Core Viewpoint - The Federal Reserve has cut interest rates, which is expected to benefit real estate investment trusts (REITs) as their dividends become more attractive compared to declining bond yields [2][3]. REITs and Interest Rates - REITs act as "bond proxies," moving in opposition to interest rates, and typically rally when rates fall [3]. - Historical trends indicate that REITs tend to perform well once the bond market adjusts to rate cuts [3]. REITs with High Dividend Yields - Healthpeak Properties (DOC) offers a 6.5% dividend yield and owns 702 properties in outpatient medical, labs, and senior housing, showing signs of recovery since the September rate cut [4]. - Broadstone Net Lease (BNL) has a 6.3% dividend yield, focusing on single-tenant commercial properties with a portfolio of 766 properties across 44 states and four Canadian provinces [4][5]. - Global Net Lease (GNL) provides a 9.4% dividend yield, operating a 911-property portfolio across 10 countries, with significant improvements in operations and a recent credit rating upgrade [7][9]. Company Transformations and Strategies - Broadstone has shifted its portfolio focus away from healthcare properties, which now account for less than 4% of annualized base rent, while industrial properties make up about 60% [5]. - GNL has sold its multitenant retail portfolio for $1.8 billion, enhancing occupancy and net operating income margins, while also reducing net debt by $2 billion [9]. - Armada Hoffler Properties (AHH) and Brandywine Realty Trust (BDN) are hybrid REITs benefiting from declining rates, but both have cut dividends this year due to financial pressures [10][11]. Challenges and Future Outlook - Brandywine Realty Trust, heavily invested in office space, faces challenges from joint ventures that have led to downward revisions in FFO estimates, although potential relief may come from recapitalization efforts [12]. - The dividend payout for Brandywine was 107% of FFO in the first half of 2025, raising concerns about liquidity and sustainability of the high yield [13].

Core Viewpoint - The Federal Reserve's recent rate cuts are expected to benefit real estate investment trusts (REITs), which thrive in lower borrowing cost environments and offer attractive dividend yields compared to declining bond yields [2][3]. REITs and Rate Dynamics - REITs function as "bond proxies," moving inversely to interest rates, and historical trends indicate that they tend to rally following rate cuts as the bond market adjusts [3]. - The current environment allows investors to secure dividend yields ranging from 6% to 13% from various REITs poised to benefit from the Fed's policy shift [2]. Specific REITs to Watch - **Healthpeak Properties (DOC)**: Offers a 6.5% dividend yield and owns 702 properties in outpatient medical, labs, and senior housing. Recent performance has improved since August, driven by the Fed's actions [4]. - **Broadstone Net Lease (BNL)**: Provides a 6.3% dividend yield and focuses on single-tenant commercial properties, with a portfolio of 766 properties across 44 states and four Canadian provinces. The company has shifted its focus away from healthcare properties, which now account for less than 4% of annualized base rent [5][6]. - **Global Net Lease (GNL)**: Features a 9.4% dividend yield and operates a 911-property portfolio across 10 countries. The company has improved its operations through significant asset sales and debt reduction, leading to a corporate credit rating upgrade [9]. - **Armada Hoffler Properties (AHH)**: Offers a 7.7% dividend yield and is experiencing challenges but has shown slight improvements in cash flow [10]. - **Brandywine Realty Trust (BDN)**: Has a high dividend yield of 13.3% but faces risks due to high payout ratios and reliance on office space, which constitutes nearly 90% of its portfolio [11][12]. Financial Performance and Outlook - Broadstone expects adjusted funds from operations (AFFO) of $1.48 to $1.50 per share, with a current dividend payout of $1.16, indicating potential for a dividend increase [7]. - GNL has successfully reduced its net debt by $2 billion over the past year, enhancing its financial stability and operational performance [9]. - Brandywine's dividend payout was 107% of FFO in the first half of 2025, raising concerns about sustainability if liquidity issues arise [13].