REXR - 3 REIT Stocks to Buy at a Discount
2024-05-11 03:25:00 ET
Rising interest rates have hit real estate investment trusts (REITs) particularly hard. Other income alternatives are now more competitive, drawing dollars out of the sector. And higher rates lead to higher costs for REITs.
Wall Street has punished a lot of REITs, perhaps for good reason, but that has resulted in a few well-run companies ending up with historically attractive yields. Here's why you might want to start looking at Realty Income (NYSE: O) , Rexford Industrial Realty (NYSE: REXR) , and Public Storage (NYSE: PSA) while the three REITs appear to be trading at a discounted price.
Realty Income isn't immune to the impact of higher rates. In fact, it might actually be more exposed than other REITs . That's partly because it is so dominant in the net lease space (a net lease requires the lessee to pay most property-level operating costs). It is nearly 4 times the size of its next largest peer, which means that it has to ink a lot more deals to grow. Or, put another way, it needs to tap capital markets more frequently so rising rates will start to pinch fairly quickly.
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3 REIT Stocks to Buy at a Discount