Office REITs: Investing Guide and Data

Office REITs own, develop, and manage commercial office real estate, like office parks and high-rise buildings. They rent the properties to tenants and collect rent payments.

This category was attractive in the past because of demand caused by customer growth. However, the COVID-19 pandemic resulted in a structural change as hybrid work became popular. This event lowered demand and client requirements.

Also, the unprecedented rise in interest rates quickly caused interest expenses to surge. Some projects and earlier acquisitions became less profitable. The combination of hybrid work and higher financing costs resulted in cutting or suspending the dividends of some office REITs. For instance, Vornado Realty (VNO) suspended its dividend because of challenging New York City (NYC) market business conditions.

That said, Office REITs may benefit when interest rates trend lower. This article discusses Office REITs and lists important financial data and a dividend calendar.

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What Are Office REITs?

Office REITs are a category within the REIT industry focusing on commercial office buildings.

They own, develop, and manage office properties such as skyscrapers, high-rise buildings, and corporate parks. A few office REITs are specialized, investing in specific classes of properties. An example is Alexandria Real Estate Equities (ARE), which owns medical and life science office buildings. It is considered a healthcare REIT. Others focus on government office buildings.

The REITs lease properties or space to tenants, usually in multi-year leases, often a triple net lease structure, which means the lessee carries most of the risk. Sometimes, a client rents a whole building or office park, and sometimes, they only take part. Typical tenants are banks, law firms, government agencies, non-profits, technology companies, multinational companies, etc.

Most office REITs are publicly traded on stock market exchanges. However, a few are closely held by private equity. The largest office REITs have a market capitalization of hundreds of millions to billions of dollars. Collectively, they own thousands of buildings with hundreds of millions of square feet. 

Our list includes 27 publicly traded office REITs.

Types of Office REITs

Office REITs are often categorized by location. They may own three different types of office buildings: Class A, Class B, and Class C.

Gateway REITs

Gateway REITs are a type of office REIT investing in urban buildings. More specifically, it is referred to as the urban central business district. They hold real estate portfolios concentrated in the six largest metropolitan office markets: NYC, Boston, Chicago, Los Angeles, San Francisco, and Washington, D.C. They may also own buildings in other cities.

Suburban REITs

On the other hand, suburban REITs hold properties in secondary markets, often in sunbelt cities. Suburban office space is often in corporate parks. 

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 dividends. A second negative is REITs do not pay qualified dividends, instead, they pay ordinary or non-qualified dividends.

Pros of Office REITs

Publicly traded office 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. However, most office REITs do not have long track records because of the Great Recession and the COVID-19 pandemic.

Diversification – Investing in publicly traded REITs provides diversification to a portfolio.

Long-Term Contracts – Contracts in this market usually last five to seven years or even longer. Hence, some stability exists for income and dividend streams.

Final Thoughts

Office REITs are a subset of the REIT industry. Investors are attracted to these companies because of long-term demand and contracts. However, hybrid work and high interest rates have affected results, and thus, the stocks have been under pressure. However, these investments may have a place in some portfolios when undervalued.

List of Office REITs

Stock Rover* and Portfolio Insight* were used to create this table.

Ticker	Company	Dividend Yield	Dividend 10-Year Avg (%)	Payout Ratio	Price / Earnings	Cap ($M USD)
AAT	American Assets Trust	6.60%	4.60%	159.80%	24.5	$1,220
AHH	Armada Hoffler Properties	7.20%	6.90%	220.00%	31	$728
ALX	Alexander's	9.20%	5.00%	93.00%	10.2	$1,003
ARE	Alexandria Real Estate	4.70%	6.20%	355.10%	76.1	$18,216
BXP	Boston Props	6.90%	4.20%	318.70%	46.2	$8,905
CDP	COPT Defense	4.60%	0.40%	-	-	$2,770
CIO	City Office REIT	8.70%	-	-	-	$183
CMCT	Creative Media	8.40%	-26.60%	-	-	$92
CUZ	Cousins Props	6.30%	5.90%	220.70%	34.9	$3,071
DEA	Easterly Government Props	9.10%	-	321.20%	35.4	$1,111
DEI	Douglas Emmett	6.20%	0.50%	633.30%	101.4	$2,032
EQC	Equity Commonwealth	-	-	0.00%	27.5	$2,055
ESBA	Empire State Realty OP	1.60%	5.80%	42.40%	26.9	$2,407
ESRT	Empire State Realty Trust	1.60%	5.80%	42.40%	27	$1,447
FSP	Franklin Street Props	1.80%	-25.50%	-	-	$233
HIW	Highwoods Props	10.40%	1.60%	155.00%	15	$2,041
HPP	Hudson Pacific Properties	-	-	-	-	$795
JBGS	JBG SMITH Props	6.40%	-	-	-	$1,344
KRC	Kilroy Realty	6.90%	4.40%	116.80%	17.1	$3,696
NYC	American Strategic	-	-	-	-	$16
ONL	Orion Office REIT	7.80%	-	-	-	$286
OPI	Office Props IT	24.50%	-17.50%	-	-	$258
PDM	Piedmont Office Realty	7.90%	-4.60%	167.80%	14	$778
PGRE	Paramount Group	4.80%	-	-	-	$1,020
PSTL	Postal Realty Trust	6.70%	-	728.90%	109.4	$308
SLG	SL Green Realty	9.40%	7.50%	-	-	$2,220
VNO	Vornado Realty	-	-	-	-	$4,366

Dividend Calendar for Office 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	12/6/23	12/7/23	12/21/23	4	$0.33	$1.32
AHH	Armada Hoffler Properties	9/26/23	9/27/23	10/5/23	4	$0.19	$0.78
ALX	Alexander's	11/3/23	11/6/23	11/17/23	4	$4.50	$18.00
ARE	Alexandria Real Estate	9/28/23	9/29/23	10/13/23	4	$1.24	$4.96
BXP	Boston Props	9/28/23	9/29/23	10/31/23	4	$0.98	$3.92
CDP	COPT Defense	12/28/23	12/29/23	1/18/24	4	$0.28	$1.14
CIO	City Office REIT	10/6/23	10/10/23	10/24/23	4	$0.10	$0.40
CMCT	Creative Media	10/5/23	10/9/23	10/23/23	4	$0.09	$0.34
CUZ	Cousins Props	10/3/23	10/4/23	10/13/23	4	$0.32	$1.28
DEA	Easterly Government Props	11/8/23	11/9/23	11/21/23	4	$0.26	$1.06
DEI	Douglas Emmett	9/28/23	9/29/23	10/17/23	4	$0.19	$0.76
EQC	Equity Commonwealth	2/22/23	2/23/23	3/9/23	0	$4.25	-
ESBA	Empire State Realty OP	9/14/23	9/15/23	9/29/23	4	$0.04	$0.14
ESRT	Empire State Realty Trust	9/14/23	9/15/23	9/29/23	4	$0.04	$0.14
FSP	Franklin Street Props	10/19/23	10/20/23	11/9/23	4	$0.01	$0.04
HIW	Highwoods Props	11/17/23	11/20/23	12/12/23	4	$0.50	$2.00
HPP	Hudson Pacific Properties	6/16/23	6/20/23	6/30/23	4	$0.12	-
JBGS	JBG SMITH Props	11/16/23	11/17/23	12/1/23	4	$0.22	$0.90
KRC	Kilroy Realty	9/28/23	9/29/23	10/11/23	4	$0.54	$2.16
NYC	American Strategic	4/8/22	4/11/22	4/18/22	4	$0.80	-
ONL	Orion Office REIT	12/28/23	12/29/23	1/16/24	4	$0.10	$0.40
OPI	Office Props IT	10/20/23	10/23/23	11/16/23	4	$0.25	$1.30
PDM	Piedmont Office Realty	11/22/23	11/24/23	1/2/24	4	$0.12	$0.50
PGRE	Paramount Group	9/28/23	9/29/23	10/13/23	4	$0.04	$0.22
PSTL	Postal Realty Trust	10/31/23	11/1/23	11/30/23	4	$0.24	$0.95
SLG	SL Green Realty	10/30/23	10/31/23	11/15/23	12	$0.27	$3.25
VNO	Vornado Realty	1/27/23	1/30/23	2/10/23	4	$0.38	-

Other REIT Lists

• Apartment REITs: Information and a Guide
• Data Center REITs – A Simple Guide
• Healthcare REITs – An Investment Guide
• Net Lease REITs

Related Articles on Dividend Power

• SL Green Realty (SLG) Dividend Cut
• Alexandria Real Estate (ARE): Undervalued REIT

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