Top 3 Equity REITs Worth Buying as Industry Prospects Improve

The REIT and Equity Trust - Other industry is being reshaped by demographic shifts, technological advances and evolving tenant preferences. E-commerce growth is fueling industrial demand, while cloud, AI and 5G adoption is strengthening data centers and telecom REITs. Healthcare REITs are benefiting from an aging population, while modern, amenity-rich offices are attracting tenants. Amid this, Welltower Inc. WELL, Terreno Realty Corporation TRNO and Easterly Government Properties, Inc. DEA are well-poised to benefit.

Despite macroeconomic uncertainty, the expectation of rate cuts is enhancing REIT appeal through lower borrowing costs and attractive yields. However, a growing divide between prime and non-prime assets is underscoring challenges, as occupiers increasingly prioritize future-ready, high-quality properties.

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?

Strong Demand Across Diverse Property Types Fuels Growth Outlook: Demographic shifts and advancing technologies are shaping growth across U.S. real estate. E-commerce expansion is driving industrial leasing. Simultaneously, the rising adoption of cloud computing, AI and 5G is fueling data center and telecom REIT growth. As reliance on connected devices expands, the need for computing, storage and network capacity strengthens, sustaining momentum in these segments. In the office market, steady economic activity and a gradual improvement in workplace attendance are lifting sentiment. Corporates are regaining confidence, with return-to-office trends prompting investment in modern, amenity-rich spaces designed to attract and retain employees. Healthcare REITs also benefit from enduring structural drivers. Demand for senior housing, medical offices and skilled nursing facilities is supported by an aging population, reinforcing long-term needs for quality healthcare infrastructure and positioning the sector for durable growth.

Rate Cut Expectations Boost Appeal Amid Macroeconomic Uncertainty: Although macroeconomic uncertainty and evolving trade policies, such as tariffs, present potential headwinds for the real estate sector, markets are increasingly expecting rate cuts, which makes yield-generating assets like REITs more appealing. Any rate cut, even a slight one, is good news for the rate-sensitive REIT industry. This sector is capital-intensive, and its dependence on debt for business keeps investors optimistic about their performance in a rate-cut environment, as the companies benefit from lower borrowing costs. Low interest rates contribute to higher valuations. Also, their dividend yield grabs investors’ attention more than yields on fixed-income and money market accounts in times like these.

Changing Tenant Demand Continues to Pose Emerging Challenges: Tenant preferences are driving a sharper divide between prime and non-prime assets. In offices, demand is tilting toward modern, amenity-rich spaces that enhance collaboration and employee experience, keeping vacancies low in top-tier buildings. However, older, less adaptable offices face rising vacancies and rent pressure. Industrial tenants show a similar shift, increasingly seeking advanced facilities that support automation and AI, fueling demand for high-quality, well-located assets. This bifurcation highlights a clear preference for future-ready properties across sectors. Traditional hotels remain under pressure as alternative lodging options gain traction and inbound travel growth slows. In life sciences real estate, occupiers are reassessing space needs amid economic uncertainty, leading to softer demand and cautious leasing activity.

Zacks Industry Rank Indicates Bright Prospects

The Zacks REIT and Equity Trust - Other industry is housed within the broader Finance sector. It carries a Zacks Industry Rank #104, which places it in the top 42% 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 robust 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 top 50% of the Zacks-ranked industries is a result of the northward 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 gaining confidence in this group’s growth potential of late. Since June-end, the industry’s FFO per share estimates for 2025 and 2026 have moved marginally north. 

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 declined 5.3% during this period compared to the S&P 500’s increase of 16.2% and the broader Finance sector’s 16.5% jump.

One-Year Price Performance

Industry'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 15.86 compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 22.76. The industry is also trading below the Finance sector’s forward 12-month P/E of 17.17. 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 22.21X and as low as 12.81X, with a median of 16.02X.

3 REIT and Equity Trust - Other Stocks to Buy

Welltower Inc.: A Toledo, OH-based REIT and S&P 500 company, Welltower partners with top senior housing operators, post-acute providers and health systems to fund real estate for innovative care models, enhancing wellness and healthcare experiences. Welltower’s portfolio includes properties in high-growth U.S., Canadian and UK markets, focusing on seniors housing, post-acute communities and outpatient medical facilities.

With an aging population and a projected increase in healthcare spending among seniors, Welltower’s senior housing operating portfolio is poised to benefit from these favorable market dynamics. Additionally, the outpatient medical segment is set to gain from rising outpatient visit trends in the near term. The company’s strategic restructuring efforts have strengthened its ability to attract operators and enhance cash flows. Furthermore, Welltower maintains a robust balance sheet.

WELL currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the company’s 2025 revenues calls for a 27.25% increase year over year. The consensus mark for 2025 and 2026 FFO per share has also been raised 0.8% and 0.9% over the past month to $5.06 and $5.76, respectively. The stock has risen 9.3% in the past three months.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Terreno Realty Corporation: This REIT focuses on acquiring, owning and operating industrial properties in six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, D.C. The company targets infill locations with strong tenant demand and limited supply, aiming to deliver long-term growth through high occupancy, rising rents and strategic portfolio management in supply-constrained, high-barrier markets.

Terreno Realty continues to excel with high occupancy rates across its industrial property portfolio in six major coastal U.S. markets. As of June 30, 2025, its overall portfolio occupancy reached 97.7%, up from 96% a year earlier, while same-store occupancy climbed to 98.5% compared to 96.1% in the second quarter of 2024. Moreover, rent growth was robust, with cash rents up 22.6% in the second quarter and 26.8% in the first half of 2025, demonstrating solid demand and pricing power in supply-constrained infill markets. 

Terreno currently carries a Zacks Rank #2. The Zacks Consensus Estimate for TRNO’s 2025 revenues calls for an 18.11% increase year over year. Moreover, the Zacks Consensus Estimate for 2025 and 2026 FFO per share suggests a 7.85% and 7.28% rise, respectively. The stock has appreciated 2.6% in the past month.



Easterly Government Properties: Headquartered in Washington, D.C., this REIT specializes in Class A commercial properties leased to the U.S. government and its adjacent partners. The company focuses on the acquisition, development and management of mission-critical facilities essential to federal agencies. 

Leveraging its experienced management team and deep knowledge of U.S. government needs, Easterly maintains a stable portfolio, leased either directly or through the U.S. General Services Administration. As of June 30, 2025, the portfolio comprised 102 operating properties totaling approximately 10.1 million leased square feet, with a weighted average age of 16.3 years and a weighted average remaining lease term of 9.6 years. These properties provide a diversified and stable income stream backed by the full faith and credit of the U.S. government, 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 11.64% increase year over year. The consensus mark for 2025 and 2026 FFO per share suggests a 2.05% and 4.36% jump year over year, respectively. The stock has risen 2.6% in the past three months.



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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Terreno Realty Corporation (TRNO): Free Stock Analysis Report
 
Easterly Government Properties, Inc. (DEA): Free Stock Analysis Report
 
Welltower Inc. (WELL): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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