3 Equity REIT Stocks That Stand Strong Despite Sector Difficulties
The REIT and Equity Trust - Other industry peers continue to navigate macroeconomic uncertainty, evolving policy landscapes, inflationary pressures and persistently high interest rates. In addition, changing tenant preferences are intensifying the divide between prime and non-prime assets, challenging the competitiveness of older or lower-tier properties.Despite these headwinds, the sector's broad exposure offers areas of resilience, with certain segments benefiting from strong demand fueled by demographic trends and technological progress. Data center and healthcare REITs are seeing robust growth, while the industrial and logistics sectors remain strong, supported by e-commerce. Office leasing is gradually improving, and companies like VICI Properties Inc. VICI, W. P. Carey Inc. WPC and Easterly Government Properties, Inc. DEA are well-positioned for long-term gains.
About the Industry
The Zacks REIT and Equity Trust - Other sector comprises a diverse collection of REIT stocks representing various asset categories, including industrial, office, lodging, healthcare, self-storage, data centers, infrastructure and more. Equity REITs lease out space within these properties to tenants, generating income through rental payments. Economic growth assumes a central role within the real estate sector as economic expansion directly correlates with higher demand for real estate, increased occupancy rates and greater bargaining power for landlords to command higher rental rates. Moreover, the performance of Equity REITs hinges on the specific dynamics of their underlying assets and the geographic location of their properties. It is imperative to thoroughly explore the fundamentals of these asset categories before making any investment decisions.
What's Shaping the Future of the REIT and Equity Trust - Other Industry?
Macroeconomic Volatility and Policy Issues Remain Concerns: Macroeconomic uncertainty and evolving trade policies, such as tariffs, present potential headwinds for the real estate sector. Tariff-driven inflation could erode consumer purchasing power and influence the Federal Reserve to limit interest rate cuts. This environment poses challenges for REITs, which typically carry substantial debt and are sensitive to interest rate movements. Prolonged periods of elevated borrowing costs can squeeze profit margins, dampen growth prospects and heighten investor concerns. As a result, highly leveraged REITs may become more vulnerable to financial strain during times of economic volatility and tighter monetary conditions.Changing Tenant Demands Continue to Pose Emerging Challenges: Evolving tenant preferences across sectors like office and industrial real estate are widening the gap between prime and non-prime assets. In the office market, demand is shifting toward modern, amenity-rich spaces that support employee engagement, driving lower vacancy rates in top-tier buildings. In contrast, older, less-equipped offices face rising vacancies and rent pressures. Similarly, industrial tenants are increasingly prioritizing technologically advanced spaces to support automation and AI integration, further boosting demand for high-quality facilities. This bifurcation highlights a clear preference for well-located, future-ready properties in both sectors.Strong Demand Across Diverse Property Types Fuels Growth Outlook: Several real estate sectors are poised to benefit from powerful demographic and technological trends. Migration to the Sun Belt and the continued rise of e-commerce are expected to fuel demand in residential and industrial markets. Meanwhile, the surge in digital services and AI, cloud computing and 5G implementation gaining pace are continuing to boost demand for Data Center and Telecommunication REITs. As consumers and businesses increasingly rely on smartphones, laptops and connected devices, the need for advanced computing, storage and processing capacity grows, sustaining momentum in the sector. In the office real estate segment, ongoing economic growth and improving workplace attendance are lifting leasing sentiment. Corporate confidence is rising, and return-to-office initiatives are gaining traction, encouraging companies to invest in modern, amenity-rich office spaces to attract and retain talent. Healthcare REITs are also set to benefit from structural demand drivers. These REITs — spanning senior housing, medical office buildings, life sciences and skilled nursing — are well-positioned to capitalize on an aging population, which continues to drive long-term demand for quality healthcare facilities.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks REIT and Equity Trust - Other industry is housed within the broader Finance sector. It carries a Zacks Industry Rank #130, which places it in the bottom 47% of around 250 Zacks industries.The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry's positioning in the bottom 50% of the Zacks-ranked industries is a result of the southward revision of funds from operations (FFO) per share outlook for the constituent companies in aggregate. Looking at the aggregate FFO per share estimate revisions, it appears that analysts are losing confidence in this group's growth potential of late. Over the past year, the industry's FFO per share estimates for 2025 and 2026 have moved 5.4% and 9.5% south. However, before we present a few stocks that you might want to consider for your portfolio, let's take a look at the industry's recent stock market performance and valuation picture.
Industry Lags Stock Market Performance
The REIT and Equity Trust - Other Industry has underperformed the S&P 500 composite and the broader Zacks Finance sector in a year.The industry has risen 6.7% during this period compared with the S&P 500's increase of 11.4% and the broader Finance sector's 19.4% jump.
One-Year Price PerformanceIndustry's Current Valuation
On the basis of the forward 12-month price-to-FFO ratio, which is a commonly used multiple for valuing REIT - Others, we see that the industry is currently trading at 15.63 compared with the S&P 500's forward 12-month price-to-earnings (P/E) of 21.83. The industry is also trading below the Finance sector's forward 12-month P/E of 16.21. This is shown in the chart below.
Forward 12 Month Price-to-FFO (P/FFO) Ratio
Over the last five years, the industry has traded as high as 22.10X and as low as 12.75X, with a median of 16.46X.
3 REIT and Equity Trust - Other Stocks to Buy
VICI Properties: A New York-based experiential REIT, VICI Properties is engaged in the business of owning and acquiring gaming, hospitality and entertainment destinations. As of March 31, 2025, the company owned 93 experiential assets, comprising 54 gaming properties and 39 other experiential properties in the United States and Canada. VICI Properties boasts three of the most iconic entertainment facilities on the Las Vegas Strip: Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas. VICI Properties stands out as a leading dividend stock, offering a compelling mix of income and growth. A robust portfolio with iconic assets, inflation-protected cash flow, proven growth and diversification efforts support its dividend payment. Its mission-critical assets and long-term triple-net lease agreements with its tenants assure stable rental revenues. VICI is expanding its portfolio and deepening partnerships. Strategic investments and a strong liquidity position continue to be attractive strengths for long-term investors.VICI currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the company's 2025 revenues calls for a 3.52% increase year over year. The consensus mark for 2025 and 2026 FFO per share has also been raised marginally over the past two months to $2.34 and $2.43, respectively. The stock has risen 7.4% so far in the year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
W.P. Carey: It is one of the largest net-lease real estate investment trusts (REITs) with a high-quality, diverse portfolio of operationally critical commercial real estate. With offices in New York, London, Amsterdam and Dallas, the company invests in properties that are generally triple-net leased to single corporate tenants, including warehouse, industrial, retail and self-storage facilities in the United States and Northern and Western Europe.The company is poised to benefit from a high-quality, mission-critical, diversified portfolio of single-tenant net lease commercial real estate. Its specialty in long-term sale-leaseback transactions with contractual rental bumps leads to steady revenue generation. Strategic portfolio repositioning efforts appear promising. A solid balance sheet aids future growth endeavors.W.P. Carey currently carries a Zacks Rank #2. The Zacks Consensus Estimate for WPC's 2025 revenue calls for a 5.23% increase year over year. Moreover, the Zacks Consensus Estimate for 2025 and 2026 FFO per share has also moved up over the past month. The stock has appreciated 13.9% so far in the year.
Easterly Government Properties: Headquartered in Washington, DC, this REIT specializes in acquiring, developing and managing Class A, mission-critical properties primarily leased to U.S. government agencies via the General Services Administration.Easterly Government Properties offers stable, inflation-protected cash flows backed by 93% federal leases, a best-in-class mission-critical portfolio, and a proven acquisition and development platform, making it a compelling REIT with defensive characteristics, low volatility, and long-term income visibility amid macroeconomic uncertainty.DEA currently carries a Zacks Rank #2. The Zacks Consensus Estimate for the company's 2025 revenues calls for an 11.9% increase year over year. The consensus mark for 2025 and 2026 FFO per share suggests a 2.4% and 4.35% increase year over year, respectively. The stock has risen 7.3% in the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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