2 Market Crash-Ready REIT Stocks To Buy in 2022
Being able to withstand a market crash is no easy feat. Volatile economic conditions can sway consumer confidence and push the values of even the best companies low. But those moments are often the best opportunities to snag up shares in high-quality stocks that will bounce back quickly because of their business model.
The most recent stock market crash in March 2020 was chock full of market crash-ready stocks. Amazon, for example, rebounded aggressively as e-commerce demand went through the roof as a result of the pandemic. Food companies and grocery stores also did exceptionally well, rallying in under a month because the nature of their businesses helped them soar despite tough times. Today's market crash-ready REIT stocks that stand out are Public Storage (NYSE: PSA) and Digital Realty Trust (NYSE: DLR). Here's a closer look at what makes these REITs attractive.
Public Storage
Public Storage is the largest self-storage REIT globally, owning 2,700 properties across 39 U.S. states and interest in 247 facilities in Western Europe. Overdevelopment in the self-storage sector caused pre-pandemic returns for self-storage to stall. But the pandemic helped fuel new demand for self-storage as people relocated and downsized. Since 2019, Public Storage has grown its portfolio by 22%, deploying a record $7.1 billion into new acquisitions and developments. At the end of 2021, Public Storage completed the $1.5 billion acquisition of All Storage, which added 56 properties to its portfolio.
But its rapid expansion isn't necessarily what makes it market crash-ready. It's the company's business model.
Digital Realty Trust
Digital Realty Trust specializes in the development and management of over 280 data storage facilities across 25 countries.
Data storage demand, like self-storage, saw a spike after the onset of the pandemic. As people stayed and worked from home, data consumption increased. Given today's continued volatility as omicron and other coronavirus variants make their appearance, data consumption demand would likely increase in a market crash. Not to mention, alternative drives like e-commerce, autonomous vehicles, and other AI services are also driving demand for data storage.
The company isn't in as strong of a financial position as Public Storage, with a debt-to-EBITDA ratio of 5.6x, but its growth prospects are strong. Digital Realty Trust just announced the acquisition of Teraco, a data storage operator in South Africa, which will help increase the company's presence in Africa while adding seven existing facilities and three expansion opportunities to its portfolio.
Both of these REITs operate in strong sectors within the real estate industry that will surely benefit from an economic recession or
10 stocks we like better than Public Storage
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the
*Stock Advisor returns as of January 10, 2022
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.