Читать книгу The Intelligent REIT Investor Guide - Brad Thomas - Страница 10

“The true investor … will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of his companies.”

—Benjamin Graham

What's your idea of a perfect investment?

That's a trick question, for the record, since there is no such thing. Greater returns come with greater risk, while lesser risk comes with lower returns. You're just not going to find a stock that offers intense gains and intense safety at the same time.

Even so, those looking for above‐average current returns, reasonably strong long‐term price appreciation, and only modest risk should definitely consider commercial real estate that can generate reliable streams of rental income.

In the past, real estate investing was only available to wealthy entrepreneurs with deep pockets and the ability to acquire and actively manage portfolios of properties. Real estate investment trusts, or REITs (pronounced “reets”), were born out of that environment with the intent to allow small investors the same kinds of benefits.

Congress officially recognized REITs in 1960, patterning them after mutual fund laws. In the beginning, they were severely restricted, mostly meant to just provide investors with a non‐taxed, passive flow‐through form of income. The REIT vehicle received a dividend‐paid deduction from corporate tax for every dollar distributed. And income was taxed only at the shareholder level instead of being double‐taxed like most corporations.

They've since evolved into a highly attractive overall package that's very much worth considering: an uncomplicated way to buy and own real estate run by experienced professionals who give you some of the profits anyway. REITs offer access to reaping income from major office buildings, shopping malls, hotels, and apartment buildings. In fact, they work with just about any kind of commercial real property you can think of. Better yet, this all comes in an easily traded common stock like Apple or Amazon.

Perhaps best yet, they do all this while giving you the steady and predictable cash flows that come from owning and leasing real estate – and on a much larger scale than a mere individual can handle. Essentially, REITs put their corporate‐strength access to public equity and debt capital into acquiring and building additional properties to grow their businesses. Combined, these features can add stability to their investors’ portfolios.

Real estate as an asset class has long been perceived as an inflation hedge that, during most market periods, enjoys fairly low correlation with the performance of other categories.

As mentioned in the introduction, REITs have been around for 60 years now, though it's only been in the past 30 that they've become widely known. That's true because of several pivotal moments in their evolution, some of which were out‐and‐out crises at the time. We'll discuss those in more detail in Chapter 3, but suffice it to say for now that REITs evolved in very positive ways as a direct result of those experiences.

From the end of 1992 through the end of 2019, the size of the REIT industry has increased by more than 75 times, rising from a market cap just under $16 billion to almost $1.33 trillion. Since that's only about 10–15% of all institutionally owned commercial real estate, this extremely attractive sector is filled with vertically integrated operating companies that still have plenty of room to grow.