Discovering Undiscovered Gems: Unveiling Hidden Opportunities in REITs in January 2025

As we step into 2025, the REIT market is poised for growth and opportunity. Despite a challenging 2024, REITs have shown resilience and are expected to outperform the broader market in the coming year. In this article, we will explore the best REITs to buy in 2025, focusing on undervalued gems that have been overlooked by the market.



Undervalued REITs: Hidden Gems in 2025
To identify undervalued REITs, we can look at REITs with significant discounts to their fair value estimates. Morningstar analysts have identified seven REITs with 5-star ratings and substantial discounts, including:

1. Park Hotels & Resorts (PK): 53% discount, 5.68% forward dividend yield
2. Macerich (MAC): 31% discount, 6.21% forward dividend yield
3. Kilroy Realty (KRC): 29% discount, 5.7% forward dividend yield
4. Ventas (VTR): 29% discount, 5.4% forward dividend yield
5. Healthpeak Properties (PEAK): 29% discount, 5.4% forward dividend yield
6. Apartment Income (AIRC): 29% discount, 7.1% forward dividend yield
7. Realty Income (O): 29% discount, 5.1% forward dividend yield

These REITs offer attractive yields and significant discounts to their fair value estimates, making them strong contenders for long-term investors.



Industry-Specific Opportunities
In addition to undervalued REITs, investors can look for opportunities within specific sectors. Some sectors are expected to outperform in 2025, such as:

1. Industrial REITs: With a 10% undervaluation, industrial REITs are well-positioned to benefit from e-commerce growth and supply chain optimization.
2. Healthcare REITs: Trading at an attractive discount, healthcare REITs are expected to benefit from an aging population and increased demand for healthcare services.
3. Data Center REITs: Attractively valued, data center REITs are expected to continue growing as global wireless carriers upgrade their 5G networks to meet booming data demand.
4. Self-storage REITs: With a significant discount, self-storage REITs are expected to benefit from strong demand for self-storage units driven by consumer preferences and life transitions.
5. Residential REITs: Trading at an attractive discount, residential REITs are expected to benefit from strong demand for single-family rental homes driven by affordability challenges and the desire for more space.

Conclusion
As we enter 2025, the REIT market presents numerous opportunities for investors seeking undervalued gems. By focusing on REITs with significant discounts to their fair value estimates and exploring industry-specific opportunities, investors can uncover hidden gems with strong growth potential. As always, it is essential to conduct thorough research and consider your investment goals and risk tolerance before making any investment decisions.