Morningstar’s REIT picks

Morningstar’s newest real estate list starts with a surprise: the cheapest names are not obscure microcaps but big landlords with familiar property types, including hotels, office towers, apartments, cell-tower sites, and medical buildings. In Morningstar’s April 6, 2026 screen, Park Hotels & Resorts was the most discounted name it covered, trading 47% below Morningstar’s fair value estimate and carrying a 9.62% forward dividend yield. (morningstar.com) That call lands in a year when real estate investment trusts have quietly beaten the broader stock market. Morningstar said the Morningstar US Real Estate Index was up 3.51% year to date as of April 3, 2026, while the Morningstar US Market Index was down 3.35%, a reversal from the sector’s weaker run in prior years. (morningstar.com) A real estate investment trust is a company that owns income-producing property and passes much of its cash flow through to shareholders as dividends. That structure is why the group often attracts income investors first and growth investors second, especially when yields on names like Park Hotels approach 10%. (morningstar.com) Morningstar’s screen was not just a hunt for high yields. The firm said it filtered for real estate investment trusts trading below its fair value estimates, then layered in its own uncertainty and competitive-position ratings, producing a cross-sector list of 12 names as of April 3, 2026. (morningstar.com) Park Hotels sits at the top of that list because the gap between its stock price and Morningstar’s estimate is unusually wide. Morningstar pegged fair value at $19.50 per share, while Park traded at $10.39 on April 6, 2026, and the company owns 33 US hotels with 21,042 rooms concentrated in the upper-upscale and luxury segments. (morningstar.com) That hotel focus explains both the appeal and the risk. Morningstar said Park is the second-largest US lodging real estate investment trust, but it also assigned the stock a high uncertainty rating and noted that new hotel supply and higher interest rates could pressure performance and valuation. (morningstar.com) The next two names in the brief point to a different corner of commercial real estate: office. Morningstar listed Kilroy Realty at roughly 44% below fair value and BXP at about 42% below fair value, showing that some of the deepest discounts are still tied to the slow recovery in office demand. (morningstar.com) Kilroy’s case is easy to picture: it owns office, life science, and mixed-use properties in markets like Los Angeles, San Diego, San Francisco, Seattle, and Austin. Morningstar’s analyst said the company needs to lease up development projects to drive growth, while also warning that office occupancy remains around 50% to 55% of prepandemic levels in many markets. (morningstar.com) BXP is a similar bet with a different footprint. Morningstar said BXP owns Class A office properties concentrated in Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC, and expects growth across that portfolio to be low but still positive. (morningstar.com) The rest of Morningstar’s list spreads the bet across property types so investors are not relying on one real estate cycle. The 12 names included Healthpeak Properties in healthcare, Americold Realty Trust in cold-storage warehouses, Invitation Homes, AvalonBay Communities, and Equity Residential in housing, plus American Tower and Crown Castle in communications infrastructure. (morningstar.com) That mix matters because real estate has split into very different markets. Hotels rise and fall with travel demand, office landlords live or die by leasing, apartment owners depend on rent growth and supply, and healthcare and infrastructure landlords are tied more closely to demographics, data use, and long lease terms. (morningstar.com) Morningstar’s list is not a call that every cheap real estate stock is safe. It is a call that the market has marked down several real estate investment trusts far below what Morningstar thinks their properties and cash flows are worth, with Park Hotels, Kilroy Realty, and BXP standing out as the biggest examples in early April 2026. (morningstar.com) For investors, the trade is straightforward and uncomfortable at the same time. If interest rates ease and property fundamentals stabilize, these discounts can close fast; if hotel demand softens, office leasing stalls, or financing stays expensive, a stock that looks 40% to 47% cheap can stay cheap for a long time. (morningstar.com)