With the market hitting record highs, it's getting more difficult to find attractively priced stocks to invest in. However, thanks to industry-specific weakness, there are still some long-term bargains to be found, especially in real estate investment trusts, or REITs. Below, I explain why I think shopping center REIT Kimco Realty (NYSE:KIM), self-storage REIT CubeSmart (NYSE:CUBE), and healthcare REIT Physicians Realty Trust (NYSE:DOC) look like excellent long-term investments at their current prices.



Recent Stock Price

Dividend Yield

Kimco Realty








Physicians Realty Trust




Data Source: TD Ameritrade. Stock prices and dividend yields current as of 8/18/2017.

Take advantage of brick-and-mortar retail worries

Over the past year or so, most stocks that are connected to brick-and-mortar retail have gotten crushed. Shopping-center REIT Kimco Realty is certainly no exception, down 36% over the past 12 months. Considering the retail bankruptcies and store closures that seem to be in the headlines constantly, it's not much of a surprise.

Sale sign in retail store's window.

Image Source: Getty Images.

However, it's important to realize that not all retail businesses are in trouble. In fact, certain types of brick-and-mortar retailers are doing quite well.

Off-price retailers, which include stores like T.J. Maxx and Ross Stores, are actually quite resistant to e-commerce headwinds. Other internet-resistant businesses, such as grocery stores and warehouse clubs, are doing well, also. Combined, these types of businesses make up 55% of Kimco's portfolio. Omni-channel retailers, which means retail businesses that have online businesses that are tied to a physical location, make up another 40%.

While many full-price and luxury retailers are certainly facing headwinds, these types of properties make up just 5% of Kimco's portfolio. And at the REITWeek 2017 conference in June, Kimco's management said that they're seeing lots of demand from retailers that are actively expanding, and those are the types of retailers the company plans to focus on going forward.

Short-term oversupply issues are creating bargains in self-storage

Self-storage REITs are another type that have underperformed the market lately, partially due to fears of oversupply in key markets. While these fears are indeed legitimate, any oversupply issues are likely to be temporary, and the big, established self-storage companies like CubeSmart should be just fine. Even so, the stock has dropped by 16% in a year, creating an interesting opportunity for investors with a long-term focus.

One of the largest self-storage brands, CubeSmart, owns 476 properties and manages another 356. Properties are located in highly populated areas where the average household income is less than the national average. Furthermore, CubeSmart's markets are more supply constrained than those of its leading peers, which should help to mitigate any effects of oversupply in the industry.

In the meantime, CubeSmart actively looks for opportunities for value-adding projects, such as renovations of its current properties. Also, since the company grows by acquisitions, as well as development, the oversupply issues could create some opportunities to acquire properties from weaker peers at a discount.

A compelling healthcare play for the next 30 years

Healthcare could be the biggest real estate opportunity over the next few decades, thanks to the rapidly growing senior-citizen population in the U.S. In fact, over the next 40 years, the senior-citizen population is expected to roughly double, and the older age groups (75+, 85+) are going to grow even faster. As a result, healthcare spending is expected to rise rapidly. From 2016 through 2025, U.S. healthcare spending is expected to climb by a staggering 65%.

Projections of U.S. healthcare expenditures and senior citizen population growth.

Image Source: Physicians Realty Trust investor presentation.

One excellent healthcare REIT is Physicians Realty Trust, which owns 253 medical office properties in 30 states. Most of the tenants sign long-term "net" leases, generally with an initial term of a decade or longer, minimizing turnover risk. And thanks to a downward revision to the company's guidance, the stock is down 17% over the past six weeks or so.

The main factor that makes Physicians Realty Trust different from most other healthcare REITs, aside from it being a pure play on medical offices, is that the company seeks to leverage its relationships with physicians and healthcare systems. Several key executives used to work for major healthcare systems, such as St. Vincent Health and Baylor Health System. This allows the company to find compelling opportunities that the big players in the healthcare REIT space may overlook.

Since going public in 2013, the company has completed more than $3 billion in acquisitions and is showing no signs of slowing down. And with the anticipated growth in healthcare spending, there could be many more billions in growth ahead.

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.