The stock market is near record-high territory, and it's getting difficult to find beaten-up stocks to buy at a discount. However, one notable exception is real estate investment trusts (REITs) which have taken a beating as interest rates started to rise. Here are three REITs, all of which have dropped more than 10% over the past six months, that may be worth a look.

The right kind of retail

I'm a big fan of single-tenant net-lease retail real estate as a long-term investment. And, National Retail Properties (NYSE:NNN) is a large REIT that invests exclusively in this type of property.

Jar of coins labeled "dividends"

Image source: Getty Images.

For one thing, the lease structure of these properties makes them an inherently defensive investment. Tenants sign leases with long initial terms (generally 15 years or more), which minimizes turnover and vacancy risk, especially in tough times. In fact, National Retail Properties' occupancy stayed above 96% even during the depths of the Great Recession.

Chart of National Retail Properties' occupancy over time.

Image source: National Retail Properties.

Furthermore, the "net lease" structure means that tenants are responsible for expenses such as property taxes, building maintenance, and insurance. In other words, most of the variable costs of property ownership are paid by the tenants, not National Retail Properties.

Finally, the types of tenants National Retail Properties has serves to further give investors peace of mind, especially in this age of e-commerce and failing brick-and-mortar retailers. Specifically, most of National Retail Properties' tenants are engaged in one (or more) of three business types:

  • Service businesses- Think of car washes or movie theaters. These are businesses people have to physically go to, and are virtually immune to online competition.
  • Non-discretionary businesses- Drug stores and gas stations fall into this category. Businesses that sell things people need, not things they want, tend to perform well in tough economies.
  • Deeply discounted retail- Warehouse clubs and dollar stores are good examples. These businesses tend to do better during recessions, as consumers look for bargains.

Healthcare real estate: An investment for the next 50 years

Healthcare real estate is just as defensive of an investment as net-lease retail, and has even more growth potential in the years ahead. One beaten-down healthcare REIT that I have my eye on in 2017 is Senior Housing Properties Trust (NASDAQ:DHC).

First, the reasons to invest in healthcare real estate in general. Healthcare is a naturally defensive property type, for the same reason I called gas stations a defensive form of retail -- people need it no matter what the economy is doing. Plus, most healthcare properties are on long-term net leases as well.

Also, the U.S. population is aging fast, which is expected to generate a lot of demand growth in the coming decades. The 65-and-older age group is expected to grow by about 50% by 2030, and the need for healthcare will grow along with it.

Chart of expected demographic trends.

Image source: Senior Housing Properties Trust.

This is especially good news for the senior housing industry, which is one big reason I like Senior Housing Properties Trust. However, despite the name, only about half of the company's portfolio is made of senior housing properties, with most of the rest made up of medical office buildings.

Senior Housing Properties Trust pays an extremely generous 8.2% dividend yield, which I believe should be safe going forward, as it represents a reasonable percentage of the company's earnings. Here's a deeper look at this REIT that I did recently, where you can find more details about the company and why I think it's a bargain right now.

Self-storage: A high-margin business that can survive the tough times

The final REIT type I like right now is self-storage, particularly Extra Space Storage (NYSE:EXR).

First, I should mention that this could prove to be the most volatile company on the list. Self-storage isn't as defensive as retail or healthcare simply because of its lease structure. Generally, you don't sign a multi-year lease on a storage unit -- you just pay each month that you want to keep it. This makes it easier for tenants to vacate the properties during tough times.

However, self-storage real estate also has extremely low operating costs, which allow these properties to remain profitable, even if occupancy falls. It doesn't cost much to maintain storage space, and tenant turnover costs are minimal.

Extra Space Storage currently has over 1,400 storage facilities, and has expanded rapidly in recent years, with the number of storage facilities in its portfolio more than doubling since 2008. Plus, the company has managed to grow its same-store net operating income faster than its peers.

Chart comparing same-store growth of leading self-storage companies.

Image source: Extra Space Storage.

As a final reason to invest, consider that the self-storage business is still in the early stages of REIT consolidation. Only about 20% of self-storage properties are REIT-owned, and no company has more than a 7% market share. This means that there is tremendous opportunity for consolidation, and if it chooses to continue its aggressive growth, Extra Space Storage should be able to do just that.

These are all bargains -- for long-term investors

To be perfectly clear, I think these three stocks are bargains if you buy them and plan to hold for the long haul. Over shorter periods of time, these REITs can be quite volatile. Just look at some of the ups and downs of National Retail Properties over the past year.

NNN Chart

NNN data by YCharts.

However, all three companies have solid business models that should produce strong returns over the long run. Invest with the long run in mind, and these could pay off tremendously.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.