns the 11,000-unit Stuyvesant Town complex on Manhattan’s East Side, the Parker Towers complex in Queens, and the 900-unit Gehry Tower.
Other private equity firms, like The Carlyle Group (CG) and KKR & Co. (KKR), are active in New York City. They are buying buildings in Manhattan, Brooklyn, and the other boroughs.
The presence of private equity firms in the residential or multifamily REIT business is considerable across America. Reportedly, as of June 2022, they owned 1,077,056 apartment units, which continues to grow.
What is a REIT?
A real estate investment trust (REIT) is a corporation that develops, purchases, owns, and operates commercial real estate properties. A REIT is a company that owns, operates, or finances income-generating commercial real estate.
To qualify as a REIT, a corporation must own real estate that generates income distributed to shareholders. Specifically, according to Investopedia, a REIT must
- Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
- Derive at least 75% of gross income from rents, interest on mortgages that finance a real property, or real estate sales
- Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
- Be an entity that’s taxable as a corporation
- Be managed by a board of directors or trustees
- Have at least 100 shareholders after its first year of existence
- Have no more than 50% of its shares held by five or fewer individuals
Some REITs are privately held, and others are publicly traded on a stock exchange. As a result, retail investors can easily invest in the commercial real estate market by buying and selling a REIT’s stock. The advantage is that investors require significantly less capital.
Investors like REITs because they can pay higher dividend yields and diversify portfolios. However, a risk is the dividend may be cut during recessions. For instance, during the Great Recession and the COVID-19 pandemic, black swan event REITs suffered disproportionately, and many cut or suspended their dividend. Another negative is REITs do not pay qualified dividends, instead, they pay non-qualified or ordinary dividends.
Pros of Apartment REITs
Publicly traded apartment REITs have several advantages for investors.
No Minimum Investment – The minimum is the cost of one share.
Liquidity – Publicly traded REITs can be traded whenever the stock market is open.
Dividends – REITs must pay dividends, permitting investors to generate a passive income stream. Some REITs are dividend growth stocks, too. For example, Essex Property Trust (ESS) has increased its dividend for 28 years, making it a Dividend Aristocrat and Dividend Champion.
Diversification – Investing in publicly traded REITs provides diversification to a portfolio.
Recession Resistant – People need places to live regardless of economic conditions. Consequently, the stocks in the industry are less prone to high volatility.
Real Estate with Less Risk – Apartment REITs offer exposure to the real estate market without buying rental properties.
Residential or multifamily REITs constitute a significant subgroup of the REIT industry. They are well-liked because of their observed advantages for investors. The industry is also undergoing considerable growth because of prior underinvestment and high mortgage rates deterring home buyers, creating demand. Moreover, many are dividend growth stocks.
List of Apartment REITs
|Ticker||Company||No. Years||Dividend Yield||Dividend 10-Year Avg (%)||Payout Ratio||Price / Earnings||Cap ($M USD)|
|AAT||American Assets Trust||3||7.00%||4.60%||154.80%||22.4||$1,161|
|AIRC||Apartment Income REIT||2||5.90%||3.90%||85.30%||14.9||$4,583|
|AIV||Apartment Inv & Mgmt||0||-||-||-||-||$1,017|
|AMH||American Homes 4 Rent||3||2.60%||33.20%||80.80%||34.7||$12,302|
|CPT||Camden Prop Trust||14||4.10%||4.70%||206.40%||51.6||$10,327|
|ELS||Equity Lifestyle Props||19||2.70%||13.60%||112.10%||43.3||$12,348|
|ESS||Essex Property Trust||29||4.30%||6.70%||109.90%||26.1||$13,773|
|IRT||Independence Realty Trust||2||4.50%||9.20%||181.30%||44.7||$3,204|
Dividend Calendar for Apartment REITs
Stock Rover* was used for creating this table.
|Ticker||Company||Ex-Dividend Date||Div. Record Date||Dividend Payment Date||Dividend Frequency||Next Div. Payment Per Share||Dividend Per Share|
|AAT||American Assets Trust||9/6/23||9/7/23||9/21/23||4||$0.33||$1.32|
|AIRC||Apartment Income REIT||8/17/23||8/18/23||8/29/23||4||$0.45||$1.80|
|AIV||Apartment Inv & Mgmt||9/13/22||9/14/22||9/30/22||0||$0.02||-|
|AMH||American Homes 4 Rent||9/14/23||9/15/23||9/29/23||4||$0.22||$0.88|
|CPT||Camden Prop Trust||9/28/23||9/29/23||10/17/23||4||$1.00||$4.00|
|ELS||Equity Lifestyle Props||9/28/23||9/29/23||10/13/23||4||$0.45||$1.79|
|ESS||Essex Property Trust||9/28/23||9/29/23||10/13/23||4||$2.31||$9.24|
|IRT||Independence Realty Trust||9/28/23||9/29/23||10/20/23||4||$0.16||$0.64|
Other REIT Lists
- Data Center REITs – A Simple Guide
- Healthcare REITs – An Investment Guide
- Net Lease REITs
- Office REITs: Investing Guide and Data
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.