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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 Specialized Property Types Strengthens Growth Trajectory: This industry is increasingly shaped by property types that support digital, operational and essential service needs. Industrial real estate continues to benefit from the steady expansion of e-commerce as companies prioritize well-located, efficient facilities that support faster fulfillment and automation. Data centers and digital infrastructure assets are seeing durable tailwinds, driven by the rising use of cloud computing, artificial intelligence and high-speed connectivity. As more devices and platforms depend on constant uptime, the need for reliable computing capacity and network infrastructure remains strong. Office properties are showing signs of stabilization, with gradual improvements in workplace attendance lifting sentiment for high-quality, modern spaces. Corporates are becoming more willing to invest in amenity-rich, collaborative environments to attract and retain employees. Healthcare-focused assets remain structurally supported, with aging demographics sustaining steady demand for medical offices and care facilities, positioning these properties as long-term, essential real estate.
Rate Cut Expectations Improve Financing Conditions and Investor Interest: Expectations for easier monetary conditions are emerging as an important driver for the sector’s outlook. Even with ongoing uncertainty around economic growth and trade policies, the potential for lower interest rates is improving sentiment toward capital-intensive real estate trusts. These companies rely heavily on external funding, so lower borrowing costs can directly enhance cash flow flexibility and refinancing capacity. More favorable rate environments also tend to support property valuations, strengthening balance sheets and long-term capital planning. At the same time, the income-producing nature of REITs continues to draw attention, especially in volatile environments where a consistent yield is valued. As traditional savings avenues become less compelling, investors often gravitate toward real assets that offer stable distributions. This combination of improving financing dynamics and income appeal is helping to sustain confidence in the sector despite broader macroeconomic noise.
Evolving Tenant Preferences Create Structural Pressure Points: The primary challenge shaping the industry is the widening gap between assets that are built for the future and those that are not. Demand in the office segment is increasingly skewed toward modern, flexible buildings with strong technology and employee-focused amenities, while older properties struggle to remain competitive. Industrial users are also raising standards, favoring facilities that can handle automation and data-driven operations, which places pressure on outdated warehouses. Data center operators, despite strong demand, face practical constraints such as power availability, which can limit expansion. Traditional hospitality assets are experiencing ongoing pressure as alternative lodging options gain traction and travel patterns evolve. In life science-related real estate, occupiers are taking a more cautious approach to expansion, reassessing space needs and slowing leasing activity amid economic uncertainty.
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 #98, which places it in the top 40% 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 healthy 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 0.4% during this period compared to the S&P 500’s rally of 16.4% and the broader Finance sector’s 12.2% increase.
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 15.65 compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 23.59. The industry is also trading below the Finance sector’s forward 12-month P/E of 17.26. 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 15.84X.
3 REIT and Equity Trust - Other Stocks to Buy
Welltower Inc.: This healthcare REIT is focused on senior housing, outpatient medical, and post-acute care properties across the United States, the United Kingdom and Canada. The company partners with leading operators to deliver housing and care solutions for an aging population, emphasizing operational excellence, technology-driven asset management and long-term portfolio resilience.
The company’s recent performance highlights strong momentum and balance sheet strength. In the third quarter of 2025, Welltower delivered normalized FFO growth of more than 20% year over year and same-store NOI growth of 14.5%, led by robust senior housing demand and occupancy gains. Strategic acquisitions, disciplined dispositions and low leverage, along with ample liquidity, position the company well for sustained earnings growth and long-term value creation.
WELL currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the company’s 2025 revenues calls for a 29.33% increase year over year. The consensus mark for 2025 and 2026 FFO per share has also been raised 1.6% and 2.7% over the past month to $5.23 and $6.04, respectively. The stock has risen 19.5% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fiscal Year Revision Price Action: WELL
Digital Realty: This global REIT specializes in data center properties and interconnection solutions. Headquartered in Austin, TX, the company operates a large portfolio of carrier and cloud-neutral facilities across key metropolitan markets worldwide. It serves hyperscale cloud providers, enterprises and network operators by delivering secure, scalable, and highly connected digital infrastructure designed to support mission-critical workloads and real-time data exchange.
The company’s outlook is supported by strong execution in AI-ready infrastructure and solid financial performance. Digital Realty has been advancing high-density, liquid-cooled data center designs to meet rapidly growing AI and cloud computing demands. In the third quarter of 2025, it reported improved earnings and steady revenue growth, reflecting resilient leasing activity and rising demand from hyperscale customers, strengthening its long-term growth profile. With solid balance sheet progress, improving cash flow visibility, and continued success delivering power and capacity in constrained markets, DLR is well-positioned to benefit from structural digital infrastructure growth.
DLR currently carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s 2025 revenues calls for an 8.98% increase year over year. While the stock has declined 5.8% in the past three months, the consensus mark for 2025 and 2026 FFO per share has been revised upward over the past two months to $7.35 and $7.91, suggesting a 9.54% and 7.57% jump year over year, respectively.
Fiscal Year Revision Price Action: DLR
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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This article originally published on Zacks Investment Research (zacks.com).
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