Around 25% of my self-invested personal pension (SIPP) is invested in property investment trusts (REITs). While each of my roles in this sector is diversified into different parts of the value chain, this concentration was driven by passive income opportunities too good to resist.

Higher interest rates worsened sentiment across the sector. However, this does not stop the growth of all REITs. And now, with interest rates steadily falling, 2026 could be the year REITs come back.

At least that’s what some institutional investors are signaling in their latest Buy recommendations. And among them are:

• LondonMetric property (LSE:LMP) – yield 6.6%.
• secret (LSE:SGRO) – yield 4.2%.

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1. Diversified logistics and healthcare

LondonMetric is a business I have been running in my SIPP since 2023 and is generating increasingly higher passive income. While the company has long specialized in prime-location warehouses for e-commerce giants, its recent acquisitions have diversified its real estate portfolio into other sectors such as healthcare and entertainment properties.

The group currently boasts an industry-leading occupancy rate of 98.1% with an average lease term of 16.4 years. Moreover, only about 8% of leases are scheduled for renewal over the next three years, signaling continued steady and predictable cash flows that fund ever-increasing shareholder payouts.

There are of course risks.

In the latest Autumn Budget, the Government announced higher business rates for larger properties such as those in the LondonMetric portfolio. While it is ultimately up to tenants to pay this bill, it could put pressure on their margins, indirectly slowing demand for LondonMetric and increasing the risk of possible contract non-renewal.

However, given that most tenants are corporate clients with solid finances, I believe it is worth taking the risk. That’s why I recently added to my current position.

2. Investing in European data centers

Like LondonMetric, Segro also manages a broad portfolio of substantial box warehouses and urban logistics hubs. However, recently, management has been investing in data centers to take advantage of the rise of artificial intelligence (AI).

As of June 2025, only about 8% of its real estate portfolio is comprised of data centers. However, there are many projects in the pipeline that could change quickly. Meanwhile, cash continues to flow into shareholders’ pockets and occupancy remains forceful at 94.3%, allowing it to fund continued dividend increases for almost eight years.

While Segro is exposed to the same interest rate risk in the UK, its diversification into Europe mitigates this impact, making its profitability look safer. However, it remains vulnerable to a potential slowdown in logistics demand as well as emerging competition in the data center space.

Its average lease term is also shorter than LondonMetric at 8.2 years. This isn’t entirely surprising, however, given that lease terms in Europe are typically much shorter than in the UK. Regardless, it is quite long-term and provides sufficient long-term cash flow visibility.

That’s why I’m taking a closer look at this REIT to potentially be alongside LondonMetric in my SIPP. But the opportunities in this sector do not end there…