Rising interest rates have dealt a heavy blow to the distributions of real estate investment trusts (REITs). When borrowing costs go up, leveraged real estate deals struggle to yield the returns investors expect. However, as financing conditions ease, a recovery could be on the horizon – particularly for REITs with solid balance sheets, strong fundamentals, and upcoming debt refinancing. Here are three REITs well-positioned to benefit as borrowing costs fall.

Why Lower Borrowing Costs Matter for REITs

REITs rely heavily on debt to buy properties and keep their operations running smoothly. Lower interest rates make it easier to refinance existing loans on better terms, shoring up future distributions. Cheaper funding also enhances the appeal of new acquisitions – though not all REITs will benefit equally. The stronger ones tend to have manageable gearing, healthy interest coverage, and high-quality assets. Strong occupancy rates, positive rental reversions, and reliable sponsor support are equally essential....