3 REIT Stocks to Watch as Fed Rate Hike Odds Climb

With markets now pricing a 77% chance of a U.S. Fed rate hike this year, investors who rely on steady income stocks are suddenly rethinking what higher borrowing costs could mean for their portfolios. Rate sensitive sectors can come under pressure, but they can also create mispriced opportunities. This article walks through three stocks from our utilities and REITs screener that appear positively exposed to the latest Fed narrative.

The three stocks highlighted below are just a starting sample from this idea, and the full screen surfaced 26 more utilities and REITs with similarly balanced income and risk profiles that are not covered here. To identify and analyze the highest conviction candidates for your watchlist, head straight to the U.S. Rate‑Sensitive Defensive Sectors (Utilities and REITs) screener.

Essential Properties Realty Trust (EPRT)

Overview: Essential Properties Realty Trust is a net lease REIT that acquires and manages single tenant, service oriented and experience based properties across the U.S., locking in long term rental contracts that can appeal to income focused investors when rates are in flux. As of September 30, 2025, it owned 2,266 freestanding properties with an average remaining lease term of 14.4 years and a 99.8% occupancy rate across 645 tenant concepts in 48 states.

Operations: Essential Properties Realty Trust generates all of its US$615 million in revenue from commercial REIT activities in the United States.

Market Cap: US$6.5b

Essential Properties Realty Trust gives you exposure to long term, net lease cash flows at a time when higher Fed rate expectations are reshaping what investors will pay for dependable income. The portfolio tilts toward e commerce resistant, service based tenants, long leases and healthy rent coverage, which can support resilience even as borrowing costs move around. Recent follow on equity raises increase financial flexibility to fund new sale leaseback deals without relying solely on debt. The flip side includes sensitivity to refinancing costs, reliance on middle market tenant credit and recent insider selling. For investors weighing whether higher rates will pressure or improve entry points for this REIT, the full story is more nuanced than a simple rate call.

Essential Properties Realty Trust pairs long leases with service based tenants, but the real story is how those cash flows stack up against higher refinancing costs. Review the 4 key rewards and 2 important warning signs (1 is major!) to see what might be hiding behind the headline stability.

Alexandria Real Estate Equities (ARE)

Overview: Alexandria Real Estate Equities is a life science REIT that owns, operates and develops large lab and R&D campuses in major research hubs such as Boston, San Diego and the San Francisco Bay Area. It provides specialized space for biotech, pharmaceutical and technology tenants under long term leases that can appeal to income focused investors watching rate sensitive sectors.

Operations: Alexandria Real Estate Equities generates essentially all of its US$2.9b in revenue from providing space for lease to life science, agtech and technology tenants, with a small segment adjustment.

Market Cap: US$8.9b

Alexandria Real Estate Equities gives you exposure to high specification lab real estate that is costly to replicate and often leased for many years. This structure can help support cash flows even as markets price a higher chance of further Fed tightening. At the same time, the company is unprofitable, carries meaningful refinancing and capex needs, and funds its liabilities entirely through external borrowings. Higher for longer rates therefore matter directly for earnings, debt service and dividend resilience. Analysts highlight both an apparent value gap against many health care REIT peers and ongoing questions about vacancy, funding costs and future demand for large campuses. For investors scanning this screener for income ideas, the risk reward trade off at Alexandria is less straightforward than a simple dividend headline implies.

Alexandria Real Estate Equities sits at the crossroads of expensive lab build outs and long leases, which can mask both pressure points and upside. Get the full story in the 3 key rewards and 2 important warning signs (1 is major!)

W. P. Carey (WPC)

Overview: W. P. Carey is one of the largest net lease REITs, owning 1,748 single tenant industrial, warehouse and retail properties across about 188 million square feet in the U.S. and Europe under long term leases with built in rent increases. That focus on essential, cash flow producing real estate and steady dividends, combined with valuations that are closely tied to interest rates and cap rates, is what places W. P. Carey squarely in this rate sensitive defensive screener.

Market Cap: US$15.9b

For income focused investors watching Fed rate expectations climb, W. P. Carey offers a mix of long leases, inflation linked rent escalations and a growing tilt toward industrial and logistics assets that can help underpin cash flow. Recent results show higher revenue and net income in the first half of 2026, along with a quarterly dividend of US$0.94 per share. However, the company still faces pressure from impairments, an uneven dividend record and reliance on external funding in a higher rate setting. Management commentary about pushing acquisition cap rates into the high 7% and 8% range suggests how W. P. Carey may seek to turn tighter financing conditions into better investment yields. The full picture, including how sustainable that balance is, needs a closer look.

W. P. Carey’s long leases and higher acquisition cap rates could be masking a more interesting income story. See how the portfolio, funding mix and dividend profile really stack up in the analysis report for W. P. Carey

Seeking Fresh Alternatives Beyond Income REITs

Markets can change quickly and emerging ideas may not stay unnoticed for long. Consider exploring potential opportunities while they are still under the radar.

• Search for high yield opportunities that still appear resilient and let the 12 dividend fortresses guide you toward income candidates before yields start dropping.
• Look for potential future leaders early by scanning the 19 high quality undiscovered gems while they are still flying under most radars and before sentiment changes.
• Focus on strong balance sheets and steady fundamentals with the curated list of solid balance sheet and fundamentals (53 results) and review these candidates before defensive quality becomes widely recognized.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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