When it comes to net lease real estate investment trusts (REITs), the 800-pound gorilla is Realty Income (O -0.17%). But investors shouldn't stop with this industry giant, because there are other companies, like W. P. Carey (WPC -1.70%), that offer unique benefits because of their differentiated business models. One example of this can be seen when you examine Realty Income's geographic footprint and compare it to W.P. Carey's portfolio.

This REIT has a small peer set

W. P. Carey really dances to its own beat in the REIT sector. For starters, its portfolio spans the industrial (27% of rents), warehouse (24%), office (17%), retail (17%), and self-storage (5%) sectors ("other" makes up the difference). Most net lease REITs focus on a smaller opportunity set, and often just a single property category. (Net leases require tenants to pay most property-level operating costs.) On top of that, W. P. Carey's portfolio extends well beyond the U.S. border (38% of rents are "foreign"), which only two other net lease REITs really do in any meaningful way.

So when you step back and look at W. P. Carey from a big-picture perspective, its only notable comparison points are Realty Income and Global Net Lease (GNL -0.14%). Both of these REITs have at least modest property-type diversification and material assets outside of the U.S. market. But they are drastically different when it comes to scale. Realty Income's market cap is $41 billion, while Global Net Lease's market cap is just $1.1 billion or so. For reference, W. P. Carey's market cap is just under $15 billion, which makes it one of the largest options after Realty Income.

Realty Income generates around 75% of its rents from retail assets, while W. P. Carey's exposure there is just 17%. So even though these two are closer in size, the portfolio breakdown is vastly different. Global Net Lease is more similar, with retail at 5%, office at 40%, and industrial 55%. But its tiny size is a competitive problem, notably leading it to a planned merger with a sister REIT. That merger will drastically reshape the portfolio, however, because it will bring with it multitenant properties. In other words, it will no longer be a pure-play net lease REIT.

Where's the property located?

All of that said, Realty Income has only just recently begun to venture into foreign markets. It has little choice, given its size, because it would increasingly find acquisition-led growth limited in North America. At this point, though, it has only entered three European markets: the United Kingdom, Spain, and Italy.

Realty Income most certainly has foreign exposure, but not much based on the number of countries and the roughly 12% or so of rents that come from across the pond. That will increase over time, but for right now, W. P. Carey has much more geographic diversification in Europe.

To put some numbers on that, W. P. Carey's portfolio spans 10 European nations: Germany (5.2% of rents), Spain (5.1%), Poland (4.8%), the Netherlands (4.3%), the United Kingdom (3.8%), Italy (2.3%), Denmark (1.8%), Croatia (1.5%), France (1.4%), and Norway (1.1%). The REIT also has a little bit of exposure to Canada (1.1%), but that's not particularly unique. And while there's a fair amount of overlap here with Global Net Lease, the coming changes from that REIT's merger will make it less comparable, not more.

Simply put, if you are looking for a diversified net lease REIT, the leading candidate is W. P. Carey.

More than just diversification

That said, W. P. Carey has a long history of success behind it (something that can't be said of Global Net Lease). The most prominent example of this is that W. P. Carey has increased its dividend every year since its IPO in 1998. Add in an investment-grade balance sheet and 6.1% dividend yield, and there's a good reason to consider this REIT over giant Realty Income, which is yielding roughly 5% today. And while Global Net Lease has a huge 14%-plus dividend yield, it was forced to cut its dividend in 2020 and has that portfolio-changing merger on tap. All told, if diversification is important to you, W. P. Carey is the REIT to own.