Displaying items by tag: reits

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. 

Real estate investment trusts, known as REITs, are renowned for their attractive dividend yields, as they are legally obligated to distribute 90% of their post-tax earnings to shareholders. However, REITs are highly sensitive to various market factors such as interest rates, inflation, leverage, and regulatory changes, posing liquidity concerns for investors.

While dividend yield is crucial, conservative investors also consider factors like analyst ratings and liquidity when evaluating REITs. The highest-yielding REITs, according to Rick Orford, based on specific criteria, including annual dividend percentage, trading volume, number of analysts, and current analyst ratings are Vici Properties, showcasing notable revenue growth and offering a promising dividend yield of 5.71%. Starwood Property Trust, recognized as the largest commercial mortgage REIT in the US, presents a forward yield of 9.81%, notwithstanding mixed financial performance in 2023. Redwood Trust emerges as a standout contender with the highest forward yield of 11.24% and an optimistic outlook for future earnings growth, bolstered by its diversified investment portfolio.

Finsum: If interest rates have peaked REITs are poised to deliver huge returns in 2024 and 2025.

According to analysis by S&P Global Market Intelligence, U.S. equity REITs have little direct exposure to Silicon Valley Bank, which had the second-largest bank failure in U.S. history. Office REIT Cousins Properties Inc. reported Silicon Valley Bank as its ninth-largest tenant by annualized rent as of 2022 year-end at just over $8.4 million, or roughly 1.2% of the REIT's total rental portfolio. The REIT leases 204,751 square feet of office space to the bank at its Hayden Ferry property in Tempe, Arizona. Boston Properties Inc. houses Silicon Valley Bank's Seattle office in its recently acquired Madison Centre property. In addition, Paramount Group Inc. leases office space to SVB Securities LLC, an entity under the SVB Financial Group umbrella, at 1301 Avenue of the Americas in Manhattan, N.Y. Alexandria Real Estate Equities Inc. reported in a March 13th news release that it has one lease with an affiliate of Silicon Valley Bank in the Greater Boston area market totaling 32,152 rentable square feet. The lease's annual rental revenue as of Dec. 31st, 2022, was $1.7 million, or 0.08% of the REIT's total annual rental revenue.

Finsum:According to S&P Global Market Intelligence, U.S. REITs had limited exposure to Silicon Valley Bank, with some REITS reporting that SVB made up a small percentage of their rental portfolios.