Image source: Getty Images
The FTSE 250 is home to a large number of real estate investment trusts. And for a lot of them, their income is not dependent on the value of the real estate they hold.
Today I’m looking at possibly my top FTSE 250 choice, coupled with a FTSE 100 favourite. Let’s check the bigger one first.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
Business boom
Land Securities (LSE: LAND) owns offices, shopping centres, and retail parks. Some investors will judge it based on the values of those properties. Others will look at where it gets its income and how its per-earnings figures look.
I see an attractive forward price-to-earnings (P/E) ratio. With the shares down 41% in five years, it’s just 7.7. And it could drop to 6.3 by 2027 if forecasts are close to the mark. We’re looking at a predicted dividend yield for this year of 6.9% too. I think that could be one of the most attractive on the FTSE 250.
Property valuation
Land Securities looks good to me on property valuation too. With November’s interim results, the company put its net asset value (NAV) at 873p per share.
That can be an uncertain measure to estimate, and we don’t know where it might have gone since. But with the shares at 558p at the time of writing (28 January), that’s a 36% discount. It seems a bit like buying £1 coins for 64p. There’s no guarantee of value, but I see it as a bonus attraction.
The economy, interest rates, business outlook, commercial property market… are all very uncertain in 2025. But for investors with at least a five-year horizon, I think this has to be one to consider.
Oh, and Land Securities “acquired a 92% stake in Liverpool ONE, one of the premier shopping centres in the UK” in December. I think the board knows a bargain when they see one.
Cheap as frozen chips?
Supermarket Income REIT (LSE: SUPR) rents out supermarket properties. After a tough 2024, it looks like it faces an uphill battle in 2025 with a projected P/E of around 35. But, expecting a strong recovery, analysts have that falling to only around 8.5 by 2027.
Since 2022, the tight economic squeeze coupled with high inflation has put pressure on supermarkets. And it’s helped push the investment trust’s share price down 37% in five years.
Another discount
There’s another discount to NAV here too. The company put its NAV per share at 90p at 30 June 2024. With a 68p share price as I write, that’s a 24% discount. It’s not as big a buffer, but it helps.
At FY results time, chair Nick Hewson reckoned “the improving interest rate environment should provide positive tailwinds“. And he added: “We are pleased to recommend another increased dividend of 6.12 pence per share for FY25 and remain focused on delivering a progressive dividend for shareholders.”
The same threats largely apply, especially as inflation is annoyingly stubborn. And I reckon the share price could struggle for a while yet. But that’s a 9% dividend yield. It’s got to be another to consider for a five-year buy-and-hold.
This story originally appeared on Motley Fool
