2 REITs To Buy BEFORE Rate Cuts

Core Viewpoint - REITs are experiencing significant gains due to expectations of near-term interest rate cuts, with a nearly 10% increase over the past month and over 30% since October 2023 [1] Group 1: Investment Opportunities - While some well-known mega-cap REITs may be too late to invest in, there are smaller, lesser-known REITs, particularly in foreign markets, that remain heavily discounted and offer over 50% upside potential as interest rates decrease [2] - Safehold (SAFE) is the only publicly listed REIT focusing on ground leases, which are long-term land investments allowing tenants to build properties without purchasing the land [3] - Safehold's share price has surged by 67% since November, with expectations of interest rates being cut by 200 basis points within a year, potentially doubling its shares from current levels [5] - NorthWest Healthcare Properties REIT focuses on hospitals and has shown resilience during the pandemic, with a same property NOI growth of nearly 4% last year and expectations for similar growth in 2024 [6] Group 2: Challenges and Strategic Responses - NorthWest Healthcare Properties REIT has faced challenges due to high leverage and negative market sentiment towards hospitals, prompting management to transform into an asset manager to raise equity and reduce debt [7] - The REIT has sold $1.4 million worth of assets at an average cap rate of 6.5$0.09 per quarter, barely covering its dividend, raising concerns about liquidity and significant debt maturities in 2025 [8] - Despite risks, NorthWest is positioned to benefit from rate cuts, as its average interest rate is 5.77%, and selling assets at lower cap rates than its debt interest could improve cash flow [8]