12 Undervalued REITs to Watch: Some Trade Up to 34% Below Fair Value

Why REITs still matter for real estate USA investors

If you’re hunting income in the real estate USA market, REITs remain one of the clearest ways to access steady dividends and property cash flow without buying physical bricks and mortar. Morningstar’s recent screen (data as of 24 July 2026) flagged 12 REITs that appear undervalued versus Morningstar’s fair value estimates — and the gaps are meaningful. The broader Morningstar US Real Estate Index is up 16.26% year-to-date, compared with 9.21% for the Morningstar US Market Index, which shows investors have chased the sector this year. That rally, though, hasn’t erased all discounts inside the universe.

REITs are attractive for income-oriented buyers because they typically pay out most operating earnings as dividends. Yet they are interest-rate sensitive: when rates fall REITs often outperform; when rates rise they tend to lag. Income is a major draw, but valuation, leverage, portfolio quality, and tenant mix matter just as much. In our view, the Morningstar list is a useful starting point, not a buying checklist.

How Morningstar picked the 12 undervalued REIT stocks

Morningstar applied three primary filters to identify bargain REIT stocks as of 24 July 2026:

• Price / Fair Value: stocks trading below Morningstar’s fair value estimate.
• Economic Moat Ratings: narrow or wide moat ratings are preferred because they signal a degree of competitive advantage; companies with no moat were also included if valuation justified it.
• Uncertainty Rating: Low to Very High — capturing how wide the range of fair value outcomes could be.

The resulting list cuts across sectors: wireless tower infrastructure, residential (both single-family and multifamily), office, industrial (cold storage), hospitality, and healthcare. That breadth matters: each sub-sector reacts differently to macro cycles, and the mix provides multiple paths to income and potential capital gains.

The 12 Morningstar picks at a glance (as of 24 July 2026)

Below are the companies, their sector, and Morningstar’s key valuation or yield metrics referenced in the original research. These figures are Morningstar’s data points and are accurate as of the date above.

• Crown Castle (REIT—Specialty): Price/Fair Value: 0.66, Forward dividend yield: 5.67% — trades 34% below Morningstar fair value.
• SBA Communications (REIT—Specialty): Price/Fair Value: 0.69, Forward dividend yield: 2.88% — 31% discount.
• American Tower (REIT—Specialty): Price/Fair Value: 0.74, Forward dividend yield: 4.19% — 26% discount.
• Park Hotels & Resorts (REIT—Hotel & Motel): Price/Fair Value: 0.76, Forward dividend yield: 6.78% — 24% discount.
• Boston Properties (BXP) (REIT—Office): Price/Fair Value: 0.76, Forward dividend yield: 4.05% — 24% discount.
• Kilroy Realty (REIT—Office): Price/Fair Value: 0.77, Forward dividend yield: 5.48% — 23% discount.
• Invitation Homes (REIT—Residential): Price/Fair Value: 0.78, Forward dividend yield: 4.03% — 22% discount.
• AmeriCold Realty Trust (REIT—Industrial): Price/Fair Value: 0.82, Forward dividend yield: 6.42% — 18% discount.
• Sun Communities (REIT—Residential): Price/Fair Value: 0.82, Forward dividend yield: 3.55% — 18% discount.
• Equity Lifestyle Properties (REIT—Residential): Price/Fair Value: 0.85, Forward dividend yield: 3.29% — 15% discount.
• Equity Residential (REIT—Residential): Price/Fair Value: 0.85, Forward dividend yield: 4.14% — 15% discount.
• Healthpeak Properties (REIT—Healthcare Facilities): Price/Fair Value: 0.86, Forward dividend yield: 5.48% — 14% discount.

These names are not homogenous. The reasons for the discounts vary: some reflect secular concerns (office demand, hotel supply), some reflect transitory headwinds (post-pandemic travel patterns), and others are tied to balance-sheet or execution questions. What ties them together is Morningstar’s view that the market price understates long-term intrinsic value.

Sector-by-sector takeaways and investor implications

Wireless tower infrastructure: Crown Castle, SBA, American Tower

• The three tower REITs are among the most defensive infrastructure plays in the list. They own large portfolios of tower sites and collect long-term rent from carriers.
• Key facts: Crown Castle owns ~40,000 towers and is trading 34% below Morningstar’s fair value; SBA owns ~46,000 towers with significant international exposure; American Tower owns roughly 150,000 sites globally.

Why investors care:

• Towers offer contractual rent escalators (roughly 2%-3% annually) and high operating leverage as carriers colocate equipment.
• The trade-off is growth — incremental demand may be modest in saturated US markets, and international exposure adds country risk.

Our view: For income-oriented investors who want telecom exposure in real estate USA, towers are compelling for durability and cash flow, but valuation discipline matters: pick companies with healthy balance sheets and reasonable growth expectations.

Residential REITs: Invitation Homes, Equity Residential, Sun Communities, Equity Lifestyle

• These REITs span single-family rentals, coastal urban apartments, and manufactured-home / RV communities.
• Morningstar highlights scale and demographic demand: Invitation Homes owns >86,000 single-family rentals; Equity Residential manages >85,000 apartment units; Sun and Equity Lifestyle target manufactured housing and RV communities, with heavy Sun Belt exposure.

Why investors care:

• Residential REITs often have shorter lease terms than commercial property, which allows faster rent repricing in inflationary environments but increases sensitivity to local supply and demand shifts.
• Manufactured-housing REITs have niche demand drivers (aging population, second-home buyers), but those drivers can soften as demographics evolve.

Our view: Residential names can provide a balance of yield and growth, but monitor occupancy trends, rent growth vs local housing prices, and potential long-term shifts in homeownership rates among younger cohorts.

Office REITs: Boston Properties (BXP), Kilroy Realty

• These owners target Class-A offices in gateway markets where occupancies and rent power should remain relatively strong.
• Challenges include continued hybrid work patterns and elevated vacancy in some West Coast markets. Office utilization sits at roughly 50%-55% of pre-pandemic levels according to Morningstar’s coverage.

Why investors care:

• Office REITs are a higher-risk, higher-reward segment: if urban employment and in-office norms rebound, high-quality landlords can capture premium rents; if hybrid work persists, valuations may remain under pressure.

Our view: With high uncertainty, office REITs are suitable for investors who accept cyclical risk and can tolerate slower recovery in FFO and occupancy. Focus on landlords with strong balance sheets and redevelopment opportunities (e.g., life-science conversions).

Industrial & Cold Storage: AmeriCold

• AmeriCold is the second-largest temperature-controlled warehouse owner. Morningstar estimates it trades 18% below fair value and pays a 6.42% forward yield.

Why investors care:

• Cold storage demographics are linked to food production, global supply chains, and pharma logistics. The asset class has high capital intensity and specialized construction needs.
• The sector has been through consolidation; institutional interest has grown, which can support long-term pricing power.

Our view: AmeriCold is a play on supply-chain specialization and consolidation in a niche industrial segment. Tight underwriting on capital expenditure and occupancy cycles is essential before committing capital.

Hospitality and Healthcare: Park Hotels & Resorts, Healthpeak

• Park Hotels & Resorts trades at a 24% discount with a 6.78% forward yield.