Diversified real estate investment trusts (REITs) take a broad-based approach to investing in commercial real estate. Instead of focusing on a specific property type (e.g., retail, industrial, residential, or office properties) like most REITs, these entities own a diversified portfolio across more than one property type.
Here's a closer look at why some REITs opt to diversify and the advantages and disadvantages of being a diversified REIT. We'll also look at some of the top diversified REITs for investors to consider.
Understanding them
Understanding diversified REITs
A diversified REIT owns a diversified portfolio of commercial real estate assets, which can include:
- Office buildings and business parks.
- Warehouses and other industrial buildings.
- Multifamily properties.
- Healthcare-related real estate like medical office buildings.
- Retail properties, including freestanding retail buildings and shopping centers.
- Hotels and resorts.
- Gas stations and travel centers.
- Self-storage facilities.
- Mixed-use properties that include offices, retail, and multifamily units.
Many diversified REITs focus on owning single-tenant net lease real estate. These are properties secured by long-term triple net (NNN) leases with the occupying tenant. This lease structure makes the tenant responsible for maintenance, building insurance, and real estate taxes, enabling the REIT to collect steady rental income.
NNN
However, some diversified REITs will own multi-tenant properties with some rental income variability due to a shorter-term lease structure or variable expenses. In addition, some diversified REITs own properties they operate alongside a third-party manager (e.g., hotels and self-storage facilities). These properties can have even more income variability since occupancy and rates can decline quickly during a recession.
Diversified REITs don't buy properties at random. They develop an investment strategy that focuses their efforts on a specific theme. For example, some diversified REITs concentrate on a particular type of property (e.g., global net lease real estate or service-related properties). Meanwhile, others focus on owning a diversified real estate portfolio in a specific city.
Advantages
Advantages of investing in diversified REITs
Diversified REITs make it easy to invest in real estate. These REITs typically own a diversified portfolio providing investors with reasonably broad exposure to several types of commercial real estate, often with offsetting risk profiles. In some ways, owning a diversified REIT is similar to investing in a REIT ETF. They both can provide instant diversification across several property types.
Risks
Risks of investing in diversified REITs
While diversified REITs can help reduce an investor's risk profile, they aren't without risk. Because of their diversified operations, many diversified REITs have chosen to pay out the bulk of their cash flow via dividend and therefore have high dividend payout ratios. While that typically means they are high dividend REITs, it increases the risk of a dividend reduction if a property segment runs into trouble. The strategy can also limit the REIT's ability to grow since it's not retaining as much cash to make acquisitions, forcing it to heavily rely on debt and issuing stock to expand.
Diversified REITs can also face risks specific to the property types they hold. For example, office and retail properties have experienced headwinds in recent years. Reduced occupancy and shopper traffic have weighed on the stock prices and cash flows of diversified REITs that hold these types of properties. This issue has led several formerly diversified REITs to shift their strategies by narrowing their investment focus on a specific property type.
Diversified REITs also face interest rate risks common to all REITs. As interest rates rise, it's more expensive for these REITs to borrow money and refinance debt. In addition, higher interest rates make lower-risk, yield-focused investments such as government and corporate bonds more attractive to income investors. As a result, REIT stock prices tend to fall, pushing up dividend yields to compensate investors for their higher risk profiles.
Our list
3 top diversified REITs to buy
There were 12 publicly traded diversified REITs in early 2025, according to the National Association of Real Estate Investment Trusts (NAREIT). This number has been shrinking in recent years. Several formerly diversified REITs have chosen to focus on a specific property type after years of underperformance in some of their other property segments.
Despite the shrinkage, investors still have several interesting diversified REITs to consider. The three biggest diversified REITs by market capitalization are:
| Name and ticker | Market cap | Dividend yield |
|---|---|---|
| W.P. Carey (NYSE:WPC) | $15 billion | 5.28% |
| Broadstone Net Lease (NYSE:BNL) | $4 billion | 6.24% |
| Global Net Lease (NYSE:GNL) | $2 billion | 11.82% |
Here's a closer look at these diversified REITs.
1. W.P. Carey
W.P. Carey (WPC 0.9%) is one of the largest and most diversified REITs. It focuses on owning operationally critical properties net leased to high-quality tenants. This REIT entered 2025 with more than 1,400 properties, with about 170 million square feet of rentable space leased to almost 350 tenants across more than a dozen industries. Its properties include single-tenant industrial (35% of its annual base rent), warehouse (28%), retail (22%), and other (15%). Other property types include education facilities, self-storage (net lease and operated), specialty, laboratory, hotels (net lease and operated), office, research and development, and land. W.P. Carey owns most of its properties in the U.S. (59% of its real estate assets) and Europe (36%). Other countries -- Canada (4%), Mexico (1%), Mauritius (0.4%), and Japan (0.2%) -- make up the remainder of its portfolio.
The REIT's focus on the global net lease market has enabled it to generate stable cash flow. That's allowed W.P. Carey to pay a consistently rising dividend. This REIT had increased its dividend every year since its initial public offering (IPO) in 1998 until late 2023. However, it reduced its dividend when it made the strategic decision to exit the troubled office sector. Even with that cut, it has historically offered an above-average dividend yield, making it an excellent option for those seeking to generate passive income backed by commercial real estate.
2. Broadstone Net Lease
Broadstone Net Lease (BNL 0.73%) has a very diversified real estate portfolio. As of early 2025, it had industrial (57.8% of its annualized base rent), restaurant (13.4%), retail (12.5%), healthcare (10.5%), and office properties (5.8%). The REIT owned around 775 properties in 44 states and four Canadian provinces net leased to 203 tenants across 55 industries.
Broadstone has made some notable changes to its investment strategy in recent years. It has reduced its exposure to the healthcare sector by selling off clinically oriented properties while retaining those focused on consumer-centric healthcare. The REIT has also secured several build-to-suit projects (primarily industrial properties) that will drive its growth over the next few years as it completes construction and starts collecting rent on those properties. The strategy shift should enable Broadstone to continue paying an attractive and growing dividend.
3. Global Net Lease
Global Net Lease (GNL 1.29%) entered 2025 with more than 1,225 properties with 61.9 million square feet of space leased to 723 tenants across 89 industries. Its portfolio included industrial and distribution (33% of its rent), multi-tenant retail (27%), single-tenant retail (22%), and single-tenant office (18%) properties across the U.S. and Northern and Western Europe.
Global Net Lease became a sector-leading diversified REIT in 2023 following its merger with The Necessity REIT. The deal created a $9.6 billion REIT with over 1,350 properties.
However, the deal also increased its debt, leading Global Net Lease to focus on selling non-core properties to reduce debt in 2024. It sold $835 million of properties, exceeding the high end of its $650 million to $800 million target range. As a result, it entered 2025 with a stronger balance sheet, positioning its business for future growth.
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The bottom line
Diversified REITs can be great options for real estate investors
Diversified REITs enable investors to own a diversified real estate portfolio through one investment, reducing risk. However, it's essential to know what's in a diversified REIT's portfolio. That's because most of these companies develop a strategy around a particular theme, which has its pros and cons. While some of these strategies have worked well over the years, others have faced headwinds, leading the REIT to shift gears.
