Specialty & Diversified REITs covers real estate investment trusts that own towers, data centers, self-storage, timberland, billboards, casinos, hotels and mixed portfolios. MoatScope covers 51 companies here. Five have a wide moat, 16 a narrow moat and 30 none.
How the industry makes money
Like all REITs, these companies collect rent and pay out most of their income, but the properties are specialized. A cell tower can host equipment from several wireless carriers at once. Data centers earn rent plus fees for connecting tenants to each other and to networks. Gaming REITs own casino real estate leased to operators on long-term leases. Hotels, by contrast, rent rooms by the night and ride every travel cycle.
Where the moats are
Efficient scale appears in 14 of the 21 moat-rated companies: well-located towers, interconnected data centers and large gaming properties are scarce and hard to permit or replicate. Switching costs appear in 13, because tenants' equipment and network connections are expensive to move.
- Equinix: data centers whose density of network interconnections draws more tenants and networks.
- American Tower and SBA Communications: scarce, well-located towers protected by zoning, permitting and the cost of building new ones.
- Equity LifeStyle Properties: manufactured-housing and RV communities in locations where new supply is highly constrained.
- Gaming & Leisure Properties: the first gaming-focused REIT, owning casino real estate in a small universe of large-scale gaming properties.
The narrow-moat group includes Digital Realty, Public Storage, Extra Space Storage, CubeSmart, Crown Castle, VICI Properties, Lamar Advertising, Iron Mountain and Weyerhaeuser. Hotel REITs such as Host Hotels, Park Hotels and DiamondRock carry no moat.
What wears moats down
Consolidation among wireless carriers reduces the number of potential tower tenants, data centers need ever more power and newer designs, and self-storage can be overbuilt in a hurry. Gaming REITs depend on a handful of operators paying their rent, and every REIT is sensitive to interest rates through its borrowing costs.
What the quality scores say
The wide-moat companies score between 56 and 67 on MoatScope's quality scale, and the industry averages 37, weighed down by hotel REITs.
What to watch
- Carrier network spending and new tower leases.
- Data-center demand, power availability and new supply.
- Self-storage occupancy and rents.
- Interest rates and refinancing costs.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.