Real Estate Investment Trusts (REITs) own, operate, or finance income-producing real estate and are required to distribute at least 90% of taxable income as dividends. The REIT universe spans industrial warehouses, cell towers, data centers, shopping malls, apartment complexes, and net-lease properties. Rising interest rates created significant headwinds for REITs in 2022-2023 as their debt costs rose and dividend yields competed with risk-free Treasuries. Rate cuts are a structural catalyst for REIT valuations.
Funds From Operations (FFO) per share is the standard REIT earnings metric. Watch debt maturity schedules and refinancing costs in a higher-rate environment. Same-store NOI growth above 3% signals strong underlying demand. Dividend payout sustainability requires FFO coverage above 1.2x.