Real estate investment trusts (REITs) tend to shine when there is a lid on interest rates. And that rate top is secure, for reasons we’ll review shortly.
Net lease REITs, in particular, are compelling here. They are the boring landlords of the real economy. (Yawn? Love that reaction from vanilla income investors!)
The net lease landlords own the pharmacies down the street, the big-box retailers at the busy intersections, and the warehouses and distribution hubs we pass on the highway. These REITs sit back and collect rent checks while the tenants pay their own way.
Here’s how the business model works:
- The REIT buys the property and builds (or renovates) the facility to rent out.
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