The Motley Fool

2 real estate investment trusts to help you retire with a million

The UK property sector is facing a highly uncertain future. Brexit has caused confidence among investors, businesses and consumers to decline to at least some degree. This has the potential to cause lower demand not only for properties themselves, but also reduced rental growth if economic activity levels decline.

But for long-term investors, there could be a buying opportunity on offer. A number of property-related companies including real estate investment trusts (REITs) now offer wide margins of safety. As such, they could be worth buying for the long run even though they face an uncertain future.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Low valuation

Reporting on Tuesday was student accommodation specialist Empiric Student Property (LSE: ESP). It recorded a rise in revenue of 27.3% in the first half of the financial year, with its portfolio valuation 13.4% higher than it was at the end of 2016. It remains well-positioned to benefit from firm demand for student properties, with it having 90 assets in 30 prime university cities and towns. With pressure on housing being high, its offering is likely to become more popular over the long run.

Certainly, Brexit is a risk for the company as 23% of students in the UK are international students. However, with many of them being postgraduates who stay for one year, they are unlikely to be affected by new immigration controls in a post-Brexit world. And with the government being keen to continue the success of the UK’s higher education sector, the company’s long-term outlook remains positive.

With dividends maintained at 3.05p per share for the six-month period, Empiric Student Property has a dividend yield of 5.6%. It trades at a share price of 109p versus a net asset value (NAV) of 105p, which suggests that it offers a wide margin of safety. Therefore, for investors focused on long-term income and value opportunities, it could be a shrewd buy.

Growth potential

Also offering an impressive investment opportunity is Segro (LSE: SGRO). The developer and manager of warehouse properties is performing well, with the company reporting a low vacancy rate and strong like-for-like (LFL) revenue growth in its most recent results. It also recently announced a successful £557m rights issue which will be used to fund future growth opportunities. This could be a sound move if the company is able to buy high quality assets at relatively low prices.

With the company trading on a price-to-book (P/B) ratio of just 1.1, it seems to offer a wide margin of safety. This suggests there could be upside potential on offer, while its dividend yield of 3% is covered 1.2 times by profit. With its earnings due to rise by 9% next year, it looks set to offer an inflation-beating rise in shareholder payouts over the medium term. As such, Segro could prove to be a strong performer in an already attractive REIT sector.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.