The outlook for REITs is positive heading into 2017 as a growing economy will spur earnings and dividend growth. And having a real estate mogul in the White House is not a bad thing either, said Wilson Magee, portfolio manager for the Franklin Real Estate Fund (FGRRX) .
"We think if Donald Trump is actually successful in creating economic stimulus, economic growth and particularly job growth, it is going to create very good real estate demand for the next two to three years," said Magee. "And less regulation of financial services is another likely positive, particularly for the N.Y. City office market."
The Franklin Real Estate Fund is down 1.3% thus far in 2016, according to Morningstar. The $147 million fund has returned an average of 5.4% annually over the past three years, outpacing 56% of its rivals in Morningstar's global real estate category. The fund sports a trailing 12 month yield of 3.24%, according to Morningstar.
Rexford (REXR) , up 41% year-to-date, is one of Magee's top picks for the coming year. Rexford focuses on industrial properties in the greater LA market.
"They are seeing strong rent growth and occupancy trends in the country's largest industrial market. And we like managements' focused approach," said Magee.
Back on the right coast, Magee is bullish on SL Green (SLG) . Shares of the New York focused office landlord are down 2% in 2016, but they have an exciting new project on Vanderbilt Place.
"The stock trades at a significant discount to SL Green's underlying property value," said Magee, who also appreciates the company's 2.8% dividend yield.
Finally, Magee is a fan of specialty lab space owner Alexandria Real Estate Equities (ARE) , which is up 21% thus far in 2016 even though biotech shares have been drubbed.
"The company has longstanding success in this niche property sector and earnings growth is expected to accelerate in 2017," said Magee.