I believe Warehouse Real Estate Investment Trust (LSE:WHR) could be one of the best shares to buy now. Here’s why I purchased shares in the REIT for my holdings.
Accessing the property market through stocks
I can access the property market by purchasing specialist stocks known as REITs. These businesses are designed to yield income from rent-producing properties. A large chunk of profits must be paid to shareholders, which is a requirement of being a REIT imposed by the government.
Warehouse REIT specialises in purchasing, revamping, and renting out warehouses to businesses to use to grow their business.
As I write, Warehouse shares are trading for 165p. At the time last year, the shares were trading for 133p, meaning the shares have returned 24% over a 12-month period.
Even the best shares to buy now have risks
The demand for warehousing needs has skyrocketed in recent years. This is something that many businesses have noticed and the warehousing market has become very competitive, one may even argue saturated. There is a chance that supply and demand could converge. In the shorter term, Warehouse REIT may lose custom to one of its competitors. Both of the aforementioned scenarios could affect performance and investor returns.
Macroeconomic factors, such as soaring inflation, rising costs of materials, and the supply chain issues have had a negative impact on businesses. If these macroeconomic factors continue to put pressure on businesses’ balance sheets and profit margins, they may find they need less warehouse space or none at all. This could affect Warehouse REIT’s occupancy, performance, and any returns I hope to make.
Why I purchased the shares
As I mentioned earlier, warehouse demand is booming. Sky News recently reported the number of warehouses and transport hubs has nearly doubled in the past 10 years across Britain. This has coincided with the online shopping boom and was exacerbated by the pandemic when “stay-at-home” spending spiked.
Warehouse REIT is primed to benefit from this upsurge in demand. At current levels, Warehouse REIT shares are dirt cheap with a price-to-earnings ratio of just four. In addition to this, it possesses an enticing dividend yield of close to 4%. This is in line with the FTSE 100 average. As a passive income seeker, I consider this a good level of return.
Most of my best shares to buy now have one common denominator, which is a good track record of performance. I do understand that past performance is by no means a guarantee of the future, however. Looking back, I can see total revenue and gross profit have increased year on year for the past four years. Full-year results are due in the coming months for the period ending March 2021. I’d expect to see earnings and dividend growth.
I own other REITs and added Warehouse REIT shares to my portfolio. Increased demand, an enticing dividend yield, as well as positive track record of performance helped me make my decision. I do believe Warehouse REIT is one of the best shares for me to buy now and hold for lucrative returns.
