Healthcare and data center REITs lead S&P 500 real estate growth rankings

Welltower Inc. (WELL) topped the S&P 500 real estate sector growth rankings, with a grade of A, according to a recent analysis of the 31 stocks in the index's real estate segment. The Toledo, Ohio-based healthcare REIT, which owns senior housing, assisted living, and medical office properties, scored highest on a composite of revenue, earnings, and cash-flow growth metrics.

Data center REITs took the next two spots. Equinix Inc. (EQIX) and Digital Realty Trust Inc. (DLR) each earned A-minus grades, reflecting the surge in demand for cloud and AI infrastructure. The three leaders all posted double-digit revenue growth over the trailing 12 months, the analysis showed.

At the bottom of the list sat office REITs and mall owners. Boston Properties Inc. (BXP) and Simon Property Group Inc. (SPG) each scored D-plus grades, the lowest in the sector. Both companies have struggled with rising vacancy rates and refinancing costs tied to higher interest rates.

The spread between the top and bottom grades was wider than in most other S&P 500 sectors, the analysis noted. That gap reflects the bifurcation within real estate itself: healthcare and data center properties benefit from structural demand shifts, while office and retail properties face secular headwinds from remote work and e-commerce.

Welltower's lead came from a combination of rent growth and occupancy gains. The company reported same-store net operating income growth of 8.2% in its most recent quarter, driven by strong demand for senior housing. Equinix and Digital Realty both cited multi-year leases with built-in escalators that protect cash flows from inflation.

The bottom-ranked REITs, by contrast, have seen net operating income shrink. Boston Properties reported a 3.1% decline in same-store NOI in its latest quarter, while Simon Property's tenant sales per square foot have flattened after years of growth.

For investors, the growth-grade rankings offer a snapshot of which property types are generating real earnings momentum and which are still absorbing the post-pandemic reset. The next quarterly earnings cycle, starting in mid-July, will show whether the leaders can sustain their pace and whether the laggards have found a floor.