With the U.S. federal funds rate now at 4.23% — already below the long-term average of 4.61% and expected to decline further in 2025, commercial real estate investment trusts (REITs) are drawing increased investor interest.
These vehicles allow individuals to invest in income-producing real estate, such as offices, apartments, shopping malls, hotels, and warehouses, without direct ownership. By pooling capital, REITs deliver steady dividends supported by tangible assets, balancing income needs with long-term growth potential.
One standout is Agree Realty Corp. (NYSE: ADC), an $8 billion industry leader specializing in properties net-leased to top retail tenants.
The company owns over 2,370 properties across 50 states, totaling nearly 48.8 million square feet. With a strong dividend yield, diversified geographic footprint, and attractive valuation, Agree Realty continues to attract income-focused investors.
Another top pick is Alexandria Real Estate Equities Inc. (NYSE: ARE), a major owner and developer of collaborative life science, ag-tech, and advanced technology campuses in innovation hubs such as Greater Boston, San Francisco Bay Area, San Diego, and New York City.
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Its Labspace portfolio serves pharmaceutical giants, biotechnology firms, research institutions, and U.S. government agencies. Alexandria also invests strategically in life sciences, climate innovation, and technology through its venture capital platform.
As interest rates ease, REITs with strong fundamentals and niche market positions could offer an appealing blend of reliable passive income and capital appreciation.
For investors looking to diversify and hedge against inflation in 2025, these real estate powerhouses may be worth serious consideration.
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