It’s been a tumultous couple of years of real estate stocks. The pandemic caused unprecedented changes in people’s daily lives and working habits. Some categories of real estate investment trusts (REITs) benefitted from these adjustments. Sub-sectors such as data centers and industrial warehouses enjoyed a surge in demand during the pandemic period.

Many categories of real estate, however, did not fare so well. One category that has taken a great deal of heat is malls and shopping centers. The past two years have seen a tremendous move toward e-commerce instead of brick and mortar retail. Offices are another category of real estate stocks facing problems. Workers are returning to the office little by little. But telecommuting is here to stay for many roles, and still more firms are adopting hybrid work models that require less-expensive office space. Office REITs are struggling to adapt to this change.

It’s not just offices and shopping mall real estate stocks that are struggling, either. The huge rise in interest rates and change in credit market conditions are creating problems for several other REIT subsectors. Investors should be particularly careful with these seven real estate stocks.

Simon Property Group (SPG)

A niche has developed on YouTube of folks videoing old malls in various states of decline. They range from malls that are still in operation with mostly empty hallways, to completely closed and abandoned ones. People have taken to viewing these “dead mall” videos, sometimes nostalgically, to remember a time when these buildings were still centers of commerce and social activity.

Not all malls are dead malls, of course. But an increasing number are. A 2020 report suggested that 25% of America’s remaining 1,000 malls would shutter within the next 3-5 years. The collapse of formerly key department stores such as Sears and JC Penney has hastened this decline as malls are left without the anchor tenants these companies once provided.

Simon Property (NYSE:SPG) has some of the nation’s best malls. It has also been aggressive in diversifying into outlets and foreign real estate. Still, this company is fighting the inexorable decline of its core asset group. Simon made it through the pandemic in one piece, but the long-term outlook is cloudy at best. And given current inflation and the possibility of an economic slowdown, both shoppers and retailers may be in a tough spot this holiday season.

Macerich (MAC)

Macerich (NYSE:MAC) is another shopping mall REIT. The company has traditionally focused on high-end shopping malls. This trust’s focus on luxury has insulated its malls, to an extent. While the middle class mall of old anchored by JC Penney and Sears is not a viable model nowadays, high-end malls are still hanging on.

Unfortunately for real estate stocks in this space, massive capital costs are required to build and maintain its luxury malls. While business is still okay at Macerich’s properties, rents simply haven’t gone up fast enough to provide much profit. In the late 2010s, MAC stock had already plunged from $50 to $20 as investors noted the darkening outlook for the company.

The pandemic accelerated this trend; MAC stock fell to $6 in 2020 and the company’s dividend was slashed. It’s easy to blame Covid-19 for the company’s problems. But the truth is that Macerich has a ton of debt and would have had a challenging future regardless. Between the lingering effects of the past two years and now sharply higher interest rates and a weakening economic situation, Macerich shares seem destined to slump below their prior lows.

Innovative Industrial Properties (IIPR)

Innovative Industrial Properties (NASDAQ:IIPR) is a specialty REIT focused on cannabis. Specifically, Innovative Industrial buys greenhouses and cannabis cultivation properties ,and then rents them out to marijuana growers.

Originally, this was a great business model due to a specific quirk. Cannabis remains illegal on a federal level, and thus banks typically won’t lend to marijuana companies. This lack of capital can make it prohibitive for cannabis companies to finance their production facilites.

Innovative Industrial came up with the solution. It raised funds from investors and then uses those to finance the cultivation companies. At first, Innovative Industrial was the only game in town and earned massive returns on its invested capital. However, competition has surged into the arena as more REITs and specialty lenders go after the same market.

Meanwhile, some of Innovative’s tenants are running into trouble. The downside of earning 20% on your capital, after, all, is that the tenant may not be able to afford such punitive rents. Major tenant King’s Garden defaulted earlier this summer, sending IIPR stock down double digits. More tenants appear to be a on a weak financial footing. And to add to the headache, if and when marijuana is legalized nationally, banks will be able to lend to cannabis farmers directly, making Innovative’s future much less certain.

Global Net Lease (GNL)

Global Net Lease (NYSE:GNL) is a REIT focused on net lease properties in the United States, Canada, and Europe. Triple net lease is a type of real estate transaction that involves leading a building to a tenant, where the tenant covers major operating expenses.

Triple net leases are historically a solid-performing category of the REIT category. Accordingly, many investors like Global Net Lease’s business model overall. However, the firm has always struggled to achieve the same level of success as rivals such as Realty Income (NYSE:O). Thanks to this, Global Net Lease has a high cost of capital, meaning it has to pay more to get funds from investors for new properties.

This has led to Global Net Lease diluting its shareholder base considerably while offering an unusually high dividend yield. This worked out alright prior to 2020, but now the firm’s weaker balance sheet is catching up to it. The firm’s European exposure is largely in the United Kingdom. There, a fiscal crisis has sent the value of the British Pound plummeting and will impact Global Net Lease’s revenues from that market. Right now, GNL stock is yielding 14%. Investors might think that’s a great deal. But, more likely, Global Net will not be able to maintain its current payout, and thus will have to reduce its dividend.

Office Properties Trust (OPI)

Office Properties Trust (NASDAQ:OPI) is one of the smaller struggling real estate stocks which, like Global Net Lease, seems likely to cut its dividend going forward. Office Properties Trust shares currently offer an eye-popping 15% dividend yield. That might seem like a great offer for retirees and income-seeking investors.

However, Office Properties Trust gets its income from offices. It doesn’t own the top offices in a given market, either. It owns cheaper properties that historically attracted significant interest from tenants looking for a more affordable office lease.

Now, however, companies can pick whatever office they want for new leases, given the low occupancy rates across the industry. Long story short, unless you own the newest, most modern, and most glamorous offices in a market, it’s going to be rough sailing getting new tenants. Investors buying OPI stock for the 15% yield are looking at the past, when Office Properties Trust had a stable business outlook. Now, however, the company will likely have to accept much lower rates for its buildings going forward, leading to a major dividend cut.

Tanger Factory Outlets (SKT)

Tanger Factory Outlets (NYSE:SKT) is a shopping center REIT focused on outlets. The outlet center model was a great template for real estate stocks 20 years ago. Operators such as Tanger or Simon would build a major shopping destination in a tourist area or along a major highway in between two big cities. People would go to the outlet center and get bargains that weren’t available at shopping malls or in downtown shopping areas. The thinking was that outlets gave retailers an alternative venue to clear out certain kinds of products, while giving shoppers a fun and novel bargain-hunting experience.

It’s far from certain that outlets make much sense in 2022, however. The internet has made it easy to go bargain-shopping without ever leaving your home. Meanwhile, discount retailers like Ross Stores (NASDAQ:ROST) set up shop within major cities, making it possible to get the experience without having to drive to a far-away outlet center.

Tanger remains focused on its outlet business and hasn’t made serious efforts to pivot the business. Like Macerich, Tanger’s financial results were poor prior to the pandemic with the company consistently reporting flat-to-slightly-down financial results in the late 2010s. Now, things have gone from bad to worse for the REIT in the post-2020 landscape. Tanger may hang on for a little while longer, but the long-term prognosis for both Tanger and the outlet shopping experience seem grim.

Medical Properties Trust (MPW)

Medical Properties Trust (NYSE:MPW) is a REIT focused on ownership of hospitals. The firm has gone on a tremendous buying spree, acquiring hospitals left and right. Unfortunately, it has run into trouble as its largest tenant, Steward Health Care Systems, has lost $800 million in recent years. Medical Properties Trust has seemingly had to step in and lend large sums of money to Steward and its CEO directly to keep the struggling hospital system going. As Steward made up 30% of Medical Properties Trust’s revenues in 2020, any default here could be devastating.

Short sellers have been hounding MPW stock all year, and with good reason. Shares continue to slide, and the trust’s now-9% dividend yield seems increasingly tenuous.

Adding to the above point, there has been huge trading in put options on Medical Properties Trust, specifically for its October 2021 options expiry. On one day alone, last week, more than 40,000 put options changed hands. This is tremendous volume for a small and relatively under-the-radar REIT, suggesting that someone is making a big bet on bad news about a tenant or possible dividend cut in the near future.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.