Displaying items by tag: reits

The valuation gap between public and private real estate has persisted, creating potential buying opportunities for investors. REITs have generally maintained higher or comparable occupancy rates relative to private real estate across major property sectors. 

They also remain more attractively priced, with cap rates exceeding those of private real estate, suggesting better value. In the fourth quarter of 2024, public-private cap rate spreads ranged from 80 to 169 basis points, highlighting REITs' pricing advantage. 

Strong operational management and asset selection contribute to REITs' higher occupancy rates, particularly in retail and office spaces. 

Finsum: REITs continue to offer investors access to high-quality properties at compelling valuations and could provide more inflation resistance. 

Despite the ongoing challenges in the residential REIT sector, some companies are well-positioned to benefit from strong demand and strategic advantages. Equity LifeStyle Properties, for example, focuses on manufactured home communities and RV resorts in high-demand locations, benefiting from favorable demographics and constrained supply. 

Veris Residential, with a modern Class A portfolio and a tech-driven approach, is poised to capitalize on scalable growth in the Northeast market. UMH Properties, which operates manufactured home communities across several states, is likely to see continued demand, particularly due to high mortgage rates that make renting a more viable option for many. 

These REITs are leveraging technology to enhance operations and optimize revenue, allowing them to adapt to evolving market dynamics. 

Finsum: Including an influx of new rental units and increased concessions, these companies offer strong prospects for future growth.

Real estate investment trusts (REITs) offer an appealing option for investors seeking steady passive income, though dividends are never guaranteed. They are required to distribute at least 90% of rental profits as dividends, often yielding attractive returns. 

Additionally, REITs diversify risk by owning numerous properties across various sectors, including industrial, commercial, and residential, which investors might otherwise find inaccessible. 

Segro, a REIT specializing in warehouses across Europe, benefits from high demand and low supply, driving strong rental growth and a projected 4.2% yield for 2025. Grainger, the UK’s largest listed residential landlord, leverages the rental housing shortage to deliver robust earnings growth, offering a reliable 3.6% dividend yield with expectations of further increases in the coming years.

Finsum: With tenants locked into long-term contracts, rental income from REITs tends to be stable and predictable.

While nontraded real estate investment trusts (REITs) have faced another challenging year, financial advisors are seeing a rise in sales of alternative investments overall. By August, financial advisors sold $76.6 billion of illiquid alternatives, including nontraded REITs, business development companies (BDCs), interval funds, and private placements. 

This amount matches 2023's total, with projections indicating the industry will surpass $115 billion by the end of 2024. Sales of nontraded REITs have notably decreased to $4.2 billion in the first eight months, compared to their peak of over $33 billion in 2022. 

However, BDCs have overtaken REITs as the most popular alternative investment sold, with $23.7 billion in sales through August. Blackstone Inc. leads in nontraded REIT and BDC sales this year.

Finsum: There is still an elevated risk premium built into most non-treasury rates right currently but REITs could see a bounce back with that falling soon. 

Real estate has long been a cornerstone of wealth creation, but the responsibilities of being a landlord can be daunting. For those seeking passive income without the hassle, REITs like Realty Income Corp. offer an appealing alternative. 

Known as “The Monthly Dividend Company,” Realty Income has a history of reliable payouts, currently offering a 5.59% dividend yield. However, REITs do tend to fluctuate more than underlying rents.

Investors looking for more direct involvement without the landlord duties might consider platforms like Arrived, which allows fractional investments in rental properties, combining monthly income with potential property appreciation. Both options provide avenues to invest in real estate without the headaches of property management.

Finsum: As interest rates fall yield seekers might consider real estate as an option to generate income, with fluctuations in equities markets.