I
nvestors often gravitate toward real‑estate holdings for their inherent stability, especially when REITs lock tenants into long‑term leases that include inflation‑linked rent adjustments. Those arrangements deliver predictable cash flows and clear revenue streams.

    A recent illustration of the sector’s volatility is Fermi Inc. (FRMI), a data‑center REIT that just went public. The company positions itself as an AI infrastructure provider, a tempting narrative, yet its fundamentals raise questions. Morningstar notes that Fermi pays no dividend—a rarity among REITs. Analyst George Metrou pointed out that the firm also lacks tenants, revenue, and physical assets; it merely holds the right to construct an 11‑gigawatt data‑center complex in Texas. The project is being built on speculation, with no tenant commitments, so investors are left wondering what value a shell company can command.

    The stock has already fallen more than 27 % in the last five days, and short‑sellers appear eager to capitalize on the uncertainty. These are scenarios that REIT’s traditional focus on reliability helps investors sidestep.

    A counterexample is Gaming and Leisure Properties (GLPI), a publicly traded U.S. casino landlord and a component of the REIT portfolio. GLPI owns relatively little property in Las Vegas but has built a reputation for acquiring and financing assets that strengthen its balance sheet and reward shareholders. Citizens analyst Mitch Germain attributes GLPI’s recent deal activity to its solid tenant relationships, deep industry experience, and willingness to structure creative transactions that support growth. The company’s emphasis on a low‑leveraged balance sheet and ample liquidity has further enabled this activity.

    For additional insights, visit the ETF Building Blocks Content Hub. Earn free CE credits and explore new strategies.