Darrell Crate, CEO of Easterly Government Properties Inc. (NYSE:DEA) that commercial REITs focused on government-leased buildings could be one of the most attractive safe-haven investments for investors right now.

Speaking on CNBC's Fast Money on Wednesday, Crate highlighted that commercial REITs have outperformed the broader market by roughly 9% this year, even as residential housing faces challenges from rising mortgage rates.

Built For Durability

“We built this portfolio for durability,” Crate said. Easterly’s holdings concentrate on federal agency field offices, buildings leased to the FBI, Drug Enforcement Administration, and Veterans Administration, rather than Washington D.C. headquarters properties, which are increasingly affected by remote work trends.

DOGE Fears Overblown

Crate dismissed concerns that DOGE-related budget pressures would trigger lease cancellations. “These leases say United States of America on them,” he noted, comparing their credit backing to that of U.S. currency. Not one Easterly lease was cancelled during the DOGE review period.

The company’s portfolio averages 16 years in age against a typical 40-year government building lifespan, providing consistent cash flow backed by an 8% dividend yield.

Crate sees modest interest rate relief as the key trigger. A small decline, he argues, could drive a significant rotation into commercial real estate, particularly long-lease, government-backed assets with high credit tenancy.

Housing Market Under Severe Strain

Meanwhile, residential housing continues to struggle. Mortgage applications fell 10.4% in the week ending late March, according to the Mortgage Bankers Association (MBA). The average 30-year fixed mortgage rate climbed to 6.57%, its highest since August.

RH (NYSE:RH) CEO Gary Friedman called it “the most dire housing market in decades,” citing tariffs and global uncertainty after the company missed earnings estimates.

The Organization for Economic Co-operation and Development (OECD) projects U.S. inflation at 4.2% in 2026, keeping Federal Reserve rate cuts off the table through 2027.

Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.

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