Looking for the best REITs to buy this month? Keep reading to see our top picks for April for the best REITs with the highest yield, the greatest growth potential and priced at the best value.

After a solid first week in March, most real estate investment trusts (REITs) gave back all of their gains the following week. After further declines, only the last four trading days of March saved them from a dismal month. The Vanguard Real Estate Index Fund ETF (NYSE: VNQ) was down 2.1% in March but is still up 1.73% year to date.

As April begins, Wall Street sentiment about the Federal Reserve pausing its interest rate hikes puts REITs in a favorable position to benefit from any type of Fed pivot.

The following list of REITs contains three distinct categories — Best High Yield, Best Growth and Best Value) — while using a five-year performance time frame and providing what could be the best opportunities in the REIT sector moving into April.

Best High-Yield REITs

When it comes to choosing REITs, investors cannot just chase high-yielding dividends without considering the overall safety and reliability of the dividend and the company.

Service Properties Trust

Service Properties Trust (NASDAQ: SVC) is a Newton, Massachusetts-based diversified REIT with a portfolio of 238 hotels and 765 service-focused net-lease retail outlets that covers 46 states, Puerto Rico and Canada. It is externally managed by the RMR Group Inc. (NASDAQ: RMR).

Service Properties Trust moves from the Best Value category in March to the Best High-Yield category for April. Year to date, it has a total return of 42.1%, far ahead of any other REIT.

Service Properties Trust’s annual dividend of $0.80 now yields 8.29%. Its five-year average dividend yield is 6.68%, indicating that its shares are still a bit undervalued.

On Feb. 28, Service Properties Trust announced its fourth-quarter operating results. Funds from operations (FFO) of $0.44 was $0.08 ahead of estimates and well above FFO of $0.17 in the fourth quarter of 2021. Revenue of $455.22 million beat the estimates by $10.35 million and was 8.03% better than $421.38 million in the fourth quarter of 2021.

On March 7, Oppenheimer & Co. Inc. analyst Tyler Batory reiterated a Perform position on Service Properties Trust while keeping his $8.50 price target. As March ended, shares were trading at just below $10, so i an increase in Oppenheimer’s target price is possible before long.

Global Net Lease Inc.

Global Net Lease Inc. (NYSE: GNL) is a New York-based diversified international commercial property REIT with 311 properties in 11 countries. Its 140 tenants are spread across 50 industries.

On Feb. 23, Global Net Lease reported fourth-quarter operating results. While its revenue of $93.9 million was slightly ahead of consensus estimates, its funds from operations of $0.24 missed the estimates by $0.13.

The Street was disappointed, so after a huge January in which it rose more than 20%, Global Net Lease gave back 6.12% of its gains in February and then lost another 8.66% in March.

There also were some positives in the quarterly report. Global Net Lease reported a 98% occupancy rate, with a remaining weighted average lease term of eight years. In addition, 94.5% of its leases contain rent increases, based on annualized straight-line rent.

Year to date, Global Net Lease has a total return of 4.16%.

Global Net Lease continues to pay out a $1.60 annual dividend, yielding 12.7% and making it a great high-yielding stock for income investors. The diversification of this REIT and its strong lease rate also bodes well for it in the future.

One caveat — in the fourth quarter, the quarterly dividend exceeded FFO. If that continues, Global Net Lease may have to cut the dividend. Investors may want to wait until Global Net Lease’s April dividend announcement before initiating a purchase.

Simon Property Group Inc.

Simon Property Group Inc. (NYSE: SPG) is an Indianapolis-based retail REIT that owns and leases over 250 shopping malls, restaurants, outlet centers and entertainment venues. It has locations in the top 25 most populated markets in the U.S. Simon Property Group was founded in 1960 and launched its initial public offering (IPO) in 1993.

In February, Simon Property Group reported fourth-quarter operating results, producing FFO and revenue that beat analysts’ expectations as well as its results from the fourth quarter of 2021. But its 2023 forward guidance on FFO of $11.70 to $11.95 was well below expectations of $12.13.

As a result, investors were disappointed, and since Feb. 1, Simon Property Group has had a total loss of 11.76%. But year to date, it’s only down by 3.21%. The last week of March it rose 8.49%, so it looks like a bounce-back could be in the cards for April.

On March 21, Goldman Sachs analyst Caitlin Szczupak (Burrows) reinstated Simon Property Group with a Buy rating and announced a $150 price target. With Simon Property Group’s final March closing price at $111.97, that represents a potential gain of 33.9%.

The annual dividend is $7.20 and now yields 6.69% Although the COVID-19 pandemic in 2020 forced Simon Property Group to cut its dividend, it has raised its dividend six times since the summer of 2021, showing investors that the dividend stability is back. 

For investors looking for a REIT with a long-term history and high-dividend yield in April, Simon Property Group could be a solid REIT to purchase.

Best Growth REITs

When looking for the best growth REIT stocks, investors can feel confident about their selections by considering the long-term price history of the company, regardless of where the price is today. These three REITs have a terrific history of appreciation but lower dividend yields than most other REITs.

Equinix Inc.

Equinix Inc. (NASDAQ: EQIX) is a specialized data center REIT that owns and operates a network of over 240 data centers in 71 major metropolitan areas. The data centers provide critical infrastructure to over 10,000 customers and 260 Fortune 500 companies around the world. 

March was an excellent month for Equinix, with a total return of 7.17%. On March 27, Equinix received a boost from BMO Capital Markets analyst Ari Klein, who upgraded it from Market Perform to Outperform, while raising the price target from $755 to $785.  From its end-of-March price of $721.04, that’s a potential increase of 8.8%.

On Feb. 15, Equinix announced its fourth-quarter operating results. FFO of $4.39 missed estimates by $0.43, and the $10 million beat on revenue was not enough to please Wall Street investors.

At the same time, Equinix announced an increase in its quarterly dividend from $3.10 to $3.41 per share. Its annual dividend of $13.64 yields 1.89%. Year to date, Equinix has a total return of 9.35%, putting it in the top 8% of all REITs.

Equinix will announce its first-quarter operating results after the closing bell on May 3.

Prologis Inc.

Prologis Inc. (NYSE: PLD) is a stalwart REIT in the ownership and management of approximately 1.2 billion square feet in 5,500 industrial logistics properties across the U.S. and in 18 other countries. Founded in 1983, the San Francisco-based company has long been a leader in appreciation among REIT stocks.

March continued to be a good month for Prologis with a total return of 3.72%. Prologis has a total return of 11.49% year to date, putting it in the top 7% of all REITs.

On Feb. 23, Prologis announced a hike in its quarterly dividend from $0.79 to $0.87 per share. The $3.48 annual dividend yields 2.79%.

On March 20, Mizuho analyst Vikram Malhotra initiated coverage on Prologis with a Buy rating and announced a price target of $140. The following day, Goldman Sachs analyst Burrows reinstated her Buy rating on Prologis and announced a $147 price target.

Prologis will announce its first-quarter earnings on April 18.

Mid-America Apartment Communities Inc.

Mid-America Apartment Communities Inc. (NYSE: MAA) is a self-administered residential REIT that specializes in purchasing and leasing apartment complexes. It owns approximately 102,000 units in 297 communities across 16 states and Washington, D.C. Most of Mid-America Apartment Communities’ properties are in the Southeast, Southwest and Mid-Atlantic states. Mid-America Apartment Communities is a member of the S&P 500 and has been a public company for 28 years.

Mid-America Apartment Communities recently announced a 12% quarterly dividend increase from $1.25 to $1.40 per share. This followed a previous dividend hike from $1.088 to $1.25 last summer and shows the ongoing strength of the FFO, along with management’s faith in its future. The annual dividend of $5.60 per share now yields 3.7%. The next ex-dividend date is April 13, and the dividend is payable on April 28.

Mid-America Apartment Communities was down 2.92% in March. Year to date it has a total negative return of 1.92%.

On Feb. 1, Mid-America announced its fourth-quarter and full-year 2022 operating results. Core FFO was $2.32 per diluted share, up from $1.90 in the fourth quarter of  2021 and beating analyst estimates by $0.05. Revenue of $527.97 million was 13.8% above the $463.58 million generated in the fourth quarter of 2021 but missed the estimates by $1.93 million. Same-store average rents per unit were 5.1% higher than for the fourth quarter of 2021, but new leases were 13% higher than the previous year. The average physical occupancy level was 95.6%, slightly below 95.7% from one year earlier.

Analysts are mixed on Mid-America Apartment Communities. Some still voice concerns that a 2023 recession could bring about an increase in apartment vacancies, affecting Mid-America Apartment Communities’ revenue and FFO. But in many areas of its portfolio, rents remain strong as high mortgage rates continue to make buying homes unaffordable for millions of younger tenants.

On March 14, Scotiabank analyst Nicholas Yulico downgraded Mid-America Apartment Communities from Sector Outperform to Sector Perform and announced a $163 price target. But two weeks earlier, Barclays analyst Anthony Powell maintained an Overweight position on Mid-America Apartment Communities and raised his price target from $185 to $192. That’s a potential 27.1% gain from its end-of-March closing price of $151.04.

Mid-America Apartment Communities will announce its first-quarter earnings on April 25.

Best Value REITs

Long-term investors looking for undervalued REITs should consider solid companies with good track records that have fallen out of favor with Wall Street. These REITs now provide strong dividend yields for income investors and over time may provide solid appreciation once economic conditions improve.

Easterly Government Properties Inc.

Easterly Government Properties Inc. (NYSE: DEA) replaces Arbor Realty Trust as a best-value REIT for April. Easterly Government Properties is an office REIT that acquires, develops and manages Class A commercial properties and leases them to government agencies through the General Services Administration. Easterly Government Properties owns a total of 86 properties across 26 states. Its occupancy rate is above 99%.

On March 28, Compass Point Research & Trading analyst Merrill Ross upgraded Easterly Government Properties from Neutral to Buy and announced a $17 price target.  From its March ending price of $13.74, that represents a potential increase of 23.7%.

Easterly Government Properties has been one of the more stable office REITs in 2023. While many in the subsector are off 15% to 40%, Easterly Government Properties has a year-to-date total loss of only 3.15%. Its occupancy rate of stable tenants and recent analyst upgrade makes it a best-value REIT for April.

SL Green Realty Corp.

SL Green Realty Corp. (NYSE: SLG) replaces Modiv Inc. (NYSE: MDV) this month as a best buy for April. SL Green is the largest landlord of office buildings in New York City. As of Dec. 31, SL Green held interests totaling 33.1 million square feet in 61 buildings.

SL Green’s performance was ugly in March, with a total loss of 29.99%. Analysts slashed their ratings on the company like nobody was ever going to rent office space in New York City again. On March 23, Barclays analyst Powell downgraded SL Green from Equal-Weight to Underweight. A few days later, Citigroup analyst Nicholas Joseph maintained a Sell position while lowering the price target from $35 to $17.

On March 28, SL Green announced it had signed a long-term, full-floor lease with Palo Alto Networks Inc. at its new property at One Madison Avenue, scheduled for completion in October. In doing so, SL Green upped its office leasing pipeline square footage from 700,000 to over 1 million in three weeks.

In addition, SL Green Realty Chief Financial Officer Matthew J. Diliberto purchased 10,000 shares of company stock on March 24 at an average price of $16.44 for an approximate total of $164,400.

April looks to be a turnaround month. On April 3, BMO Capital Markets analyst John Kim came out in support of SL Green, upgrading it from Market Perform to Outperform and announced a $30 price target, a 27.5% potential increase from its March closing price of $23.52. It’s also worth noting that from its March 24 closing price of $20.25, SL Green rose over 16% in the final week of the month.

SL Green will release first-quarter operating results after the market closes on April 19.

Extra Space Storage Inc.

Extra Space Storage Inc. (NYSE: EXR) replaces CubeSmart (NYSE: CUBE) as a best buy for April. Extra Space Storage is a Salt Lake City-based self-storage REIT that has 1.6 million units in 2,338 self-storage properties across the country.

In February, Extra Space Storage declared a first-quarter 2023 dividend of $1.62 per share, an 8% increase over the prior quarter’s dividend. The annual dividend of $6.48 per share now yields 4.2%.

On April 3, Extra Space Storage announced it will acquire Life Storage Inc. (NYSE: LSI) in an all-stock transaction of approximately $145.82 per share. The merger will add about 1,200 new properties for Extra Space Storage and boost its portfolio by over 50%.

In March, Extra Space Storage had a total return of 0.54%. But with the merger, Extra Space Storage dropped about 6% on the morning of April 3, setting up an excellent opportunity for investors to acquire this REIT at a more attractive price.

Best Non-Traded and Private REITs

Not all REITs are publicly traded on a major stock exchange. The benefit to this type of REIT is that their prices aren't affected by market sentiment. Instead, share prices are directly tied to the REIT's net asset value (NAV), meaning less volatility and more predictable growth.

Fundrise Growth eREIT III

(Buy Shares)

While many publicly traded REITs are trading near their 52-week lows, the Growth eREIT III is up 17.2% YTD with a 2.53% dividend yield. The REIT invests in value-add multifamily properties in Texas and California.

The value-add strategy allows for greater long-term growth in terms of both property appreciation and income, making an investment in the Growth eREIT III a solid play for investors comfortable with riding out their investment for 5+ years.

The REIT's most recent NAV update puts it share price at $17.77

Fundrise Growth eREIT VII

(Buy Shares)

Another REIT offering from Fundrise is the Growth eREIT VII, which presents a rare opportunity to invest at a discount after its share price dipped to $11.60.

The REIT's portfolio is 100% allocated to single-family rentals in the Sunbelt Region of the United States, where long-term rent growth is expected to remain strong. The majority of the single-family rentals are in rental communities, allowing for greater price protection from changes in the housing market.

Despite the recent dip in share price, the REIT is still up 4.2% YTD.

See also: Fundrise Review 2022

Recent REIT Analyst Ratings

REIT Sector Performance

This data reflects how each REIT sector is performing as a whole based on average total returns and dividend yields.

What to Look for When Choosing The Best REITs

While publicly-traded REITs are bought and sold on the stock market like any other publicly-traded company, REITs are a unique asset class that needs to be analyzed differently than other stocks. 

Funds From Operations (FFO)

If you're familiar with stocks, you're most likely familiar with terms like earnings per share (EPS) and price-to-earnings ratio (p/e ratio). However, these metrics don't offer much help when looking at an equity REIT.

To understand a REIT's true cash flow, you have to look at their funds from operation (FFO). Since real estate is a depreciable asset, a REIT's reported net income includes a significant depreciation expense. It also includes capital gains and losses from the sale of properties, which don't represent what investors can expect the company to earn on a consistent basis.

FFO adds depreciation back into the REIT's net income and takes out any gains or losses on the sale of property, providing a more accurate picture of a REIT's true earnings.

To use FFO as a way to value REITs, we divide the REIT's current share price by its FFO per share to get a price to FFO ratio. We then compare the price to FFO of the different REITs in each real estate sector to find value opportunities.

Balance Sheet

REITs have to carry a lot of debt in order to finance the properties they purchase. This is especially true because REITs are required to pay out 90% of their taxable income to shareholders in the form of dividends. This doesn't leave REITs with the ability to stockpile a lot of cash.

It's important to make sure that the REIT you're investing in isn't carrying too much debt, though. The easiest way to do this is by looking at their total debt compared to their earnings before interest, tax, depreciation and amortization (EBITDA). This is called a debt to EBITDA ratio.

For instance, if a REIT has a total of $1 billion in debt and their annual EBITDA is $250 million, you would divide $1 billion by $250 million to get a debt to EBITDA ratio of 4.

Ideally, you want to look for REITs with a debt to EBITDA ratio somewhere between 4 and 6. Anything above 6 and their balance sheet starts to look risky. You also want to make sure that they're not too conservative with their debt. A debt to EBITDA ratio below 4 can indicate that they're using too much cash that could be going to investors instead of utilizing debt.

A solid REIT management team will use a reasonable amount of debt to maximize their overall returns. This means more growth and higher dividends being paid to investors.

Dividends

One of the greatest advantages to REITs is their dividends. On average, REITs pay out significantly higher dividends than most other dividend stocks. 

You want to be careful not to get caught in a yield trap, though. Some REITs may increase their dividend payments to an amount they can’t sustain in order to attract or keep shareholders. They also may put off cutting dividends when their FFO has dropped. In either case, buying a REIT with a dividend it can’t sustain is a quick way to lose money. 

To get an idea as to whether a REIT’s dividend is safe, you’ll want to look at the FFO payout ratio. This compares the company’s FFO per share to its dividend rate. 

For instance, if a REIT has an FFO per share of $2 and a dividend payment of $1.50 per share, you’ll simply divide the dividend rate by the FFO per share to get 75%. 

Ideally, the REIT’s FFO payout ratio will be somewhere between 70% - 80%. However, a lower payout ratio is fine if you’re happy with the yield. A slightly higher payout ratio isn’t necessarily a red flag as long as they’ve consistently maintained that payout ratio while either keeping or increasing their dividend payments over time. 

The Real Estate

You can’t forget that investing in a REIT is essentially investing in a real estate portfolio. If you were buying properties directly instead of investing in a REIT, you would want to invest in assets that would provide you the greatest potential return with the least amount of risk possible. You want to look at REITs the same way. 

If you’re looking for a dependable REIT, you’ll want to look at ones that invest in a property type with a strong outlook. For instance, if you think shopping malls are doomed you won’t want to invest in a REIT that owns a lot of shopping malls. 

REIT ETFs

A REIT ETF is an exchange-traded fund that invests in REITs and other real estate stocks. These funds typically follow a REIT index and have a diversified portfolio with investments spread out across multiple companies.

Investing in The Best REITs

A REIT’s recent financials provide a great basis for choosing the best ones to buy, but major changes can happen between quarterly filings. Before investing in a real estate stock, be sure to look for recent news about any acquisitions, dispositions, offerings, or any other relevant news that can affect their future performance.

Other intriguing REITs include the Plymouth Industrial REIT, Emirates REIT, U.S. REIT ETF and the Apple Hospitality REIT.

You can learn more about how to use REITs to invest in the real estate market with our guide on How to Invest in REITs.

Related content: BEST HIGH-YIELD REITS