3 REITs To 'Buy And Hold' Forever

Añadido: 2026-05-30

[00:00:00]Most REITs are not meant to be held forever, in my opinion. Real estate fundamentals are cyclical and valuations can change drastically over time.

[00:00:08]Therefore, it's very rare that I will consider holding a REIT forever. The pain of a potential down cycle and valuation compression is just too brutal, especially if a REIT is richly valued. Take the example of Welltower.

[00:00:19]The blue-chip senior housing REIT is doing really well today because senior housing is under supplied, leading to rapid rent growth. However, this is now more than reflected in its valuation, in my opinion, trading at 35 times FFO and an estimated 50% premium to its net asset value. I agree that this is a great REIT, but the problem is that continuing to hold it at these high valuations is a very risky proposal.

[00:00:40]Eventually, expect this strong performance to catch the attention of property developers, who will then start building new properties, which will eventually cool down the fundamentals of the REIT, which could then lead to significant downside as its multiple re-rates from, let's say, 35 times to 20 times FFO, which is still above average.

[00:00:57]Therefore, the risk-to-reward has become quite poor, in my opinion, and this is why in these type of situations I tend to sell the REIT and move on to the next opportunity. However, there are some exceptions in my portfolio that I expect to hold for a very long time to come and potentially forever. These are REITs operating in structurally under supplied property sectors with long-term secular tailwinds that I expect to lead to significant value creation over time.

[00:01:19]Therefore, I expect to be very patient with these REITs and even if they become a bit overvalued, I expect to hold them because the higher valuations could even benefit them, allowing them to raise more capital to make even more investments to accelerate their growth rate even further. Hey, this is your Shameless Small Investment Firm that specializes in REIT investing, and in today's video, I'm going to discuss three REITs to buy and hold forever. But before I get started, I want to remind you that you can always access my real money REIT portfolio in its entirety.

[00:01:45]These are real money, real transactions.

[00:01:47]By joining High-Yield Landlord for a 2-week free trial, you won't be charged anything in the first 14 days, so feel free to just come check out the portfolio. If the research is not for you, you can cancel anytime, no questions asked. It's the first link in the description of this video. The first REIT I'm going to discuss is called Helios Towers with the ticker symbol HTWS and this is our single largest position at High Yield Landlord today representing about 14% of our portfolio.

[00:02:08]This wasn't initially such a large investment, but after more than doubling over the past year, size in our portfolio has grown accordingly.

[00:02:15]Normally under these type of circumstances, I would typically sell the REIT and move on to the next opportunity, but in this particular case, I've decided to let my winner run.

[00:02:23]My plan is to hold it for a long time to come because I expect significant value creation over the coming decade. For context, Helios is the leading cell tower landlord in Africa owning a well diversified portfolio of nearly 15,000 towers across nine countries. As such, it's quite similar to cell tower REITs American Tower and Crown Castle.

[00:02:41]However, the big difference is that it's focusing on the fastest growing region of the world. Just consider that Africa is expected to enjoy by far the fastest population growth over the coming decades, even as its mobile phone market is still decades behind developed markets. And as a result of this, the consumption of data is exploding to the upside today. This is evident if you look at this next slide. In short, it's expected that 80 million new mobile connections will be added to Africa over the next five years alone, which will lead to much more demand for Helios Towers infrastructure leading to higher rents and property values. And here's the track record of the REIT ever since it's been capitalizing on this opportunity. It's done exceptionally well over the past decade, yet I think that the best days are still ahead of it. And even following the recent surge in its valuation, the company is still trading at just about 14 times FFO, which is very reasonable in my opinion for a REIT with such rapid growth prospects. In fact, the management seems to agree as they've been buying back shares over the past quarters. And this is especially true as you consider that the REIT also has low leverage with a three and a half time debt to EBITDA.

[00:03:40]That's very conservative for REIT.

[00:03:41]Finally, before you comment that you would never want to invest in Africa because too risky, I agree that there are risks here, but you should know that the REIT has done a good job at mitigating those risks by structuring long-term leases with multinational companies. So, these are not some tiny African companies with risky balance sheet. These are big multinational companies. The rent payments are typically in hard currencies like the US dollar, the euro. And then, finally, the REIT has well diversified its portfolio investing across nine different countries to limit political risk. I think that selling today to take the gain will look like a mistake 10-20 years from now. I expect the rapid growth to really compound over time, and that is why I expect to be very patient with Helios Towers. Hey, before I move on to the second REIT, can you do me a huge favor and click the like button and subscribe to the channel if you enjoy this content? It takes me a lot of time and effort to film this this free content for you, and this would really help me to keep growing. Thanks so much in advance. The second REIT I want to discuss called Shurgard Self Storage, ticker symbol SHUR. This is the leading self storage REIT in continental Europe, and arguably the best properties in this continent. And you don't have to just take this from me. A strong vote of confidence that the company's biggest shareholder is Public Storage owning about 35% of its equity. In case you're not familiar with Public Storage, this is the world's leading, by far, the biggest self storage landlord. It has an exceptional track record, and the fact that they picked Shurgard for their main investment in Europe is a very strong vote of confidence, in my opinion, in the quality of the assets, the balance sheet, and the management. And the reason to hold it for the long run is this. The European self storage market is still decades behind the US today with 15 times less storage space per capita at the moment. Even then, the concept is now rapidly growing in popularity because the same demand drivers also exist in Europe: divorce, death, relocation, the need to make space for a home office now as well in the post-COVID world. And so, the concept is now finally growing in popularity, and this is turning into a significant long-term tailwind for REITs like Shurgard as they're able to develop new properties to bring new supply to the market earning high initial yields and large spreads over the cost of capital. And for context here, the US self storage market went through the same maturation process, and as they did, they earned exceptional returns for their shareholders, nearly 20% per year for the last 30 years. And I just think that Shurgard, as well as other European self-storage REITs, are set to replicate the success story of the coming decade.

[00:05:54]But, despite enjoying these very attractive long-term prospects, Shurgard is today trading at just about 14 times FFO, an estimated 50% discount to its net asset value, which is unseen. It's truly exceptional for it to trade at such a large discount despite having such attractive long-term growth prospects, backing by Public Storage, a triple-B investment-grade rating. Sorry.

[00:06:12]I really like the risk-to-reward, and so I expect very patient with this REIT, especially at these valuations. Hey, before I go into the third REIT, quick reminder, my book The REIT Advantage now out on Amazon has a foreword by the CEO of Vici Properties. It has received praise from other REIT CEOs, including Agree Realty CEO Joey Agree. There will be a link in the description in case you want to check it out. The third REIT I want to discuss is Vesta REIT, ticker symbol of VTMX. This REIT has also risen a lot lately, just like Helios, and yet I expect to be very patient with it, and that's because this is the leading industrial REIT in Mexico, which is greatly benefiting from the growing trend of nearshoring, which I expect to lead to significant value creation over the coming decade. For most Western companies, it's today a lot cheaper to produce and ship goods from Mexico than from China to their home markets.

[00:06:58]Moreover, the shipping time's also a lot faster and more reliable, especially in a black swan event such as a pandemic or future Chinese invasion of Taiwan. This, coupled with the growing tensions between the West and the East, has led many European, Canadian, and American companies now to shift larger portions of their supply chains from China to Mexico, leading to enormous demand for industrial properties in these markets.

[00:07:20]This benefits Vesta in two ways. First, its existing portfolio is benefiting from rapid rent growth. And then, secondly, it's leading to new development opportunities, allowing it to build new supply at high initial yields, resulting in large spreads of its cost of capital. As a result, Vesta has guided to grow its FFO per share by 10% annually or more through 2030, and I think that these will be just the first years of a decade or two plus of rapid growth prospects. I think that this growth will compound over time and lead to significant value creation. And yet, the REIT is still trading at a very reasonable valuation of 15 times FFO.

[00:07:52]And for these reasons, I expect to be very patient with my investment and hold it for a long time to come. Finally, I forgot to note here that the REIT has low leverage with three times that to EBITDA, giving it great capacity to keep reinvesting in its future. The dividend yield is low at 2.4%, but that's because the REIT retains most of its cash flow and again has low leverage. But I think this is the right decision given that they have all these attractive investment opportunities with high initial yields and large spread over their cost of capital. These are three exceptions I expect to hold for a very long time to come, potentially forever in my REIT portfolio. But there are more. And if you want to access my full portfolio, you can join us at High Yield Landlord for a two-week free trial. It will be the first link in the description of this video. Once more, I would really appreciate if you click the like button. Thanks so much. Have a good one. Bye-bye.