JPMorgan Sees REIT Rebound Amid Rising Interest Rates

JPMorgan Chase has upgraded three real estate investment trusts (REITs) from Neutral to Overweight, despite rising interest rates and a sluggish performance by the sector. The bank's bet reflects a stance that the risk in real estate has been over-penalized and discounted, making it ripe for a rebound.

The three firms are Welltower Inc., The Macerich Co., and EastGroup Properties Inc. JPMorgan sees durable demographic demand from aging Baby Boomers as a tailwind for Welltower's healthcare and senior-housing operations. This demand is largely independent of debt-market swings, providing a buffer against refinancing pressure.

Welltower reported revenue of $3.54 billion in its most recent quarter, beating the estimate of $3.44 billion, although earnings per share (EPS) of $0.61 missed the consensus of $0.6388. JPMorgan sees a price target of $260 for Welltower.

The Macerich Co., an enclosed-mall operator, was raised to Overweight with a $26 target, implying 14.9% upside from its prior close. EastGroup Properties Inc., an industrial REIT focused on Sun Belt logistics corridors, received an upgrade with a $231 target, or around 14.2% upside.

Mainstream investors often treat equity REITs as bond proxies, leading to mechanical selling across benchmarks when Treasury yields climb. However, evidence suggests this reflexive selling might be misplaced. Research by Glenn Mueller and Keith R. Pauley established that equity REIT prices show very low sensitivity to borrowing rates, with an average correlation of -0.153 during rising-rate periods.

Nareit's data reinforces the point, as REITs posted positive total returns in 78% of months with rising Treasury yields between 1992 and mid-2025. This dynamic makes JPMorgan's thesis contrarian to consensus yet validated by long-run empirical data.