As the first half of 2023 comes to an end, it’s been a clearly challenging time for stocks, and real estate investment trusts (REITs) in particular, with Federal Reserve rate hikes and hints of recession to come. More than half of all REITs have had negative total returns so far.

But some REITs have done quite well as earnings have improved or analysts have raised their positions. Acquisitions have played a part as well in some of the best performances. Take a look at the best REITs over the first half of 2023. Although the top two are mortgage REITs (mREITs), the rest are spread across a broad base of subsectors:

Angel Oak Mortgage REIT Inc. (NYSE:AOMR) is an Atlanta-based mREIT that specializes in offering wholesale nonqualified mortgage loans for borrowers who don’t fit traditional lending guidelines.

Following a terrible 2022 in which Angel Oak Mortgage had a total return (including dividends) of negative 61.9%, Angel Oak turned it around to lead all REITs so far in 2023 with a 64.35% total return. About two-thirds of that return occurred in January when mREITs and other financial services companies bounced higher from extremely oversold levels.

Angel Oak’s performance has been surprising, considering its first-quarter earnings of negative $0.37 was $0.57 below analysts’ expectations and far below its first-quarter 2022 results. This was also the second consecutive quarter of 2023 in which Angel Oak missed the estimates.

Despite this, analysts have been looking for a rebound in mREITs. On May 8, Wells Fargo analyst Donald Fandetti maintained his Overweight position on Angel Oak and raised the price target from $8 to $9.

Another boost for Angel Oak shares came in early April when it announced the appointment of Manmohan “Manu” Singh as group chief financial officer, succeeding Tracy Jackson, who retired after 12 years with Angel Oak Mortgage REIT.

Arlington Asset Investment Corp. (NYSE:AAIC) is a McLean, Virginia-based mREIT that focuses on investing in mortgage-related assets and residential real estate. It allocates capital between agency mortgage-backed securities, mortgage servicing right-related assets, credit investments and single-family residential properties.

On May 30, Arlington Asset Investment agreed to a merger with Ellington Financial Inc. (NYSE:EFC), which made Arlington’s shares soar from $2.75 to $4.06 in one day. But Arlington has climbed another 11% since then.

Arlington Asset’s total return is the second highest among REITs in 2023 at 53.2%.

Life Storage Inc. (NYSE:LSI) is a Buffalo, New York-based self-storage REIT with 1,200 facilities encompassing 68 million square feet across 37 states and Washington, D.C.

After turning down an offer to be acquired by Public Storage (NYSE:PSA) in February, Life Storage agreed to a superior offer from Extra Space Storage Inc. (NYSE:EXR) in early April.

In May, Life Storage reported quarterly funds from operations (FFO) that were 6.94% higher than FFO in the first quarter of 2022 and revenue that beat the first-quarter 2022 number by 17.18%.

Life Storage has a total 2023 return of 38.75%.

EPR Properties (NYSE:EPR) is a Kansas City, Missouri-based diversified experiential REIT that owns and operates 363 movie theater chains, amusement parks, ski resorts, fitness centers and other recreational venues across 44 states.

EPR Properties has a total year-to-date return of 29.32%.

Tanger Factory Outlet Centers Inc. (NYSE:SKT) is a Greensboro, North Carolina-based retail REIT that owns 37 indoor shopping centers and outdoor factory outlet malls with 14 million square feet and over 2,700 stores across 20 states and Canada.

In April, Tanger Factory Outlet Centers raised its quarterly dividend by 11.3% from $0.22 to $0.245 per share. Two weeks later, Tanger reported first-quarter FFO and revenue that beat the Street estimates and raised its guidance for full-year FFO.

Tanger has performed quite well in 2023 with a 243.07% return.

Welltower Inc. (NYSE:WELL) is a healthcare REIT with 2,008 healthcare properties in the U.S., Canada and the U.K. The properties are a mix of senior housing, medical offices and skilled nursing or post-acute care sectors.

On June 6, Welltower announced it was raising its 2023 Normalized FFO guidance from $3.39-$3.54 to $3.43-$3.56. Despite this, on June 23, Raymond James analyst Jonathan Hughes downgraded Welltower from Strong Buy to Outperform, yet raised his price target from $82 to $90.

Welltower’s total return so far in 2023 is 21.1%.

Plymouth Industrial’s total occupancy at the end of 2022 was 99%, and its rent collection was 99.7%, both outstanding numbers. It’s had some positive developments this year:

In February, Plymouth Industrial hiked its dividend from $0.22 to $0.225 per share. In April, Plymouth announced it was raising its first-quarter rental rates by 15.9%. In May, Plymouth reported FFO of $0.45 that beat estimates by a penny, while revenue of $49.4 million beat the Street view by $1.84 million and was 15.4% better than revenue of $43.81 million in the first quarter of 2022.

Over the first half of the year, Plymouth Industrial REIT has had a total return of 21.03%.

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