Learn About Real Estate Through Investing in REITs and Publicly Traded Real Estate Companies
What is a REIT?
A REIT (pronounced REET), or Real Estate Investment Trust, is a company that owns, operates or finances income-producing real estate. Modeled after mutual funds, REITs historically have provided investors of all types regular income streams, diversification and long-term capital appreciation.
Why should you invest in REITs?
- Low correlation with other stocks and bonds
- Higher risk-adjusted returns
- An investment in real, tangible assets
- Ability to buy/sell like other stocks, mutual funds and ETFs
- Opportunities for tactical asset allocation
- Easy portfolio rebalancing
- Corporate governance aligned with shareholders interests
- Audited financial reports
- Dividends & wealth accumulation
- Regular income from rents
- Reduced portfolio volatility
- Total returns above the S&P 500 over the past 25 years
- Higher returns than corporate bonds
What are the different types of REITs?
There are two primary types of REITs: Equity REITs and Mortgage REITs. The two types give investors the opportunity to invest in either the equity financing or the debt financing of real estate.
- Invest in real estate across a wide range of property types
- Equity REITs own more than 200,000 properties in the U.S.
- 157 companies in the FTSE NAREIT Equity REIT Index
- Total market capitalization of nearly $1 trillion
- Invest in both residential and commercial mortgages
- MREITs help finance 2.5 million homes in the U.S.
- 36 MREITs in the FTSE NAREIT Mortgage REIT Index
- Total market capitalization close to $60 billion
Equity REIT Sectors
Notable REIT-Owned Properties
- Baylor Cancer CenterDallas, TXThe $154 million, 10-story, 459,717-square foot facility joint venture of Duke Realty and Milwaukee-based Northwestern Mutual Life Insurance Co. Inc., was developed on a site leased from Baylor University. The facility builds on the 35-year history of leadership in oncology that the center has become known for.
- Manzanita Hall-ACETempe, AZOn-campus living has come a long way from what many of us experienced during college, thanks in part to student housing REITs. In 2013, American Campus Communities redeveloped a 45-year old Arizona State University campus icon, Manzanita Hall, honoring the residence hall's original mid-century aesthetic value while providing modern student living accommodations. The on-campus residence, originally built in 1966, includes 241 units accommodating 816 students.
- The Empire State Building-OfficeNew York, NYThe Empire State Building is an American cultural icon. It is designed in the distinctive Art Deco style and has been named as one of the Seven Wonders of the Modern World by the American Society of Civil Engineers. The building and its street floor interior are designated landmarks of the New York City Landmarks Preservation Commission, and confirmed by the New York City Board of Estimate. It was designated as a National Historic Landmark in 1986. In 2007, it was ranked number one on the AIA's List of America's Favorite Architecture. In 2010, Empire State Realty Trust began a $550 million renovation, with $120 million spent to transform the building into a more energy efficient and eco-friendly structure. The Empire State Building is the tallest Leadership in Energy and Environmental Design (LEED)-certified building in the United States, having received a gold LEED rating in September 2011.
- theMARTChicago, ILVornado Realty Trust's theMart (formerly The Merchandise Mart) is the largest privately held commercial building in the United States. Located in the center of the sought-after River North submarket, it is a well-recognized fixture in the Chicago landscape. This unique 25-floor asset spans two city blocks and features 200,000-square-foot floors. Vornado is transforming this former showroom building into an office building that is quickly becoming home to Chicago's most creative and technologically innovative companies.
- Alexandria Technology Center-GatewaySouth San Francisco, CAIn San Francisco, Alexandria Real Estate Equities redeveloped a brownfields district of railroad yards in the Mission Bay area, turning it into a dynamic life sciences office campus. The Alexandria Center for Science and Technology – Mission Bay is designed to foster collaboration and innovation with immediate proximity to the renowned University of California, San Francisco (UCSF). The biotechnology and pharmaceutical companies that have located in the campus have created hundreds of jobs, helping to fuel the city’s knowledge-based economy. Other REITs have joined in to create a new apartment community adjacent to the campus, where many of these knowledge workers make their home.