If you thought June and July were rough from an interest rate standpoint, September may be just as bad, as it is pretty baked in now that the Federal Reserve will raise rates next month by another 75 basis points before taking a break until November. As we have noted before, the adage “Don’t fight the Fed” works both ways. There is a good chance the Fed will continue to raise rates until the spiraling inflation starts to calm down.

One asset class that tends to survive rate increases and inflationary times is real estate investment trusts (REITs). As overall costs rise, so do rents and leases that REITs hold. In fact, during a recent rate hiking cycle, REITs outperformed the S&P 500 by more than double. In addition, rising rates are forcing some potential homebuyers to remain in rentals, whether it be houses or apartments.
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We screened our 24/7 Wall St. REIT research database looking for solid ideas that also pay large and dependable dividends. All of these have been hit hard and are offering the best entry points for long-term investors looking to add hard assets to their portfolios.

While all seven of the companies we uncovered are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Getty Realty

Despite climate change concerns, the reality is people still need gasoline for their cars, trucks and vans, and gas stations still provide that basic need. Getty Realty Corp. (NYSE: GTY) is a publicly traded, net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single-tenant retail real estate. As of March 31, 2022, the company’s portfolio included 1,014 properties in 38 states and the District of Columbia.

With big footprints in both Texas and California, the company serves some of the most populated regions of the country, and it posted strong first-quarter results with funds from operations surpassing Wall Street expectations.

Shareholders receive a 5.47% distribution. The JMP Securities target price on Getty Realty stock is $32. The consensus target is $33.21, and the stock closed on Friday at $30.32.

Gladstone Commercial

This stock was hit hard as interest rates charged higher and is offering the best entry point in over a year. Gladstone Commercial Corp. (NASDAQ: GOOD) is focused on acquiring, owning and operating net leased industrial and office properties across the United States.
As of June 30, 2021, Gladstone owns a diversified portfolio of 121 office and industrial properties located in 27 states and leased to 106 tenants. The company has grown the portfolio in a consistent, disciplined manner at a rate of 18% per year since the IPO in 2003. It matches long-term leased properties with long-term debt to lock in the spread to create a durable, stable cash flow stream to fund monthly distributions to shareholders. Current occupancy stands at 96.5% and occupancy has never dipped below 95.0% since the IPO.
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Most importantly for investors, Gladstone has a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy greater than 95.0%, and 10+ years of paying continuous monthly cash distributions.

Gladstone Commercial stock investors receive a 7.64% distribution. B. Riley Securities has a $23 price target, the same as the consensus target of analysts. The last trade for Friday was reported at $19.69 a share.

Iron Mountain

Many businesses turn to this company to store data or documents. Iron Mountain Inc. (NYSE: IRM), founded in 1951, is the global leader in secure storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 90 million square feet across approximately 1,450 facilities in approximately 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data and cultural and historical artifacts.

Its solutions include secure records storage, information management, digital transformation and secure destruction, as well as data centers, cloud services and art storage and logistics. Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster and enable a more digital way of working.

Shareholders receive a 4.65% dividend. Barclays started coverage earlier this summer with a $58 price target. That compares with a $55.17 consensus target for Iron Mountain stock. Friday’s closing print was $54.27.

Medical Properties Trust

This stock may offer investors the best value at current price levels. Medical Properties Trust Inc. (NYSE: MPW) acquires, develops and invests in health care facilities and leases health care facilities to health care operating companies and providers. The company also provides mortgage loans to health care operators, as well as working capital and other term loans to its tenants/borrowers.
With a growing portfolio and a versatile business model, Medical Properties Trust continues to rank high across Wall Street. The analysts noted that the company’s acute care hospitals rent coverage increased nicely and the company attributed the increase to better cost controls and higher patient admissions.

Shareholders receive a 7.71% distribution. The $23 Barclays price target is higher than the $18.85 consensus target. Medical Properties Trust stock closed at $15.80 on Friday.
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Simon Property

Shares of this leading company have been pounded and are offering the best entry point since last year. Simon Property Group Inc. (NYSE: SPG) is a very strong company for investors looking to play the commercial real estate subsector. It invests in real estate markets across the globe, engaging in investment, ownership, management and development of properties. The company primarily invests in regional malls, premium outlets, mills and community/lifestyle centers to create its portfolio.

Through its subsidiary partnership, Simon Property owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European real estate investment trust with over 260 shopping centers in 13 countries.

Simon Property stock comes with a 6.55% distribution. Morgan Stanley has set a price target of $133. The consensus target is $127.73, and shares ended trading on Friday at $104.85.

VICI Properties

This is the top pick across Wall Street in the net lease group, and it is an ideal pick for investors who are more conservative and looking for gaming exposure. VICI Properties Inc. (NYSE: VICI) is a triple net lease REIT that was spun out of Caesars Entertainment post-bankruptcy.

The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.

Much of the focus has been on VICI’s recent deal to acquire the real estate of the Venetian Resort in Las Vegas, with Apollo as a new tenant. Looking ahead, many on Wall Street are very positive on VICI’s embedded growth pipeline with Caesars Entertainment, including a put/call on the Centaur properties in Indiana (starting in January) and a right of first refusal on a strip asset sale for Caesars, which could occur soon after a full earnings before interest, taxes, depreciation, amortization and restructuring or rent costs recovery.
In addition, the company closed a $17.2 billion deal earlier this year to buy out rival gaming REIT MGM Growth Properties, which owns the real estate of 15 casinos and resorts in eight states, including seven properties on the Las Vegas Strip. All of MGM Growth’s properties are operated by MGM Resorts International.
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Investors receive a 4.24% distribution. Truist Financial’s $35 price target was raised last month to $40. The consensus target is $37.89. On Friday, VICI Properties stock closed at $33.64.

W.P. Carey

This is a large net lease REIT with an incredible distribution for income investors. W.P. Carey Inc. (NYSE: WPC) ranks among the largest net lease REITs, with an enterprise value of approximately $18 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,215 net lease properties covering approximately 142 million square feet, as of September 30, 2020.

For nearly five decades, the company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in the United States and northern and western Europe, and it is well diversified by tenant, property type, geographic location and tenant industry.

Investors receive a 4.92% distribution. W.P. Carey stock has a $95 price target at Raymond James. That compares with a consensus target of $92.70 and Friday’s close at $85.73.

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Almost all of these top companies have been hit by the move higher in interest rates, and the large-scale selling all across Wall Street of every sector this year. These top companies are all leaders in their specific REIT subsectors, and they offer multiple ways for investors to get steady growth and be paid substantial dependable income. Due to their rate sensitivity, we avoided the super-high-yielding mortgage REITs.

Lastly, while they rallied some during the summer, all these stocks have been hit reasonably hard and are offering the best entry points in well over a year.

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