Three real-estate investment trusts built on solid foundations
With interest rates set to remain at rock bottom, investors will come to prize reliable income streams, particularly those backed by physical assets, says professional investor Chris Clothier of the Capital Gearing Trust. Here. He picks three of his favourite Reits to buy now.

A consequence of the Covid-19 pandemic is that interest rates are going to be much lower for much longer. In the US the Federal Reserve has cut interest rates below 0.25%. The Fed Fund Futures market (where investors can speculate on the path of future interest rates) predicts that rates will turn negative before rising.
This is hardly surprising. The Taylor rule serves as a rule of thumb for central bankers: it takes unemployment and inflation as its inputs and spits out a target interest rate. Today it recommends an interest rate of minus 5%. It will be a long time before the US sees any interest-rate rises. The outlook is not very different here in the UK.
All this means that investors will be even more starved for income in the next few years and will come to prize reliable income streams highly, particularly those that are backed by either physical assets or government promises. Fortunately there are a number of investments in the property sector that meet these criteria: real estate investment trusts (Reits). Some of them are available at knockdown prices.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The backbone of online retailing
Tritax Big Box Reit (LSE: BBOX) invests in so-called mega-sheds: the large logistics warehouses that are the backbone of online retailing. The sheds themselves make up a fraction of the overall cost of distribution centres because inside they are kitted out with sophisticated “pick & pack” robotics. To protect this investment, tenants are happy to sign up for long leases, often rising with inflation.
The firm has signed a deal to pre-let 2.3 million square feet in Dartford to “a world- leading online retailer”, widely tipped to be Amazon. When completed this should add a few pence to the net asset value (NAV)per share. Rent collection has been strong – reflecting the thriving tenants – and the shares offer a covered 4.4% dividend yield. They trade around NAV.
Secure Income Reit (Aim: SIR) is managed by Nick Leslau and owns a portfolio of long-lease property assets. There are three parts to the portfolio: leisure, private hospitals and budget hotels. The shares have had a bruising year thanks partly to a spat between Travelodge and its landlords, which has just been resolved.
The leisure portfolio, which includes theme parks such as Alton Towers and Legoland, could also be a cause for concern. But Leslau says the tenants – which include the Lego family and Blackstone – are in it for the long haul and have deep pockets, while these irreplaceable assets are their crown jewels.
Healthy hospital holdings
The private hospitals look rock-solid and at present their rents are being paid by the government, which has commandeered all UK private hospitals to help fight the Covid-19 pandemic.
The shares trade at a 40% discount to historic NAV, which provides an ample cushion against any fall in the value of the leisure and budget hotel portfolio, and pay a dividend yield of 6.3%.
Finally, Residential Secure Income Reit (LSE: RESI) is a specialist residential-property investor. It owns a portfolio of retirement flats and shared-ownership properties. Both income streams look very secure and should rise slightly faster than inflation. It trades on a 15% discount to net assets and yields 5.5%.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Chris Clothier is co-manager of the Capital Gearing Trust.
-
8 of the best houses for sale for around £500,000
Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?
What will a US-China decoupling mean for the global economy?
-
'Technology will determine tomorrow’s top stocks in emerging markets'
Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Three British mid-caps that could make 'attractive' investments
Opinion Charles Luke, manager of the Murray Income Trust, highlights three UK-listed mid-cap companies, as he tells us where he'd put his money
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategy
Ramsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance market
The insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
LendInvest: a promising fintech firm going cheap
Opinion LendInvest has made some mistakes in the past, but it’s now primed for growth, says Rupert Hargreaves