The Resurgence of High-Yield REITs in a Post-Rate-Pause Environment

In a world where traditional fixed-income assets struggle to keep pace with inflation, high-yield real estate investment trusts (REITs) have emerged as a compelling solution for income-focused investors. The Federal Reserve's decision to pause rate hikes in 2025 has catalyzed a resurgence in REIT performance, with these vehicles outperforming major stock indices by a significant margin. For investors seeking monthly dividends and long-term capital appreciation, the post-rate-pause environment presents a unique opportunity to leverage undervalued REITs as a strategic passive-income tool.

The Post-Rate-Pause Tailwind

The Fed's rate pause in early 2025 created a favorable backdrop for REITs, which thrive in low-interest-rate environments. With the 10-year Treasury yield stabilizing between 3.5% and 4.0%, REITs gained access to cheaper refinancing options, bolstering cash flows and reducing debt burdens. This dynamic was particularly evident in Q2 2025, where high-yield REITs delivered 2.8% returns while the S&P 500 declined 4.4%. The resilience of REITs was further underscored by their historical performance: they have averaged 16.55% returns over four quarters in rising interest rate periods, with positive total returns in 82% of those quarters.

The legislative landscape also shifted in REITs' favor. The One Big Beautiful Bill Act (OBBBA) of 2025 extended key tax provisions, including permanent increases in mortgage deductions and the QBI deduction for pass-through entities. These changes enhanced REITs' financial flexibility, particularly in capital-intensive sectors like industrial and multifamily real estate.

Sector Spotlight: Multifamily and Industrial REITs

While the broader REIT market benefited from the rate pause, specific sectors outperformed. Multifamily REITs surged 29.19% through March 2025, driven by near-maximum occupancy rates and robust rent growth in Sun Belt markets. Industrial REITs also shone, with 3.8% total returns year-to-date and occupancy levels above 95% for 38 consecutive quarters. E-commerce's projected $36 trillion valuation by 2026 ensures sustained demand for industrial assets.

Undervalued Monthly-Dividend REITs for Long-Term Income

1. Healthpeak Properties (DOC)

Healthpeak Properties, a healthcare-focused REIT, exemplifies the post-rate-pause opportunity. After merging with Physicians Realty in 2024, the company shifted its portfolio to 50% life science facilities and 40% medical office buildings (MOBs). These assets attract high-credit tenants with long-term leases, ensuring stable cash flows.

In Q2 2025, Healthpeak reported Nareit FFO of $0.43 per share and reaffirmed 2025 guidance of $1.81–$1.87 per share. Its net debt to EBITDAre stands at 5.2x, well within conservative leverage ratios. The REIT's recent switch to monthly dividends (7.2% yield) and $2.3 billion in liquidity further enhance its appeal.

2. RioCan REIT (RIOCF)

RioCan, Canada's largest retail REIT, offers a defensive income stream with a 6.6% yield. Its portfolio of 150+ shopping centers in major urban hubs maintains 97.5% committed occupancy, supported by essential retailers like grocery stores and pharmacies.

Q2 2025 results highlighted a 2.0% growth in commercial same-property NOI and an improved adjusted debt to EBITDA ratio of 8.88x. RioCan's $1.3 billion liquidity position and $230.4 million in asset dispositions demonstrate disciplined capital management. With a FFO payout ratio of 60.5%, the REIT balances growth and income sustainability.

3. Sila Realty Trust (SILA)

Sila Realty Trust, a healthcare REIT, trades at a premium P/E ratio of 40.76 but offers a 6.4% yield and a compelling growth story. Its portfolio of 100+ medical facilities maintains 99.2% occupancy, with tenants covering 5.31x EBITDARM.

Despite a Q2 2025 EPS miss, Sila's revenue outperformed estimates by 5.66%, and analysts remain bullish. Truist Securities upgraded its price target to $28 (11.69% upside from $25.07), citing the REIT's low leverage (3.6x net debt to EBITDAre) and $568.8 million liquidity. A $25 million share repurchase program further underscores management's confidence in undervaluation.

Strategic Considerations for Investors

The key to capitalizing on high-yield REITs lies in sector selection and valuation discipline. Multifamily and industrial REITs remain the most resilient, while healthcare and retail REITs offer defensive characteristics. Investors should prioritize REITs with strong tenant credit, low leverage, and a history of distribution growth.

For those seeking monthly dividends, Healthpeak, RioCan, and Sila present a balanced mix of income, growth, and risk mitigation. Their current valuations—supported by strong fundamentals and analyst optimism—make them attractive additions to a diversified portfolio.

Conclusion

In a low-yield world, high-yield REITs have proven their mettle as income generators and diversifiers. The post-rate-pause environment, combined with favorable legislative changes and sector-specific tailwinds, positions these REITs for sustained performance. By focusing on undervalued monthly-dividend payers like Healthpeak, RioCan, and Sila, investors can build a resilient passive-income stream that thrives in both stable and volatile markets.