In a significant shift on December 13, investor sentiment toward real estate investment trusts (REITs) experienced a notable change as the Federal Reserve announced a pause in interest rate hikes and hinted at potential rate cuts in 2024. This move has reignited interest in low-priced REITs, particularly those with higher yields, as investors anticipate a favorable environment due to lower interest rates.
- Office Properties Income Trust (NASDAQ: OPI)
- Location: Newton, Massachusetts
- Portfolio: 154 properties covering 20.7 million square feet
- Occupancy Rate (Q3): 89.9%
- Recent Performance: Closed at $5.91 on Dec. 12, with a recent close at $6.88, marking a 16.4% gain and a 37.32% gain over the past month.
- Dividend Yield: Presently at 14.53%, down from over 23% a few weeks ago.
- Service Properties Trust (NASDAQ: SVC)
- Location: Newton, Massachusetts
- Portfolio: 221 hotels and 761 service-focused net lease retail outlets
- Recent Performance: Closed at $7.90 before the Federal Reserve announcement, spiked to $8.60 within three days, and currently at $8.33, reflecting a 21.7% increase since the Nov. 13 low of $6.84.
- Dividend Yield: Presently at 9.6%
- Medical Properties Trust Inc. (NYSE: MPW)
- Location: Birmingham, Alabama
- Portfolio: 441 general acute care and other healthcare properties across the U.S. and internationally
- Recent Performance: Closed at $4.85, up 22.4% from the Nov. 13 low of $3.96, reaching a high of $5.76 on Dec. 14 before pulling back.
- Dividend Yield: Currently at 12.37%
While these REITs have seen renewed buying interest, it’s crucial to note potential risks such as high-interest debt and the need for refinancing. Investors should remain vigilant, considering the volatility of these REITs, and conservative investors may find these options less suitable.
