PORTFOLIO REVIEW - Q2/2026

Jussi Askola, CFA

Jul 08, 2026

∙ Paid

Opening Notes
Changes Portfolio Holdings
Changes to HYL Ratings
The Core Portfolio (Our Main Portfolio)
The Retirement Portfolio (Our Secondary Portfolio)
The International Portfolio (Our Optional Portfolio)

1. Opening Notes

This second quarter was another important one for REIT investors.

The big theme was the AI immunity trade.

As investors became increasingly concerned about the disruption that AI could cause to many asset-light businesses, capital began rotating toward businesses that are harder for AI to disrupt.

REITs were one of the main beneficiaries.

Despite interest rates remaining elevated and even rising, the REIT sector surged by roughly 10% during the quarter:

This is exactly the trend that we have been highlighting for a while.

So far, AI has mainly disrupted the digital world: software, advertising, content creation, customer service, coding, and other asset-light industries.

But as AI becomes more powerful and is combined with robotics, autonomous vehicles, and humanoids, the disruption will increasingly spread into the physical world as well. This will likely make investors even more concerned about obsolescence risk across large parts of the market.

But REITs are different.

They own essential, scarce, physical assets that AI cannot simply replicate, replace, or make irrelevant.

You cannot create new high-quality real estate with a few lines of code. You still need land, zoning, permits, infrastructure, building materials, labor, financing, and years of development before new supply can come to market.

And even then, the demand for well-located, high-quality properties should continue to grow over time. The economy will still need industrial parks, apartment communities, grocery-anchored shopping centers, data centers, cell towers, healthcare facilities, timberland, and many other forms of mission-critical real estate.

In fact, many of these assets may become even more valuable in an AI-driven world because they provide the physical foundation that the digital economy still depends on.

Whitestone REIT Acquires 5000 South Hulen in Fort Worth, Texas | Whitestone REIT

That, of course, does not mean that all REITs are immune. Some property sectors will be hurt, while others will benefit. But as a group, REITs are far more insulated than most other businesses, and the market is starting to recognize this.

Even then, I think we are still early.

REITs have recovered some ground, and the chart below has not been updated in a few quarters, but valuations remain historically low, and many high-quality names still trade at large discounts to the fair market value of their properties.

In other words, most REITs have rallied, but they are still cheap.

Moreover, the AI immunity trade is not the only tailwind benefiting REITs right now. Rent growth is now also accelerating in many property sectors as new supply slows, demand continues to grow, and landlords regain pricing power.

At the same time, M&A activity is heating up.

Several REITs have already been bought out, and at High Yield Landlord, we have profited from three of these takeovers in the last quarter alone:

Takeover #1: Whitestone REIT (WSR):

Takeover #2: Sila Realty Trust (SILA):

Takeover #3: Caesars Entertainment (CZR):

Buyback activity is also clearly accelerating:

This is important.

REIT management teams know their assets better than anyone. If they are buying back stock more aggressively, it likely means that they see the disconnect between private market values and public market prices.

They may also sense that fundamentals are improving and that the window to repurchase their own shares at such cheap prices may be closing.

Put differently, REITs are benefiting from several forces at once:

AI disruption is pushing capital toward real assets.
Rent growth outlook is improving.
M&A activity is accelerating.
Buybacks are increasing.
Valuations remain low.

That is a powerful setup. In fact, I suspect that if it had not been for the war in Iran, the oil price spike, and the renewed inflation and interest-rate fears, REITs would have surged even more during the quarter.

The good news is that those fears now appear to be easing.

Oil prices have come back down, inflation expectations are moderating again, and the 10-year Treasury has already pulled back from its recent highs. If this continues, the market’s focus will likely shift back from “war-driven inflation risk” to “AI-driven deflation and rising unemployment,” which could bring rate cuts back on the table.

Economists at the Pantheon expect the new Fed Chair Warsh to hold rates steady this year, and finally give President Trump the rate cuts he has been asking for in early 2027, by cutting rates by 75 basis points to address the excess unemployment.

This could push REITs a lot higher already in the near-term.

How Are We Reacting?

We are doubling down on our efforts to make sure that we are positioned to maximize the gains of this recovery.

This is likely to lead to more capital recycling.

During Q2, we already sold four positions and redeployed the capital into opportunities that we believe offer better risk-to-reward.

We expect to do more of the same in Q3.

Our goal is not simply to own REITs. Our goal is to own the best-positioned REITs as this recovery gains momentum.

That means focusing on companies with:

discounted valuations,
improving fundamentals,
strong balance sheets,
capable management teams,
growing dividends,
and clear catalysts for upside.

As part of this effort, we are spending more time and money meeting management teams face-to-face.

I recently spent time in New York City at REIT Week and met with many REIT management teams. You can read our coverage here:

Exclusive Interview: VICI Properties
Exclusive Interview: Agree Realty Corporation
Exclusive Interview: BSR REIT
Roundtable Meetings: NNN REIT, Prologis, First Industrial, Invitation Homes, Rexford Industrial
Roundtable Meetings: Rayonier, AH Realty Trust, Realty Income, EPR Properties
Roundtable Meetings: W.P. Carey, Kimco Realty, EastGroup Properties, Crown Castle
Final Takeaways From REIT Week Conference

These meetings are valuable because they help us better understand which companies are executing well, which management teams are allocating capital intelligently, and which opportunities the market may be underappreciating. We already increased our positions in Agree Realty (ADC) and Rexford Industrial (REXR) as a result of these meetings, and also initiated a new one in VGP (VGP / VGPBF). You can read our trade alerts by clicking the links below:

In September, I will also attend the EPRA Conference in Milan, which is the biggest annual REIT conference in Europe. Some American REITs that invest heavily in Europe, such as W. P. Carey (WPC) and Realty Income (O), are also expected to attend.

I will again cover the conference for High Yield Landlord, and I expect it to create more opportunities for us to refine the portfolio and recycle capital into better ideas.

By the way, you can get a chance to win a free ticket to the conference if you complete this short survey by clicking here

EPRA_Annual_Conference_2026_Register_Now_v1.5.png

Finally, in case you missed it, we just held our quarterly webinar and discussed many of our top holdings, recent trades, and the opportunities that we are most excited about today.

You can listen to the recording here: