President Donald Trump hasn't been shy in demanding that the Federal Reserve cut interest rates, and unsurprisingly, his choice to succeed Fed Chair Jerome Powell is potentially on the same page. Kevin Warsh has echoed the President's calls for lower rates in recent months, and federal funds traders now forecast an 81% chance of a rate cut by this summer, with a 45% chance of one in April, before Warsh is even sworn in. After almost four years of tight monetary policy, there are indications that U.S. companies can look forward to lower borrowing costs. That's great news for real estate investment trusts (REITs), which benefit from lower interest rates in three ways.

These companies, which follow tax-related rules that require them to pay 90% of their net income back to shareholders as dividends, typically offer high yields that attract income investors who might otherwise be left out in the cold by falling Treasury yields. Their valuations can also rise because their future cash flows are discounted using the 10-year Treasury yield as a benchmark, so as the latter falls, REIT valuations rise. Finally, lower borrowing costs naturally boost REITs, since they fund their long-term operations through long-duration debt that can be refinanced at more favorable terms when interest rates fall.

You can see REITs' tendency to outperform by comparing their returns during the last era of prolonged low rates against those of the S&P 500. From June 2009 to November 2015, when the federal funds rate never exceeded 0.21%, the Vanguard Real Estate Index Fund ETF (NYSEMKT: VNQ), an exchange-traded fund (ETF) that offers broad exposure to U.S. equity REITs, handily beat the S&P 500's total return. This performance underscores the inherent advantages for REITs in a low-rate environment, where their ability to generate consistent income becomes a focal point for investors.

Still, not all REITs will thrive amid falling rates, while others will be standout performers. Each REIT has unique characteristics that can influence its performance in different interest rate environments. Therefore, it is crucial for investors to analyze the fundamentals of individual REITs to identify potential winners in this evolving landscape. Here are three opportunities in the REIT universe to consider buying now.

Founded in 1969 and headquartered in Vancouver, Canada, Realty Income (NYSE: O) is the sixth-largest REIT globally, with properties in nine countries totaling $61 billion in value. Its diverse client base includes retail giants like Lowe's, Chipotle, Sainsbury's, and Walmart, which adds to its stability and attractiveness as an investment. The company's business model focuses on acquiring and managing retail and commercial properties leased to high-quality tenants, which helps ensure consistent rental income.

Realty Income has a remarkable track record when it comes to dividend payments, having announced 112 consecutive quarterly increases to its dividend as of Q3 2025. This impressive streak reflects the company's commitment to returning value to its shareholders and its ability to generate reliable cash flow. With earnings growing 17% year over year last quarter, this trend of increasing dividends appears highly likely to continue, making Realty Income a shining example of a REIT that is well-positioned to benefit from lower interest rates.

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Currently, Realty Income pays a monthly dividend yielding 5.2%, significantly higher than the S&P 500 average of 1.16%. This disparity in yields makes Realty Income particularly appealing to income-focused investors who are looking for ways to enhance their returns amid a backdrop of declining interest rates. The attractiveness of its yield, combined with the potential for capital appreciation as interest rates decrease, presents a compelling case for investors to consider adding Realty Income to their portfolios.

Investors eyeing REITs should consider how these firms adapt to lower rates. With the potential for cuts on the horizon, Realty Income exemplifies a solid investment due to its robust dividend growth and high yield. As interest rates influence the market, strategic choices in REITs could lead to significant gains for income-seeking investors. The market sentiment surrounding interest rates is shifting, and REITs like Realty Income could be prime beneficiaries. As companies anticipate lower borrowing costs, REITs that can maintain or grow dividends will attract more investors. This trend highlights the importance of monitoring monetary policy changes and their ripple effects on real estate investments.

The future looks promising for REITs in this evolving financial landscape. Lower rates tend to enhance property valuations and investor returns, making it an opportune time for investors to explore this sector further. The interplay between interest rates and the performance of REITs is a critical consideration for investors, as the latter often relies on stable and growing income streams amidst changing economic conditions. With the right picks, investing in REITs could yield substantial rewards as the Fed adjusts its policies.

Moreover, it's essential to recognize that the economic environment can influence REIT performances beyond just interest rates. Factors such as job growth, consumer spending, and overall economic health play significant roles in the quality of tenants that REITs can attract and retain. As the economy continues to recover and consumer confidence strengthens, the demand for retail and commercial spaces is likely to rise, further benefiting REITs like Realty Income.

Additionally, as REITs navigate the complexities of a low-interest-rate environment, those with strong management teams that focus on strategic acquisitions and efficient operations are more likely to outperform their peers. Investors should conduct thorough due diligence, examining management's track record and the REIT’s portfolio diversification to identify those that can weather economic fluctuations effectively.