VICI - 3 Buy Alerts: Triple Net REITs Are Falling Like Ninepins

2024-02-14 10:30:00 ET

Summary

• REITs have experienced a significant decline so far in 2024, with Triple Net Lease REITs falling more than others.
• The higher interest rate sensitivity of Triple Net Lease REITs is one reason for their larger decline.
• Yet this definitely seems shortsighted. Here's why, and here's 3 top buys.

Written by Sam Kovacs

Introduction

After a great run in November and December, REITs have tumbled so far in 2024.

Triple Net Lease REITs have been falling more.

While the SPDR Select Real Estate Fund ( XLRE ) is down 5% YTD, some of the larger triple net REITs are down 8-14%, namely: Realty Income ( O ), WP Carey ( WPC ), Agree Realty ( ADC ), and National Retail Properties ( NNN ).

One of our members asked:

Just seems all the Triple Nets have done the worst, Whether it be ADC, NNN, O. It’s interest rate related, but why the triple nets more than the others ?

And that is a brilliant question, and the basis of this article.

We'll break down why it is that triple net lease REITs are falling more than the rest, why this spells opportunity, and highlight those which we believe are the top buys.

2 Reasons Why Triple Nets Fell More

Reason 1: Higher Interest Rate Sensitivity

The first reason pertains to interest rate sensitivity.

As you can see in the chart below, the 10 year U.S. Treasury yield has increased from 3.78% on December 27th to 4.18% today....

For further details see: