In years gone past, buy-to-let was one of the best places that one could stash their cash. Ordinarily speaking there have been few investment destinations as effective as bricks and mortar, with surging property prices also helping to drive rents sky high, and physical property, of course, proving far less volatile than, say, investing in cyclical commodities or the stock market.
But diving mortgage demand for rental purposes more recently suggests that the popularity of buy-to-let is heading through the floor. And it’s no surprise to this Fool as rising regulation and increasing tax liabilities (a government response to the chronic homes shortage for first-time buyers), provide landlords with an increasingly-painful headache.
There’s no shortage of stocks out there which, in my opinion, are better ways to get exposure to property-based investments. And right now I consider real estate investment trust (REIT) Civitas Social Housing (LSE: CSH) to be one of the best.
The creation of affordable housing is a hot topic for government. There simply isn’t enough of it to go around, and this is illustrated by changing policy towards it at Number 10. Amongst the measures announced recently is the creation an extra £2bn worth of funding earmarked for housing associations to boost build rates over the next decade, giving the long-term trading outlook at Civitas an extra boost.
What’s more, the FTSE 250 company’s robust balance sheet is allowing it to aggressively build its property portfolio. It’s embarked on a flurry of further acquisitions over the past few months, the latest of which in early November saw it snap up three regulated social housing properties leased to Auckland Home Solutions for £3.7m.
Its rampant M&A drive is expected to deliver a 270% earnings bump in the year to March 2019, and I believe the likelihood of more action in the New Year could see the 4% increase forecast for fiscal 2020 upgraded sooner rather than later.
It deals on a dirt-cheap forward PEG reading of 0.1 and carries bulky dividend yields of 4.7% this year and 4.8% next year too.
GCP Student Living (LSE: DIGS) is another attractive REIT worthy of investment today, I feel. Like Civitas, its cheap, an anticipated 30% earnings improvement for the provider of student accommodation in the year to June 2019 producing a prospective PEG reading bang on the bargain benchmark of 1.
And in the current period, it also sports an inflation-bursting dividend yield of 4% too, and I’m confident that it can keep delivering impressive profits growth and market-beating dividends long into the future.
Britain has always been, and will remain, an attractive destination for students from all over the world, a point perfectly illustrated by strong admissions from foreign visitors even in spite of the uncertainties created by Brexit. And with more than nine-tenths of GCP’s portfolio (which comprises of 10 assets housing some 3,600 beds) by value being in and around London, the demand outlook for its accommodation is given that little extra security.
As of June 2018 the value of the company’s property portfolio was £784.4m, up 7.3% on a like-for-like basis and driven by full occupancy rates, rental growth and yield compression. GCP has proven it has the knack of outperforming the broader student accommodation market and I am confident that it will prove a great share to buy today and hold in the years to come.
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Royston Wild has no position in any of the 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.