Specialty REITs meet all of the REIT qualifications, but they do not own properties that fit one of the traditional REIT categories. For example, specialty REITs may own movie theaters, casinos, farmland and outdoor advertising sites.
Specialty REITs cover a wide range of property types, so it’s impossible to identify universal risks for specialty REITs. For instance, a REIT that owns farmland would have a completely different risk profile than one that owns movie theaters. The risks are relative to the properties within the specialty REIT’s portfolio.
Specialty REITs have also experienced negative double-digit returns throughout most of the pandemic. These negative returns reflect an increase in expenses and a simultaneous decrease in revenues.