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Here’s 2 of my favourite REITs

Most Australians think that the main two asset classes are shares and property. I think there’s a good middle ground with real estate investment trusts (REITs).

REITs are commercial property businesses that operate in a variety of sectors. There are office REITs, warehouse REITs, retail REITs among others.

There are a few REITs that are unique on the ASX and I think they are interesting investment opportunities, below are two of my favourite REITs.

National Storage REIT (ASX: NSR)

National Storage is Australia and New Zealand’s largest self-storage provider with 127 centres.

It has a compelling offering. Real estate in Australia has reached extremely high levels, an extra bedroom in a house could cost $50,000, $100,000 or far more just for storage. National Storage’s offering makes economical sense for people with a lot of items they want to store.

National Storage has steadily grown its underlying earnings per share over the past four years, alongside the distribution. In its latest report the net tangible assets (NTA) per share increased by 5% and the distribution increased by 2.17%.

The current distribution yield is 6.22%

Rural Funds Group (ASX: RFF)

Rural Funds Group is Australia’s only ASX-listed REIT that purely owns agricultural property.

I like Rural Funds as an investment idea because farmland has been a useful asset for a very long time and I imagine it will continue to be useful for a long time to come. In-fact, it should become even more useful as the Australian and global populations increase.

It has a variety of farm types including almonds, macadamias, cotton, poultry, cotton and vineyards.

Management have a goal of increasing the distribution by 4% every year if it can and it has achieved this whilst improving the net rental profit at a faster rate.

Foolish takeaway

I think both of these REITs are very good investment options, but I particularly like Rural Funds which is why I would like to add to my holdings of it.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended National Storage REIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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