What is a REIT?
It has become increasingly clear over the years that an investment in income-generating real estate is a safe bet while you are building your wealth and increasing your net worth. But for many folks, making an investment in real estate, especially commercial real estate, is beyond their financial reach. For this reason, more and more people are discovering the advantages of investing in REITs or real estate investment trusts. REIT, which is sometimes referred to as ‘real estate stock’, allows for smaller investors to pool their resources together in order to invest in real estate on a large scale. Basically, REITS are real estate companies that both own and manage a portfolio of different real estate properties and mortgages. Some REITS own healthcare properties, like nursing homes or assisted living homes, while others own retail properties, shopping malls, hotels, restaurants, apartment complexes, and other types of commercial properties. When considering REITs, you can find out what type of assets the REIT holds by reading its prospectus.
All investors can buy shares in REITs that are publicly traded, and the REIT offers the advantages of real estate ownership minus the drawbacks and expenses of being the landlord or owner. But unlike actual real estate properties, the shares that are owned in a REIT can be easily and quickly liquidated or sold, and since investing in a REIT means that you are investing in a portfolio of different properties and not just a single property or building, the amount of financial risk that you face with REITs is less.
The REIT is actually a product of legislation that was introduced back in the sixties, when Congress determined that smaller investors should be given the ability to invest in larger-scale income-producing real estate. Congress went on to determine that the ideal way to make this happen was to allow the purchase of equity, thus the REIT was born.
Advantages of Investing in a REIT
There are several advantages to investing in a REIT. REITs are traded in much the same way like stocks are traded on the market. The advantages of investing in a REIT include:
• Roughly greater than six percent annual dividend yield. A company must return 90% (minimum) of its earnings to shareholders in order to be classified as a REIT for tax purposes. • Provides portfolio with diversification and helps to smooth out overall returns. This is because the REIT is not as highly correlated with the major indices in a way that many industries are. This can be especially true during periods of market downturn. • Stable and consistent income stream potential. REITs typically own tangible, hard assets like building sand land, and usually sign their tenants to lengthy lease agreements. • Ability to get “in and out” with ease. The setup of the REIT allows for entering and exiting the REIT investment without hassle. • REIT share prices can go up. The value of the REIT increases when the value of the real estate properties within the REIT increases, thus, the REITs share price can go up.
How to Select the Right REIT
Just like with stocks, bonds, and mutual funds, it is important that you have a sound investment strategy when choosing the right REIT to invest in. Making the right choice now can provide you with a healthy return each year. There are some factors to take into consideration when selecting a REIT, including:
• Potential for growth. You want to choose a company that will deliver the best total returns. Total returns are a combination of capital appreciation and dividends. If you find a company that pays a seven percent dividend, then you should look for an eight percent growth rate in what is known as the “funds from operations”, which is what the REIT earns. In the REIT’s prospectus or an analyst’s report, the funds from operations may be listed next to the acronym “FFO”. If you add the dividend to the increase in funds from operations (FFO) over the next year, you’ll arrive at the expected rate of return. • Think about demographics. Although the REIT is diversified by its sheer definition, it is also crucial that investors determine whether or not the REIT that interests them focuses on a particular type of commercial development or a particular geographic location that might cause the REIT to be vulnerable to downturns. Because of this, many people choose to invest in more than one REIT. Demographics like employment or population growth, economic activity for an industry or particular area, and other things can affect the growth of the REIT and impact the occupancy rates and rent levels of the properties in the REIT – which will affect dividends and cash flow. • Evaluate how the REIT is managed. The REIT can provide long term appreciation and current income. Examine how REIT trustees and management are compensated. Is the compensation for trustees and management based on asset value? If so, then management may be concentrating on investing in additional properties for appreciation. If, however, compensation is based on current earnings and dividends, then management may lean more towards increasing dividend yield, even at the expense of appreciation over the long term.
If you are interested in investing in real estate in order to generate income, the REIT may be the best option for you. For more information on REITs, see your financial planner.
| State | City | Company Name | Home | Group |
| AL | Birmingham | Capstone Capital Corporation | CCT | Health Care |
| AL | Birmingham | Colonial Properties Trust | CLP | Diversified |
| AZ | Phoenix | Arizona Land Income Corp. | AZL | Mortgage COM |
| AZ | Phoenix | Starwood Lodging Trust | HOT | Hotels |
| AZ | Scottsdale | Franchise Finance Corp of America | FFA | Specialty |
| CA | Beverly Hills | Arden Realty INC | ARI | Office |
| CA | Beverly Hills | G & L Realty CORP | GLR | Office |
| CA | El Segundo | Kilroy Realty Corporation | KRC | Diversified |
| CA | Escondido | Realty Income Corporation | O | Specialty |
| CA | Glendale | PS Business Parks | PSB | Self-storage |
| CA | Glendale | Public Storage INC | PSA | Self-storage |
| CA | Irvine | American Residential Investment Trust | INV | Mortgages Residential |
| CA | Lafayette | Bedford Property Investors INC | BED | Industrial |
| CA | Los Angeles | Apex Mortgage Capital | AXM | Mortgages BOTH |
| CA | Los Angeles | Health Care Property Investors INC | HCP | Healthcare |
| CA | Los Angeles | Westfield America | WEA | Retail Malls |
| CA | Manhattan Beach | Alexander Haagen Properties | ACH | Retail Mixed |
| CA | Menlo Park | Spieker Properties INC | SPK | Diversified |
| CA | Newport Beach | Irvine Apartment Communities | IAC | Apartments |
| CA | Newport Beach | Nationwide Health Properties INC | NHP | Healthcare |
| CA | Newport Beach | Pacific Gulf Properties INC | PAG | Diversified |
| CA | Newport Beach | PIMCO Commercial Securities Trust | PCM | Mortgage COM |
| CA | Oxnard | LTC Properties INC | LTC | Healthcare |
| CA | Palo Alta | Essex Property Trust INC | ESS | Apartments |
| CA | Pasadena | Alexandria Real Estate Equities | ARE | Office |
| CA | Pasadena | INMC Mortgage Holdings | NDE | Mortgages Residential |
| CA | San Clemente | Sunstone Hotel Investors INC | SSI | Hotels |
| CA | San Diego | Burnham Pacific Properties INC | BPP | Retail Centers |
| CA | San Diego | Excel Realty Trust INC | XEL | Retail Centers |
| CA | San Francisco | AMB Property Corporation | AMB | Industrial |
| CA | San Francisco | BRE Properties INC | BRE | Apartments |
| CA | San Francisco | Meridian Industrial Trust | MDN | Industrial |
| CA | San Francisco | Meridian PT 8 | MPH | Industrial |
| CA | San Francisco | Tri Net Corporate Realty Trust INC | TRI | Specialty |
| CA | San Francisco | Western Investment Real Estate Trust | WIR | Retail Centers |
| CA | San Mateo | Franklin Select Realty Trust | FSN | Diversified |
| CA | San Mateo | Glenborough Realty Trust | GLB | Diversified |
| CA | Santa Ana Heights | Impac Commercial | ICH | Mortgage COM |
| CA | Santa Ana Heights | Imperial Mortgage Holdings INC | IMH | Mortgage COM |
| CA | Santa Monica | Answorth | ANH | Mortgages Residential |
| CA | Santa Monica | Macerich Company | MAC | Retail Malls |
| CA | Santa Monica | National Golf Properties | TEE | Specialty |
| CA | Westlake Village | Angeles Mortgage Investment Trust | ANM | Mortgage COM |
| CO | Arvada | Amerivest Properties INC | AMVP | Diversified |
| CO | Aurora | Security Capital Industrial Trust | SCN | Industrial |
| CO | Denver | American Real Estate Investment Corp | REA | Apartments |
| CO | Denver | Apartment Investment and Management CO | AIV | Mortgages Residential |
| CO | Denver | Asset Investors Corp | AIC | Mobile Home Parks |
| CO | Denver | Capital Trust | CT | Mortgage COM |
| CO | Denver | Commercial Assets INC | CAX | Mortgages BOTH |
| CO | Englewood | American Health Properties | AHE | Healthcare |
| CO | Englewood | Chateau Communities INC | CPJ | Mobile Home Parks |
| CT | Greenwich | Starwood Financial Trust | APT | Mortgage COM |
| CT | Greenwich | Urstadt Biddle | UMP | Retail Centers |
| CT | Hartford | Grove Property Trust | GVE | Apartments |
| CT | Wilton | Avalon Bay Properties | AVB | Apartments |
| DC | Washington | Allied Capital REIT | ALLC | Mortgage COM |
| DC | Washington | Carremerica Realty Corp | CRE | Office |
| FL | Jacksonville | Koger Equity INC | KE | Office |
| FL | Jacksonville | Regency Realty Corporation | REG | Retail Centers |
| FL | Miami Beach | Equity One INC | EQY | Retail Centers |
| FL | Orlando | Commercial Net Lease Realty INC | NNN | Specialty |
| FL | Palm Beach | Innkeepers USA Trust | KPA | Hotels |
| FL | Palm Beach | Correctional Properties Trust | CPV | Specialty |
| FL | West Palm Beach | CV REIT INC | CVI | Mortgage COM |
| GA | Atlanta | Chastan Capital | CHAS | Mortgage COM |
| GA | Atlanta | Cousins Properties INC | CUZ | Office |
| GA | Atlanta | Gables Residential Trust | GBP | Apartments |
| GA | Atlanta | IRT Property Company | IRT | Retail Centers |
| GA | Atlanta | Jameson Inns INC | JAMS | Hotels |
| GA | Atlanta | JDN Realty Corp | JDN | Retail Centers |
| GA | Atlanta | Post Properties INC | PPS | Apartments |
| GA | Atlanta | Roberts Realty Investors | RPI | Apartments |
| GA | Atlanta | Security Capital Atlantic INC | SC | Apartments |
| GA | Atlanta | Suburban Lodges | SLAM | Hotels |
| GA | Augusta | Merry Land & Investment INC | MRY | Apartments |
| GA | Norcross | Weeks Corporation | WKS | Industrial |
| IA | Cedar Rapids | Cedar Income Fund LTD | CEDR | Office |
| IA | Cedar Rapids | USP Real Estate Investment Trust | USPTS | Retail Centers |
| IL | Chicago | Ambassador Apartments INC | AAH | Apartments |
| IL | Chicago | AMLI Residential Properties Trust | AML | Apartments |
| IL | Chicago | Banyan Strategic Realty Trust | BSRTS | Diversified |
| IL | Chicago | Centerpoint Properties | CNT | Industrial |
| IL | Chicago | Equity Office Properties | EOP | Office |
| IL | Chicago | Equity Residential Properties Trust | EQR | Apartments |
| IL | Chicago | First Industrial Realty Trust | FR | Industrial |
| IL | Chicago | General Growth Properties | GGP | Retail Malls |
| IL | Chicago | Manufactured Home Communities INC | MHC | Mobile Home Parks |
| IL | Chicago | Urban Shopping Centers | URB | Retail Malls |
| IL | Northbrook | Bradley Real Estate INC | BTR | Retail Centers |
| IL | Oak Brook | Great Lakes REIT INC | GL | Office |
| IN | Indianapolis | Century Realty Trust | CRLTS | Apartments |
| IN | Indianapolis | Duke Realty Investments INC | DRE | Diversified |
| IN | Indianapolis | Simon Debartolo Group | SPG | Retail Malls |
| KS | Westwood | Novastar Financial Inc | NFI | Mortgage |
| LA | Kenner | Sizeler Property Investors | SIZ | Diversified |
| MA | Boston | Berkshire Realty Company INC | BRI | Apartments |
| MA | Boston | Boston Properties | BXP | Office |
| MA | Boston | Cabot Industrial | CTR | Industrial |
| MA | Boston | MGI Properties | MGI | Diversified |
| MA | Needham Heights | Meditrust | MT | Healthcare |
| MA | Newton | Health & Retirement Properties Trust | HRP | Healthcare |
| MA | Newton | Hospital Properties Trust | HPT | Hotels |
| MA | Baltimore | The Town & Country Trust | TCT | Apartments |
| MA | Bethesda | First Washington Realty Trust, INC | FRW | Retail Centers |
| MA | Chevy Chase | Saul Centers INC | BFS | Retail Centers |
| MD | Columbia | Storage USA INC | SUS | Self-storage |
| MD | Kensington | Washington Real Estate INV Trust | WRE | Diversified |
| MD | Linthicum | Mid Atlantic Realty Trust | MRR | Mixed Retail |
| MD | Rockville | CRIIMI Mae Inc | CMM | MortgageCom |
| MD | Rockville | Federal Realty Investment Trust | FRT | Retail Centers |
| MD | Silver Spring | Humphrey Hospitality Trust | HUMP | Hotels |
| MD | Columbia | Rouse | RSE | Diversified |
| MI | Ann Arbor | Captec Net Lease Realty | CRRR | Specialty |
| MI | Ann Arbor | Omega Healthcare Investors INC | OHI | Healthcare |
| MI | Birmingham | Malan Realty Investors | MAL | Retail Centers |
| MI | Bloomfield Hills | Taubman Centers INC | TCO | Retail Malls |
| MI | Farmington Hills | Agree Realty CORP | ADC | Retail Centers |
| MI | Farmington Hills | Sun Communities INC | SUI | MHParks |
| MI | Jackson | Eastgroup Properties | EGP | Industrial |
| MI | Norton Shores | Horizon Group INC | HGI | Retail Outlets |
| MI | Southfield | Ramco-Gershensen Properties | RPT | Retail Mixed |
| MO | Columbia | Storage Trust Realty | SEA | Self-storage |
| MO | Kansas City | Entertainment Property Trust | EPR | Specialty |
| MO | St. Louis | Nooney Realty Trust INC | NRTI | Office |
| MS | Jackson | Parkway Properties | PKY | Office |
| NC | Cary | FACE Realty Trust | FAC | Retail Outlets |
| NC | Charlotte | Boddie-Noell Properties INC | BNP | Diversified |
| NC | Charlotte | Summit Properties INC | SMT | Apartments |
| NC | Greensboro | Tanger Factory Outlet Centers INC | SKT | Retail Outlets |
| NC | Raleigh | Highwoods Properties INC | HIW | Office |
| NC | Raleigh | Winston Hotels | WXH | Hotels |
| NC | Omaha | Mid America Realty Investments | MDI | Retail Mixed |
| NJ | Cranford | Cali Realty Corporation | CLI | Office |
| NJ | Eatontown | Monmouth Real Estate Investment Corp | MNRTA | Industrial |
| NJ | Eatontown | United Mobile Homes INC | UMH | Mobile Home Parks |
| NJ | Hackensack | First Real Estate Investment Trust of NJ | FREVS | Retail Centers |
| NJ | Roseland | Chelsea GCA Realty INC | CCG | Retail Outlets |
| NJ | Saddle Brook | Alexander’s INC | ALX | Retail Centers |
| NJ | Saddle Brook | Vornado Realty Trust | VNO | Diversified |
| NJ | Short Hills | Laser Mortgage Management INC | LMM | Mortgages Residential |
| NM | Santa Fe | Thornburg Mortgage Asset | TMA | Mortgages Residential |
| NY | Great Neck | BRT Realty Trust | BRT | Mortgage COM |
| NY | Great Neck | One Liberty Properties INC | OLP | Retail Centers |
| NY | Melville | Reckson Associates Realty Corp. | RA | Office |
| NY | New Hyde Park | Kimco Realty Corporation | KIM | Retail Centers |
| NY | New York | Annaly Mortgage | NLY | Mortgages COM |
| NY | New York | Anthracite Capital INC | AHR | Mortgages BOTH |
| NY | New York | Atlantic Realty Trust | ATLRS | Retail Centers |
| NY | New York | Clarion Commercial Holdings | CLR | Mortgages COM |
| NY | New York | Cornerstone Properties INC | CPP | Office |
| NY | New York | Hanover Capital Management | HCM | Mortgages BOTH |
| NY | New York | LaSalle Hotel Properties | LHO | Hotels |
| NY | New York | Lexington Corporate Properties INC | LXP | Specialty |
| NY | New York | National Income Realty Trust | NIRTS | Apartments |
| NY | New York | New Plan Realty Trust INC | NPR | Retail Centers |
| NY | New York | Phillips International Realty | PHR | Retail Centers |
| NY | New York | Wellsford Residential Property Trust | WRP | Apartments |
| NY | New York | SL Green | SLG | Office |
| NY | New York | Tower Realty Trust | TOW | Office |
| NY | Rochester | Home Properties of New York INC | HME | Apartments |
| NY | White Plains | Presidential Realty Corp. | PDLA | Diversified |
| NY | Williamsville | Sovran Self-Storage INC | SSS | Self-storage |
| OH | Cleveland | Boykin Lodging Co | BOY | Hotels |
| OH | Cleveland | First Union Real Estate Investments | FUR | Diversified |
| OH | Cleveland | Realty Refund Trust | RRF | Mortgage BOTH |
| OH | Columbus | Glimcher Realty Trust | GRT | Retail Mixed |
| OH | Columbus | Lexford Residential Trust | LFT | Apartments |
| OH | Moreland Hills | Developers Diversified Realty Co | DDR | Retail Centers |
| OH | Richmond Heights | Associated Estates Realty Corp | AEC | Apartments |
| OH | Toledo | Health Care REIT INC | HCN | Healthcare |
| OR | Portland | Wilshire | WREI | Mortgage COM |
| PA | Conshohocken | Kranzco Realty Trust | KRT | Retail Centers |
| PA | Fort Washington | Pennsylvania REIT | PEI | Apartments |
| PA | Johnstown | Crown American Realty Trust | CWN | Retail Malls |
| PA | Kennett Square | Elder Trust | ETT | Healthcare |
| PA | Kingston | Mark Centers Trust | MCT | Retail Centers |
| PA | Malvern | Liberty Property Trust | LRY | Diversified |
| PA | Newtown Square | Brandywine Realty Trust | BDN | Office |
| PA | Philadelphia | Corporate Office Properties | OFC | Office |
| PA | Philadelphia | Resource Asset Management | RAS | Mortgage COM |
| PA | West Conshohoken | Arbor Property Trust | ABR | Retail Mixed |
| PA | King of Prussia | Universal Health Realty Income Trust | UHT | Healthcare |
| SC | Charleston | Golf Trust of America | GTA | Specialty |
| TN | Chattanooga | CBL & Associates Properties INC | CBL | Retail Mixed |
| TN | Memphis | Equity Inns INC | ENN | Hotels |
| TN | Memphis | Mid America Apartment Communities | MAA | Apartments |
| TN | Memphis | RFS HotelInvestors | RFS | Hotels |
| TN | Memphis | Timberland Growth Corp | TGC | Specialty |
| TN | Murfreesboro | National Health Investors INC | NHI | Healthcare |
| TN | Murfreesboro | National Health Realty | NHR | Healthcare |
| TN | Nashville | CCA Prison Realty Trust | PZN | Specialty |
| TN | Nashville | Healthcare Realty Trust | HR | Healthcare |
| TX | Dallas | AMRESCO | AMMB | Mortgage COM |
| TX | Dallas | Capstead Mortgage Corp | CMO | Mortgage COM |
| TX | Dallas | Continental Mortgage & Equity Trust | CMETS | Diversified |
| TX | Dallas | Host Funding INC | HFD | Hotels |
| TX | Dallas | Income Opportunity Realty Trust | IOT | Diversified |
| TX | Dallas | Patriot American Hospitality | PAH | Hotels |
| TX | Dallas | PMC Commercial Trust | PCC | Mortgage COM |
| TX | Dallas | Prentiss Properties Trust | PP | Diversified |
| TX | Dallas | Tarragon Realty | VIPT | Apartments |
| TX | Dallas | Transcontinental Realty Investors INC | TCI | Diversified |
| TX | Dallas | U.S. Restaurant Properties | USV | Specialty |
| TX | Dallas | Walden Residential Properties INC | WDN | Apartments |
| TX | El Paso | Security Capital Pacific Trust | PTR | Apartments |
| TX | Fort Worth | Crescent Real Estate Equities | CEI | Diversified |
| TX | Houston | Camden Property Trust | CPT | Apartments |
| TX | Houston | United Investors Realty | UIRT | Retail Centers |
| TX | Houston | Weingarten Realty Investors | WRI | Retail Centers |
| TX | Irving | American General Hospitality Corp | AGT | Hotels |
| TX | Irving | American Industrial Properties | IND | Industrial |
| TX | Irving | Felcor Suite Hotels INC | FCH | Hotels |
| UT | Salt Lake City | JP Realty INC | JPR | Retail Mixed |
| VA | McLean | Capital Automotive Realty | CARS | Specialty |
| VA | Arlington | Charles E. Smith Residential Realty | SRW | Apartments |
| VA | Arlington | Mills Corp | MLS | Retail Mixed |
| VA | Richmond | Cornerstone Realty Income Trust | TCR | Apartments |
| VA | Richmond | United Dominion Realty Trust | UDR | Apartments |
| VA | Glen Allen | Dynex Capital | DX | Mortgage BOTH |
| WA | Seattle | Shurgard Storage Centers | SHU | Self-storage |
| WI | Brookfield | Wellington Properties Trust | WLPT | Apartments |
| WV | Charleston | Pittsburgh & WV Railroad | PW | Specialty |
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| Tags: company, dividend, estate, growth, investment, percent, portfolio, REIT, value, way | ||
| Posted in Investing, Personal Finance, Real Estate, Strategies |
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