Real Estate Investment Trusts (REITs) have been pulverised since the Bank of England (BoE) started raising interest rates. With property valuations plummeting and debt burdens increasing, investors have been seemingly fleeing this segment of the market, sending these stocks into the gutter.

However, there are plenty of REITs caught in the panic-selling crossfire whose rental cash flows remained resilient, maintaining and even boosting dividends. So much so that I couldn’t help but capitalise on the situation and snap up some terrific bargains and tasty dividend yields.

Jump ahead to today, and these businesses continue to chug along nicely despite what their continued depressed valuations would suggest. And now that the BoE has started cutting interest rates, REITs could be primed to surge in the coming years.

So which stocks did I buy? And should I buy even more today?

Becoming a passive landlord

REITs are a marvellous vehicle for investing in real estate. While a direct investment can provide more control, using this indirect method provides a far more passive approach to generating extra income.

They also open the door to owning some more lucrative commercial real estate rather than being stuck in the more fickle residential sector. And it’s an advantage I fully capitalised on when I bought shares in Londonmetric Property (LSE:LMP), Safestore Holdings (LSE:SAFE), and Warehouse REIT (LSE:WHR).

Across these three stocks, there’s not much variation in the business model. Each owns a portfolio of real estate assets that are leased to businesses or individuals, and the rent is used to service debt and pay dividends. But the companies specialise in different areas of the market.

Londonmetric is predominantly focused on large-scale distribution centres used by retailers and e-commerce giants like Amazon and Tesco. Warehouse REIT caters more to last-mile delivery urban warehouses. And Safestore specialises in self-storage facilities across the UK and Europe.

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Debt vs dividends

Buying and developing new properties isn’t cheap, especially in the commercial sector, where the costs venture into the millions. And since their REIT status requires that 90% of net profits must be paid out as dividends, these firms, along with almost every other REIT, are reliant on external financing.

In other words, they’ve each got their own chunky pile of debt to contend with. And that’s created some fairly understandable concern in recent years. Each has seen their interest expenses rise considerably, ramping up the pressure. And Warehouse REIT, in particular, has even had to sell off some properties to shore up its balance sheet.

Yet, despite the wobbles, dividends have remained intact across the board. In fact, both Londonmetric and Safestore have continued to hike shareholder payouts. And when paired with a falling share price, it’s translated into a far more impressive rising dividend yield. That’s why I’m still tempted to add more shares to my portfolio today while they continue to trade at a discount.