US REITs Screener: Finding Value in Real Estate Investment Trusts

US REITs are a far larger, more structurally standardised, and sector-diverse market than their European counterparts — a single, well-defined legal structure (REIT status under the Internal Revenue Code) instead of the patchwork of national structures (UK REIT, French SIIC, German G-REIT) covered in the European REITs guide. That standardisation makes cross-company comparison easier, but the sector composition — dominated by data centers, industrial, and specialised property types largely absent from European listed real estate — means the screening playbook needs its own treatment.

Last updated: July 2026.

Why standard equity metrics mislead for REITs

The lesson carries over directly from European REIT screening: P/E ratio is close to useless for real estate companies, because depreciation — a real cash-flow-irrelevant, mechanical accounting charge on long-lived property assets — distorts reported net income in a way that doesn't reflect the underlying cash economics of the business.

The metrics that actually matter for US REITs:

1. Funds From Operations (FFO) and FFO per share

FFO = Net Income + Depreciation & Amortisation − Gains on Property Sales

FFO adds back the non-cash depreciation charge that distorts REIT net income, and removes one-off property sale gains that don't reflect ongoing operating performance. It's the standard REIT industry earnings measure — used in place of EPS for valuation multiples (Price/FFO instead of P/E) and payout ratio calculations.

Adjusted FFO (AFFO) goes a step further, subtracting recurring capital expenditures needed to maintain the properties — a closer approximation of true distributable cash flow.

2. Price-to-NAV

Same logic as the European guide: NAV estimates the appraised value of the property portfolio net of liabilities, and Price/NAV shows whether the market is pricing the REIT above or below independent asset value. US REIT NAV estimates are typically published by sell-side analysts covering the sector rather than by the companies themselves (unlike some European jurisdictions where formal NAV reporting is a regulatory requirement).

3. Leverage: Debt/EBITDA and Loan-to-Value (LTV)

REITs are structurally leveraged businesses by design — real estate is financed with meaningful debt as a matter of course, unlike most operating companies where the same leverage would be a red flag (see Debt-to-EBITDA screening for the general leverage framework). For REITs specifically, Net Debt/EBITDA in the 5–7x range is often normal rather than alarming, and Loan-to-Value (total debt ÷ property value) is the more real-estate-specific leverage metric.

4. Dividend yield and the REIT payout requirement

US REITs must distribute at least 90% of taxable income to shareholders to maintain REIT tax status — a structural feature that produces the sector's characteristically high dividend yields, but also means REITs retain little capital internally and rely on debt and equity markets to fund growth and acquisitions.

US REIT sectors and what makes each distinct

This sector diversity has no close European equivalent — data center and self-storage REITs in particular are a far larger, more mature category in the US than in European listed real estate, where office, retail, and residential dominate.

Building a US REIT screen

Value screen (discount to NAV):

• Price/NAV < 0.85
• AFFO payout ratio < 90% (dividend is well-covered by cash flow)
• Net Debt/EBITDA < 7.0x
• Sort by: Price/NAV ascending

Quality income screen:

• Dividend yield > 4%
• AFFO payout ratio < 85%
• Occupancy > 90% (where disclosed)
• Sort by: dividend yield descending, filtered by payout coverage

Growth-oriented REIT screen (data center, industrial):

• Sector: data centers or industrial/logistics
• FFO growth (YoY) > 8%
• Net Debt/EBITDA < 6.0x
• Sort by: FFO growth descending

Common mistakes when screening US REITs

Using P/E instead of Price/FFO: REIT net income is distorted by mechanical depreciation charges on long-lived property assets. Price/FFO or Price/AFFO is the sector-appropriate multiple.

Applying general-corporate leverage thresholds: A Net Debt/EBITDA of 6x would be a red flag for an industrial company (see Debt-to-EBITDA screening) but is fairly normal for a REIT, given real estate's structurally higher and more asset-backed leverage capacity. Compare REIT leverage against REIT sector norms, not general corporate benchmarks.

Treating all REIT sectors as one category: An office REIT and a data center REIT face entirely different demand drivers, occupancy dynamics, and growth outlooks. A blanket "REITs are cheap" or "REITs are expensive" view ignores this dispersion.

Ignoring the payout ratio relative to AFFO, not FFO: A dividend that looks well-covered against FFO can be poorly covered against AFFO once recurring maintenance capex is subtracted — the more conservative and more accurate coverage check.

Bottom line

US REITs require the same core adjustment as European listed real estate — FFO/AFFO instead of net income, NAV-based valuation instead of P/E, and sector-appropriate leverage benchmarks — applied to a market that's larger, more standardised in its legal structure, and considerably more diverse in property type than European real estate. Screening by Price/NAV, FFO growth, and payout coverage, with leverage benchmarked against REIT sector norms rather than general corporate standards, is the right starting framework across both markets.

Frequently asked questions

What is FFO and why does it matter for REIT screening?

Funds From Operations adds back depreciation and removes property sale gains from net income, producing a cash-flow-based earnings measure appropriate for real estate companies, where mechanical depreciation charges distort standard net income and P/E comparisons. Price/FFO is the REIT-sector equivalent of P/E.

Is high leverage a red flag for REITs?

Not automatically. REITs are structurally leveraged by design, and leverage levels that would be concerning for a general operating company are often normal for real estate. Compare a REIT's Net Debt/EBITDA or loan-to-value against sector peers rather than general corporate leverage benchmarks.

How do US REITs differ from European listed real estate?

US REITs operate under a single, standardised federal tax structure (REIT status under the Internal Revenue Code) rather than the patchwork of national structures found in Europe (UK REIT, French SIIC, German G-REIT). The US market is also considerably larger and more diverse by property sector, with mature categories like data centers and self-storage that have limited European equivalents.

What dividend yield is typical for US REITs?

REITs must distribute at least 90% of taxable income to maintain their tax status, producing structurally higher dividend yields than the broader equity market. Typical yields vary meaningfully by sector — necessity-driven and net-lease REITs often yield more than growth-oriented data center or industrial REITs reinvesting more heavily in expansion.

Screen US REITs by FFO, leverage, and dividend yield → — free, no account required. Filter real estate stocks across US, Canadian, and European markets.