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Niche REITs have a lot going for them. Combining the commercial REIT structure with a specialized niche means that customers are stickier and facilities are able to command higher rents per square foot than generic retail space can ask for. A perfect example is
BioMed Realty Trust(BMR), a REIT that owns 12.2 million leasable square feet of lab and office space for life sciences firms.
It's important to think of BioMed more like an income generation tool than a way to get exposure to the commercial real estate market. The majority of BMR's properties are triple-net leased, which means that the firm isn't on the hook for things like property taxes, maintenance, and insurance. Instead, it collects stable, predictable rental revenues each month. And because leases generally range from five to 15 years, its tenants are stickier than a residential REIT like UDR.
Last week, BMR announced a 7.5% increase in its dividend, bringing the firm's total annual yield to an impressive 4.52%. BMR is a reasonable choice for a core income holding, but I like it even better as a component of a niche REIT portfolio.
To see these dividend plays in action, check out the
Dividend Stocks for the Week portfolio on Stockpickr.
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join Stockpickr today to create your own dividend portfolio.
-- Written by Jonas Elmerraji in Baltimore.