Real estate investment trusts (REITs) are often considered appealing for income investors due to their typically high yields. As of July 1, 2025, the real estate stocks covered by Morningstar appeared undervalued by 9.7% as a group. REITs are sensitive to interest rate changes; they tend to perform better when rates fall and worse when rates rise. Year-to-date, the Morningstar US Real Estate Index has seen a 3.57% increase, while the broader Morningstar US Market Index gained 5.89%.
12 Most Undervalued REIT Stocks to Buy Now
Morningstar’s analysts identified the following REIT stocks as the most undervalued as of July 1, 2025. This list was generated by screening for:
- Undervaluation as measured by their price/fair value metric.
- Companies with Narrow or Wide Morningstar Economic Moat Ratings, or those without a moat. A “narrow” moat suggests a company can fend off competitors for at least 10 years, while a “wide” moat implies competitiveness for 20 years or more.
- Morningstar Uncertainty Ratings lower than “Extreme,” indicating a higher level of confidence in the fair value estimates.
Here’s a closer look at each of these top REIT picks, along with commentary from Morningstar’s analysts.
Park Hotels & Resorts (PK)
- Morningstar Price/Fair Value: 0.48
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 9.39%
- Industry: REIT – Hotel & Motel
Park Hotels & Resorts is the most undervalued company on this list, trading at a 52% discount to Morningstar’s fair value estimate of $22 per share. It’s the second-largest U.S. lodging REIT, focusing on upper-upscale hotels. The company, spun out of Hilton Worldwide Holdings in 2017, has since divested international and lower-quality U.S. hotels to concentrate on high-quality assets in domestic gateway markets. Its 2019 acquisition of Chesapeake Lodging Trust diversified its hotel brands to include Marriott, Hyatt, and IHG.
While the pandemic severely impacted hotel operations in 2020, leisure travel quickly rebounded in 2021 and 2022. However, average daily rate growth decelerated in 2023 and 2024, with occupancy plateauing at about 7% below 2019 levels. Morningstar anticipates modest growth from recent renovations driving revenue per available room (RevPAR) above the industry average and operating margins slightly exceeding 2019 levels.
Long-term headwinds for the hotel industry include elevated supply in key markets, immediate price discovery due to online travel agencies and reviews, and “shadow supply” from platforms like Airbnb, which limits the ability to push rates during peak demand.
- Analyst Comment (Kevin Brown): “We think the company should continue to see modest growth as renovations completed over the past few years drive revPAR growth above industry average for several years and allow for operating margins to slightly exceed the levels the company achieved in 2019.”
Pebblebrook Hotel Trust (PEB)
- Morningstar Price/Fair Value: 0.52
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 0.39%
- Industry: REIT – Hotel & Motel
Pebblebrook Hotel Trust is another undervalued lodging REIT, trading 48% below Morningstar’s fair value estimate of $20 per share. It is the largest U.S. lodging REIT focused on owning independent and boutique hotels, with 46 upper-upscale and luxury properties across 11,933 rooms, primarily in urban gateway markets. The 2018 merger with LaSalle Hotel Properties doubled its size and improved efficiency by taking on only a portion of general and administrative costs.
Similar to Park Hotels, Pebblebrook’s operations were significantly impacted by the pandemic in 2020. Leisure travel recovered strongly in 2021 and 2022, though growth slowed in 2023 and 2024, with potential drag from lower international tourism in 2025. Morningstar expects better growth in 2026 as renovations completed in late 2023 and 2024 boost RevPAR.
Long-term challenges mirror those of Park Hotels: elevated supply, price transparency from online travel agencies, and competition from Airbnb.
- Analyst Comment (Kevin Brown): “We think Pebblebrook should begin to see slightly better growth in 2026, as renovations executed across its portfolio were finished in late 2023 and 2024, which should help drive revPAR growth above the industry average.”
Americold Logistics (COLD)
- Morningstar Price/Fair Value: 0.54
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 5.53%
- Industry: REIT – Industrial
Americold Realty Trust is the world’s second-largest owner and operator of temperature-controlled warehouses, trading at a 46% discount to Morningstar’s $31 fair value estimate. Its primary business, warehouse rent and storage, accounted for 90% of revenue in 2024, mainly storing perishable food products. Most of its facilities are in North America and are considered high-quality due to their location and operational excellence.
Historically, the cold storage market lacked institutional interest and speculative development due to construction complexity, high capital investment, and modest growth. However, deep-pocketed institutions like Lineage Logistics have recently entered the space.
Americold’s warehouse portfolio was affected by lower commodity stock levels post-pandemic and labor challenges. Fundamentals have since recovered as food manufacturers ramp up production and supply chain issues abate. Morningstar believes Americold will continue to expand its market share in a consolidating industry, achieving mid-single-digit net operating income growth in the coming decade.
- Analyst Comment (Suryansh Sharma): “We think that Americold will continue to grow its market share in a rapidly consolidating industry and should be able to achieve mid-single-digit net operating income growth in the upcoming decade.”
Kilroy Realty (KRC)
- Morningstar Price/Fair Value: 0.59
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 6.25%
- Industry: REIT – Office
Kilroy Realty is a premier owner and landlord of approximately 17 million square feet of office space across major markets like Los Angeles, San Diego, the San Francisco Bay Area, Austin, and Seattle. It trades 41% below Morningstar’s $59 fair value estimate.
Kilroy’s strategy focuses on developing and owning high-quality office, life science, and mixed-use properties in technology and life science hubs. The portfolio’s average age is just 11 years, significantly younger than peers. The company also emphasizes ESG (Environmental, Social, and Governance) alignment.
The pandemic and remote work trends have created a challenging office environment, with utilization around 50%-55% of pre-pandemic levels. Vacancy rates in Los Angeles and San Francisco (24.9% and 34.2% respectively in Q4 2024) are substantially higher than during the global financial crisis. Net absorption remains negative in West Coast markets, and rental growth is disappointing after inflation.
However, Morningstar notes an increasing number of companies requiring employees to return to the office. They believe offices will remain central to workplace strategy for collaboration and culture, even with increasing acceptance of remote and hybrid work.
- Analyst Comment (Suryansh Sharma): “In the long run, we believe that remote work and hybrid remote work solutions will gain increasing acceptance, but offices will continue to be the centerpiece of workplace strategy and will play an essential role in facilitating collaboration, harnessing innovation, and maintaining the company culture.”
Healthpeak Properties (DOC)
- Morningstar Price/Fair Value: 0.65
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 6.82%
- Industry: REIT – Healthcare Facilities
Healthpeak Properties, a healthcare facilities REIT, trades 35% below Morningstar’s fair value estimate of $27.50 per share. The company strategically shifted its focus by disposing of most of its senior housing assets (around $4 billion) in 2020, reinvesting proceeds into its life science and medical office portfolios.
Healthpeak’s high-quality assets in top markets attract credit-grade tenants. The company completed a $5 billion merger with Physicians Realty Trust in March 2024, adding 16 million square feet of medical office buildings. Following the merger, 54% of its net operating income comes from medical office, 35% from life science, and 11% from continuing-care retirement communities and other triple-net assets.
Morningstar believes the company is well-positioned to benefit from industry tailwinds such as the Affordable Care Act’s focus on high-quality, lower-cost care settings, and the aging baby boomer population (the 80-plus demographic, with high healthcare spending, is expected to nearly double in the next decade).
- Analyst Comment (Kevin Brown): “Despite the possibility of further changes to the ACA, we think any changes will still result in a coordinated value- and outcome-based system that will provide Healthpeak’s current portfolio with strong tailwinds.”
Federal Realty Investment Trust (FRT)
- Morningstar Price/Fair Value: 0.66
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 4.67%
- Industry: REIT – Retail
Federal Realty Investment Trust, a shopping center-focused retail REIT, trades 34% below Morningstar’s $142 fair value estimate. It owns high-quality properties in eight major metropolitan markets. The company has strategically acquired and developed assets in submarkets with strong demand drivers, leading to a portfolio with higher population density and median household income than other retail REITs. This has allowed it to achieve strong same-store net operating income growth and double-digit re-leasing spreads for two decades.
While e-commerce pressures brick-and-mortar retail, much of Federal Realty’s portfolio is insulated by segments like grocery stores, restaurants, and fitness centers that drive physical traffic. Retailers are becoming more selective, opting for high-quality assets like Federal’s.
Fundamentals have recovered from the pandemic’s fallout, with foot traffic returning to pre-pandemic levels by summer 2021 and occupancy exceeding 2019 levels. Morningstar expects high-quality retail locations to continue producing above-average sales and rent growth.
- Analyst Comment (Kevin Brown): “We expect Federal’s portfolio to remain in demand despite the changing retail environment.”
Macerich (MAC)
- Morningstar Price/Fair Value: 0.71
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 4.14%
- Industry: REIT – Retail
Macerich, a retail REIT investing in premium mall assets, trades 29% below Morningstar’s $23 fair value estimate. Over the past decade, Macerich has repositioned itself as an owner/operator of Class A regional malls, selling nearly $5 billion in lower-quality assets to reduce leverage and reinvest in higher-quality properties. This strategy aims to improve tenant sales productivity, occupancy, and rent in the face of e-commerce challenges.
While e-commerce continues to pressure brick-and-mortar retail, Macerich’s focus on Class A malls with high foot traffic and sales productivity makes them attractive locations for retailers.
Fundamentals for its Class A malls have largely rebounded from the pandemic, with foot traffic and sales growth recovering. Occupancy, which dropped to 89% in 2020, has almost fully recovered. Morningstar believes Class A malls will remain dominant in brick-and-mortar retail and eventually return to prior occupancy and rent levels.
- Analyst Comment (Kevin Brown): “We believe that Class A malls will remain dominant in brick-and-mortar retail with high-quality malls eventually returning to their prior occupancy and rent levels.”
BXP (BXP)
- Morningstar Price/Fair Value: 0.75
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 5.75%
- Industry: REIT – Office
BXP, formerly Boston Properties, owns over 180 properties comprising approximately 53 million rentable square feet of Class A office space, primarily concentrated in Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, D.C. It trades 25% below Morningstar’s $91 fair value estimate.
BXP’s strategy is to develop and own premier properties that maintain high occupancy and achieve premium rental rates in supply-constrained markets with strong economic growth. The company also has significant exposure (5.6 million square feet) and future development potential in the burgeoning life sciences sector. Management’s focus on ESG also aligns its portfolio with clients’ sustainability requirements.
The office real estate market faces challenges from pandemic recovery and remote work dynamics, with utilization around 50%-55% of pre-pandemic levels. Net absorption remains negative, and rental growth is disappointing after inflation. Despite this, Morningstar notes an increasing number of companies mandating office returns.
- Analyst Comment (Suryansh Sharma): “In the long run, we believe that remote work and hybrid remote work will gain increasing acceptance, but offices will continue to be the centerpiece of workplace strategy and will play an essential role in facilitating collaboration, harnessing innovation, and maintaining the company culture.”
Host Hotels & Resorts (HST)
- Morningstar Price/Fair Value: 0.76
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 5.04%
- Industry: REIT – Hotel & Motel
Host Hotels & Resorts, the largest lodging REIT in the U.S., owns 81 predominantly urban and resort upper-upscale and luxury hotel properties (over 43,000 rooms), mainly in the United States. It trades 24% below Morningstar’s $21 fair value estimate. Hotels are highly sensitive to economic cycles due to daily resetting of occupancy and rates.
The pandemic led to a massive downturn in 2020. Leisure travel quickly recovered in 2021, and group business steadily recovered in 2022. However, high inflation led to decelerating leisure demand in 2023 and 2024, and Morningstar anticipates lower international tourism will impact demand for luxury and upper-upscale hotels in 2025 and 2026. Business travel is still below pre-pandemic levels but is expected to normalize by 2027.
Long-term headwinds include elevated supply in large markets, immediate price discovery from online travel agencies, and competition from Airbnb limiting pricing power.
- Analyst Comment (Kevin Brown): “We anticipate lower international tourism will lead to lower demand for luxury and upper upscale hotels in 2025 and 2026. Business travel is still below prepandemic levels but has seen steady growth, and we believe this segment eventually returns to normal by 2027.”
Rayonier (RYN)
- Morningstar Price/Fair Value: 0.76
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 4.79%
- Industry: REIT – Specialty
Rayonier is the second-largest timberland REIT in North America, managing over 2 million acres of timberland in the U.S. and New Zealand. It trades 24% below Morningstar’s $30 fair value estimate. As a pure-play REIT, Rayonier primarily generates cash flow from timber harvesting and land sales, distributing income to shareholders without corporate income taxes.
A significant majority (75%) of its timberland is in the Southern U.S., primarily selling pulpwood. Its Pacific Northwest and New Zealand operations mainly sell higher-value sawtimber to domestic and Pacific Rim (China, South Korea, India) markets, reducing reliance on North American construction.
In March 2025, Rayonier announced an agreement to sell its 77% stake in its New Zealand joint venture for $710 million, with the deal expected to close in 2025.
- Analyst Comment (Spencer Liberman): “The New Zealand operations reduce Rayonier’s reliance on North American construction as much of the production is exported to China, South Korea, and India.”
Realty Income (O)
- Morningstar Price/Fair Value: 0.77
- Morningstar Uncertainty Rating: Low
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 5.58%
- Industry: REIT – Retail
Realty Income, “The Monthly Dividend Company,” is the largest triple-net REIT in the U.S., owning roughly 15,600 freestanding, single-tenant, triple-net-leased retail properties. It trades 23% below Morningstar’s $75 fair value estimate. About 80% of its tenants are in defensive retail segments resilient to e-commerce or economic downturns. The triple-net lease structure places operational risk and capital expenditure burden on the tenant, providing Realty Income a stable income stream from long-term leases (often 15+ years). This stability has earned it membership in the S&P High-Yield Dividend Aristocrats Index and a credit rating of A- or better.
While offering exceptional stability, internal growth is limited by low annual rent increases (around 1%). Therefore, Realty Income relies on acquisitions for growth, having executed nearly $32 billion in acquisitions since 2019. Rising interest rates have increased funding costs for external growth, raising concerns about its ability to continuously find high-cap-rate deals, potentially leaving it with a low internal growth story.
- Analyst Comment (Kevin Brown): “This makes Realty Income one of the most dependable investments for income-oriented investors.”
Equity Lifestyle Properties (ELS)
- Morningstar Price/Fair Value: 0.79
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: None
- Forward Dividend Yield: 3.33%
- Industry: REIT – Residential
Equity Lifestyle Properties, a residential REIT, rounds out the list, trading at a 21% discount to Morningstar’s $78 fair value estimate. It focuses on owning manufactured housing, residential vehicle communities, and marinas. Its portfolio includes 455 properties across the U.S., with a high concentration in the Sunbelt region (38% in Florida, 12% in Arizona, and 8% in California).
Please note that the provided text for Equity Lifestyle Properties cuts off before the analyst commentary, so a complete summary of the analyst’s view isn’t available.