Commercial property is one of the biggest and best asset classes out of choices like shares, gold, investment properties and so on.
There are a variety of real estate investment trusts (REITs) listed on the ASX. Just like any businesses, there are some good ones and some bad ones. Here are three of my favourite REIT ideas:
National Storage REIT (ASX: NSR)
National Storage is the largest self-storage provider in Australia and New Zealand with 116 centres at the last count across the two countries.
The rising cost of property has made the idea of storing items in a unit much more economical than owning a property with an extra bedroom just for storage.
National Storage is currently trading with a distribution yield of 6.09%.
Rural Funds Group (ASX: RFF)
Rural Funds Group is a REIT that focuses purely on owing agricultural property and renting it out.
It has an impressive list of tenants including Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).
Most of its rental contracts with tenants have a rental increase indexation of 2.5%, or CPI inflation.
Rural Funds Group is currently trading with a distribution yield of 5.28%.
Arena is a REIT that mostly owns childcare centres and leases them to childcare providers, though it also owns a few healthcare buildings too.
Management have been growing profit and distributions at an impressive rate over the past few years and are predicting continued strong performance in the near-term.
Arena is currently trading with a distribution yield of 5.45%.
Foolish takeaway
I think REITs are worthy of a place in most investors' portfolios due to their strong income potential and the growing land values. Out of the three above options, Rural Funds Group is definitely my favourite and is trading at decent value too.
