iShares US Real Estate

The great American deleveraging has largely been limited to the financial sector (XLF) (IYF). Non-financial debt is still much higher than historical averages.

In this series, we’ll get down to the brass tacks of investing in the REIT sector, the market’s current landscape, and the benefits you can expect from this type of investment.

The rising interest rate is expected to boost the economy in the long run, but it could severely impact sectors like real estate.

Rising correlation across asset classes is a sticky problem that investors face while investing in today’s markets.

February US crude oil (UWT) (USL) futures contracts rose 0.5% to $61.73 per barrel on January 8. Prices are near the highest level since December 2014.

When financial intermediaries allocate funds, they assess the risks and returns that come from various risky claims. Intermediaries help allocate resources and risks throughout the economy. Financial intermediation can result in concentrated risks. The risks increase the financial system’s fragile state. These risks are called systemic risks.

By Michael Orzano, Director, Global Equity Indices Publicly traded property stocks, including real estate investment trusts (or REITs) and real estate operating companies (or REOCs), allow investors to gain exposure to real estate, which is generally an illiquid asset class, without sacrificing the liquidity benefits of listed equities. They also typically offer higher yields than […]

Pershing Square Capital Management’s top sectors in 3Q17 were consumer discretionary (XLY), information technology (XLK), consumer staples (XLP), real estate (IYR), and materials (XLB).

The CPI and PCE are both important indicators of U.S. inflation. CPI is more important from an individual perspective, while PCE is more important for monetary policy.

The rates for capital gains tax depend on the asset’s holding period. If the holding period is less than one year, short-term capital gains tax is payable.

The Bureau of Labor Statistics (or BLS) developed the U.S. CPI in 1913 to measure the change in prices.

The U.S. Bureau of Economic Analysis issues PCE data, and the price index is a measure of the average increase in prices for all domestic personal consumption.

In practice, asset owners (both retail and institutional) want to avoid significant portfolio drawdowns even if the benchmark index declines.

According to the latest report from NAR, existing home sales rose 5.6% to a seasonally adjusted annual rate of 5.81 million homes in November.

Revenue and earnings Ventas (VTR) is a major REIT in the United States and Canada. The company’s revenue growth slowed from 18% in 2015 to just 5% in 2016. The growth was driven by all of its segments, through resident fees and services, office building and other service revenue, and income from loans and investments, […]

The real estate sector’s (VNQ) (IYR) performance was subdued in 2016 due to its supply-demand dynamics.

HEDGING AGAINST INFLATION  Property stocks and REITs have often been viewed as inflation hedges because expected inflation will affect prices of real estate, and rental income tends to rise along with generalized inflation. However, other factors may mitigate the impact of inflationary forces. Some of these additional factors may include real estate supply and demand […]

COMPARING DIVIDEND YIELDS ACROSS ASSET CLASSES  Since 1999, approximately half of the total return of the Dow Jones U.S. Select REIT Index has come from dividends. During periods of heightened volatility, this income could act as a buffer and may mitigate negative price movements. Historically, the Dow Jones U.S. Select REIT Index has produced higher […]

RETURNS AND RISKS OF REITS  REIT and property stock performance has been relatively strong over the long term, especially when compared with traditional bond and equity indices. Since 1992, the Dow Jones Global Ex-U.S. Select RESI has had an average total return close to 9%, while the Dow Jones U.S. Select REIT Index has had […]

The Evolution of REITs  The basic concept of REITs originated with the business trusts that were formed in Massachusetts in the mid-19th century, when the wealth created by the industrial revolution led to a demand for real estate investment. The first REIT was set up in 1961, but it took several decades before REITs were […]

To qualify as a REIT, a company must have most of its assets and income tied to real estate investment and must pay out almost all of its taxable income to shareholders in the form of dividends. In the U.S., a REIT must meet the following four requirements. The REIT must distribute at least 90% […]

Not only do REITs (RWR)(ICF) help diversify a portfolio, but they also bolster portfolio income with their steady dividends and their long-term capital appreciation.

REITs (IYR)(VNQ) are known for their high dividend yields, outclassing almost all other broad market indices.

Not only do REITs tend to provide steady and stable returns over the long term, but they also help in diversifying investor portfolios effectively.

The REITs (IYR) sector has shown phenomenal growth over the years. In the past five decades, REITs have grown to a market cap of nearly $1 trillion.

Let’s talk about the two main types of REITs (ICF)—equity REITs and mortgage REITs.

Danaher (DHR) was the brainchild of brothers Steven and Mitchell Rales. It was incorporated as a holding company in 1984.

Post Properties’ EV-to-EBITDA ratio is in line with its historical valuation, ranging between 12.2x–25.5x, with a current EV-to-EBITDA ratio of ~21.7x.

Post Properties’ TTM price-to-FFO multiple is in line with its historical valuation at around 18.9x.

Headquartered in Atlanta, Georgia, Post Properties is structured as an REIT and completed its initial public offering in 1993.

The distribution of properties in attractive US coastal markets reflects AvalonBay Communities’ geographic diversification strategy.

Traditional valuation methods don’t apply to REITs because their operations are different from traditional companies. REITs are valued based on three main techniques.

US REITs came into existence in 1960 when President Eisenhower signed the REIT Act contained in the Cigar Excise Tax Extension.

Real estate private equity funds have been attracting unprecedented amounts of capital, with assets under management reaching an all-time high of $724 billion.

High yield bonds are becoming increasingly correlated with the S&P 500 and might increase your risk exposure instead of giving diversification benefits.

Sandell has proposed a spin-off of Brookdale’s real estate assets into an REIT. It’s a tax-free spin-off that avoids double taxation on income distribution.

According to Jeffrey Lacker, two fundamental factors contribute to GDP growth in the long term—population growth and real GDP per worker.

While calculating the GDP estimate, the Bureau first takes into account the sum of an individual’s personal consumption expenditures, that is, durable goods, non-durable goods, and services.