In this article, we will take a look at the 10 most undervalued REIT stocks to invest in now.
Where is the Real Estate Sector Heading?
According to the National Association of Realtors, sales of previously owned homes in February increased 4.2% from January while they were 1.2% lower year-over-year. Home buyers are slowly moving into the market although mortgage rates have not changed much. Although the market is still tight, it is witnessing more inventory and choices, with the inventory at February end standing at 1.24 million units thereby representing a 17% rise year-over-year. The tight supply is still driving home prices up since the median price of a home sold in the month of February was 3.8% higher, as compared to last year.
Lawrence Yun, NAR’s chief economist, previously appeared on CNBC to give insights on the state of the housing market. In his opinion, if inflation comes down due to deregulation policies despite the tariff conditions or more home construction occurs with the federal government opening up for more development, the market might see lower mortgage rates along with the Fed rate cut. Simultaneously, the Federal Reserve decided to hold the interest rates steady amidst uncertainties around tariffs.
Logan Mohtashami, HousingWire lead analyst, thinks the cure for tariffs is lower mortgage rates. In an interview with CNBC, he said that if mortgage rates go down and new home sales start to grow, the builder would find a way to sell homes and build homes. Although builder sentiment has recently fallen considering their profit margins are stressed amidst tariffs, this sentiment tends to increase with rates going down.
With that being said, let’s move to the 10 most undervalued REIT stocks to invest in now.
An aerial view of multiple modern high-rise commercial buildings, representing the company’s wide-ranging real estate portfolio.
Our Methodology
In order to compile a list of the 10 most undervalued REIT stocks to invest in now, we first used a stock screener to shortlist REIT stocks trading at a forward P/E of less than 15, as of March 25. From this list, we selected the top 10 stocks with the highest number of hedge fund holders, as of Q4 2024. The 10 most undervalued REIT stocks to invest in now have been arranged in ascending order of the number of hedge funds that disclosed stakes in them at the end of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Undervalued REIT Stocks to Invest In Now
10. Safehold Inc. (NYSE:SAFE)
Number of Hedge Fund Holders: 15
Forward P/E: 11.49
Safehold Inc. (NYSE:SAFE) is a provider of modern ground leases. The REIT gives investors access to this historically inaccessible asset class since typical owners include universities, high net-worth families, churches, and royalty. Currently, Safehold Inc. (NYSE:SAFE) has a $6.8 billion ground lease portfolio in more than 40 unique markets.
Safehold Inc. (NYSE:SAFE), the market leader of the modern ground lease industry, is the first and only nationally-scaled publicly traded ground lease platform. The REIT strategically targets well-located, institutionally owned commercial real estate with attractive fundamentals diversified across the top 30 US MSAs, which it believes are positioned for long-term sustainable growth. While a relatively sharp rise in interest rates poses headwinds for customers and places upward pressure on discount rates and cap rates used for valuing the REIT’s existing portfolio, the management believes interest rates are an uncontrollable factor. However, the firm is working to counteract the impact of higher rates by increasing its penetration in the multifamily market, especially the affordable sector in 2025 and expanding to at least two new states. New origination activity for the REIT was $225 million in 2024. This includes 10 new ground leases and one leasehold loan while the 10 new ground leases were in the broader multifamily category, comprising of 6 in the affordable housing space.
9. Innovative Industrial Properties, Inc. (NYSE:IIPR)
Number of Hedge Fund Holders: 17
Forward P/E: 13.26
Innovative Industrial Properties, Inc. (NYSE:IIPR) is a leading provider of real estate capital for the regulated cannabis industry. The REIT focuses on the acquisition, ownership, and management of specialized properties leased to state-licensed operators for their regulated cannabis facilities.
Innovative Industrial Properties, Inc. (NYSE:IIPR) is the only NYSE-listed cannabis REIT and hence, offers direct investment exposure to cannabis with the stability of real estate. The REIT is currently witnessing growth prospects in its industry where 40 states and Washington, D.C., have legalized cannabis for medical use, while 24 states and Washington, D.C., have legalized cannabis for adult use as of August 2024. In this environment, the growth opportunity remains promising for the REIT since the expected 2028 US legal cannabis sales forecast is $46 billion, exceeding the 2023 US beer market, spirits market, and wine market. Innovative Industrial Properties, Inc. (NYSE:IIPR) made significant progress in leasing in the full year 2024, executing new leases at 6 properties representing 530,000 square feet. The REIT continued to generate significant revenue from the regulated cannabis industry, posting total revenues of $308.5 million and AFFO of $256.1 million.
8. Annaly Capital Management, Inc. (NYSE:NLY)
Number of Hedge Fund Holders: 18
Forward P/E: 7.69
Annaly Capital Management, Inc. (NYSE:NLY) is a diversified capital manager that engages in the mortgage finance business. The firm’s portfolio includes securities, loans, and equity in the mortgage finance market. The REIT is a proven industry leader across the residential mortgage finance market with a scale 10x the size of the median mortgage REIT by market capitalization.
Annaly Capital Management, Inc. (NYSE:NLY) is utilizing a differentiated investing model comprising diversified investment strategies including agency mortgage-backed securities, mortgage servicing rights, and residential real estate. The REIT generated an economic return of 11.9% in 2024 driven by strong performance from each of these three investment strategies. While the Agency portfolio grew by nearly $5 billion through 2024, Residential Credit portfolio increased 17% year-over-year and the Mortgage Servicing Rights (MSR) portfolio grew by 24% year-over-year. Regarding the reiterated favorable dynamics for these businesses in 2025, David Finkelstein, the firm’s Chief Executive Officer, said:
“Agency MBS continues to provide attractive returns while an improved supply and demand picture, decreasing financing costs and a steeper yield curve are additional sector tailwinds. Meanwhile, our Residential Credit and MSR portfolios are well-positioned for further growth given Annaly’s deep capital base and strategic relationships with originators. As always, we remain prepared for continued volatility given our low leverage, ample liquidity and dynamic hedging and portfolio management.”
7. Arbor Realty Trust, Inc. (NYSE:ABR)
Number of Hedge Fund Holders: 18
Forward P/E: 10.06
Arbor Realty Trust, Inc. (NYSE:ABR) is a real estate investment trust and a direct lender that provides loan origination and servicing for multifamily, and single-family rental portfolios as well as other diverse commercial real estate assets. It offers a nationwide solution for multifamily finance needs, including Freddie Mac, Fannie Mae, FHA, and Bridge loans, among other options. The REIT operates through two business segments, its Agency Loan Origination and Servicing Business, or ‘Agency Business’ and Structured Loan Origination and Investment Business, or ‘Structured Business’.
Arbor Realty Trust, Inc. (NYSE:ABR), one of the premier real estate finance companies in the US, provides the most comprehensive, customized, and creative financing platforms in the commercial real estate industry. The REIT is an approved FHA Multifamily Accelerated Processing (MAP) lender as well as a top 10 Fannie Mae DUST lender for 18 years in a row. The REIT closed the year with a solid fourth quarter amidst an elevated and volatile interest rate environment and reported Agency loan originations of $1.38 billion and Structured loan originations of $684.3 million. While the firm is growing its single-family rental business, it demonstrated sustained progress in its newly added construction lending business. The REIT remains confident to originate $250 million to $500 million of the construction lending business in 2025, based on its deal flow. Simultaneous to the strong fourth quarter, Arbor Realty Trust, Inc. (NYSE:ABR) managed to outperform its peers in every major financial category including its shareholder return, dividend, and book value preservation.
6. AGNC Investment Corp. (NASDAQ:AGNC)
Number of Hedge Fund Holders: 18
Forward P/E: 6.36
AGNC Investment Corp. (NASDAQ:AGNC) is an internally managed mortgage REIT founded in 2008. The firm is a leading investor in Agency residential mortgage-backed securities (Agency MBS) which are guaranteed by a US government-sponsored enterprise. It also invests in other mortgage and mortgage-related securities including non-Agency residential and commercial MBS, credit risk transfer securities, and assets related to the housing, mortgage, or real estate markets not guaranteed by a government agency.
AGNC Investment Corp. (NASDAQ:AGNC) focuses on Agency MBS which has government support, substantial yield opportunity, and a highly liquid market to offer. Hence, the REIT provides a liquid and efficient way to gain exposure to this impactful asset class. While interest rate volatility eased amidst an accommodative monetary policy during 2024, the REIT generated a positive economic return of 13.2% in the year thereby showing its ability to generate strong investment returns in environments where Agency MBS spreads tend to be wide and stable. In the view of management, the favorable environment for Agency MBS will persist in the current year.
Investors should also note that the company’s dividend-driven total stock return since its IPO in 2008 has surpassed those of comparable indices and other yield-oriented alternatives. With more than $13 billion of common stock dividends paid since inception, AGNC Investment Corp. (NASDAQ:AGNC) is a source of substantial monthly dividend income.
5. Ladder Capital Corp (NYSE:LADR)
Number of Hedge Fund Holders: 21
Forward P/E: 10.88
Ladder Capital Corp (NYSE:LADR) is an internally managed commercial real estate investment trust. The firm originates and invests in a diverse portfolio of commercial real estate and real estate-related assets. Ladder’s primary business is originating fixed and floating rate first mortgage loans secured by all commercial real estate property types. In the commercial mortgage REIT space, Ladder sets itself apart through its conservative investment approach and credit underwriting expertise.
Ladder Capital Corp (NYSE:LADR) serves as a leader in commercial real estate finance with a particular emphasis on the middle market. This middle market focus has worked out for the REIT as evident from its most recent quarterly results. Ladder Capital Corp (NYSE:LADR) received $1.7 billion in proceeds from loan payoffs for the full year 2024 across 61 loan positions, representing the highest annual payoffs in the REIT’s history. Brian Harris, Ladder’s Chief Executive Officer, emphasized the robustness of this middle market strategy, stating:
“In the fourth quarter, Ladder generated strong earnings and dividend coverage. Throughout 2024, our middle market by choice business model continued to demonstrate success, as we received a significant amount of loan payoffs and our credit performed well overall. ”
4. Blackstone Mortgage Trust, Inc. (NYSE:BXMT)
Number of Hedge Fund Holders: 21
Forward P/E: 13.77
Blackstone Mortgage Trust, Inc. (NYSE:BXMT) is a publicly traded commercial mortgage real estate investment trust that originates senior loans on commercial real estate in North America, Europe, and Australia. The REIT’s portfolio comprises primarily of senior loans secured by high-quality, institutional assets situated in major markets and sponsored by experienced real estate investment owners and operators.
Blackstone Mortgage Trust, Inc. (NYSE:BXMT) is managed by Blackstone, the world’s largest owner of commercial real estate having total assets under management of more than $1.1 trillion and hence, the REIT remains uniquely positioned to capture the real estate debt market opportunity. In the prevailing environment, Blackstone Mortgage Trust, Inc. (NYSE:BXMT) is capitalizing on an attractive market environment by boosting new investment activity and continued loan resolution and repayment momentum. The REIT had robust 2024 repayments of $5.2 billion. The robust repayment activity led to a quarter-over-quarter decrease in debt-to-equity ratio for the REIT from 3.8x to 3.5x. Simultaneously, investment activity accelerated with over $2 billion of new loan originations closed or in closing in Q1 2025 to date, as of December 31, 2024.
3. Starwood Property Trust, Inc. (NYSE:STWD)
Number of Hedge Fund Holders: 27
Forward P/E: 10.52
Starwood Property Trust, Inc. (NYSE:STWD) operates as a REIT focusing primarily on originating, acquiring, financing, and managing mortgage loans and other real estate investments in the United States, Australia, and Europe. It is organized into complementary business segments including Real estate commercial and residential lending, Real estate property, Infrastructure lending, as well as Real Estate investing and servicing.
Starwood Property Trust, Inc. (NYSE:STWD) is an affiliate of the global private investment firm, Starwood Capital Group. The firm differentiates from many of today’s market participants by leveraging the global reach and operating expertise of Starwood Capital Group. It is important to note that Starwood Capital Group is one of the largest institutional real estate investors globally with 32 years of experience and broad operating expertise across virtually every real estate asset class.
While other commercial real estate finance companies focus solely on specific sectors of the market, Starwood Property Trust’s multi-cylinder investment platform enables it to seek out investment opportunities across a broader universe. While the firm reported its results for the fourth quarter of 2024 for which it recorded a GAAP EPS of $0.15, the CEO Barry Sternlicht reiterated the strength of this low-leverage multi-cylinder platform which has allowed it to invest every quarter for 15 years despite volatile and disruptive market conditions, successfully deploying over $100 billion of capital. The REIT invested $1.6 billion in the quarter and $5.1 billion for the year 2024 and plans to raise its pace of investment in 2025.
2. Rithm Capital Corp. (NYSE:RITM)
Number of Hedge Fund Holders: 33
Forward P/E: 5.79
Rithm Capital Corp. (NYSE:RITM) is an asset manager focused on real estate and financial services. The firm invests across a variety of real estate and financial services assets some of which include residential mortgage loans, consumer loans, residential transitional loans, and commercial real estate. The firm was formed as a limited liability company in September 2011 and has been structured as an internally managed REIT since June 2022. Rithm Capital Corp. (NYSE:RITM) owns and actively manages a family of operating companies across the complete real estate and lending lifecycle including Newrez, Genesis Capital, and Sculptor.
Rithm Capital Corp. (NYSE:RITM) serves as a high-performing diversified asset manager currently leveraging the strength of its vertically integrated operating companies with capabilities in direct asset sourcing, asset optimization, and capital markets. The firm closed 2024 with robust earnings and a strong performance in each of its core businesses. With regards to Genesis Capital, the firm had a record FY24 origination volume of $3.6 billion, based on a high-performing client franchise and an expanding product suite. Simultaneously, Newrez had $844 billion in total servicing, positioned as the number three servicer, and $59 billion in FY24 funded volume.
1. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 48
Forward P/E: 11.44
VICI Properties Inc. (NYSE:VICI) is an experiential real estate investment trust that is one of the largest owners of gaming, hospitality, and entertainment destinations in the United States. The S&P 500 experiential REIT owns 93 experiential assets comprising 54 gaming properties and 39 other experiential properties across the United States and Canada. The firm’s properties are occupied by industry-leading leisure, gaming, and hospitality operators under long-term, triple-net lease agreements.
As compared to other traditional net lease real estate investment trusts, the firm’s assets have high barriers to entry and high financial transparency. With demand currently inclining towards developments that tend to blend luxury, hospitality, and experience, VICI Properties Inc. (NYSE:VICI) recently made a strategic move giving it an opportunity to invest in place-based history and experiential luxury. On February 19, the REIT announced a strategic relationship with Cain International and Eldridge Industries, a collaboration that launched with VICI’s $300 million investment into a mezzanine loan related to the development of a landmark 17.5-acre luxury mixed-use development ‘One Beverly Hills’. This strategic move took place subsequent to the end of the fourth quarter of 2024, during which the REIT’s total revenue rose 4.7% year-over-year while AFFO rose 5.4% year-over-year.
While we acknowledge the potential of VICI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than VICI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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