In this third article in our series on real estate investing, we examine real estate crowdfunding and how it compares to REIT investing. Both are passive investments that allow you to earn rental income and/or capital gains without direct involvement in property management. Although their goals are similar, they have distinctly different characteristics and risk profiles. Introduction to Real ... [Read More]
REITs vs Direct Investing in Real Estate
This is the second article in our series about ways to invest in real estate. In the overview article, we described nine different options for real estate investors. Direct investing in real estate—real property—is the gold standard. Adding real property to your investment portfolio provides a source of income and capital gains separate from more conventional assets like stocks, bonds, mutual ... [Read More]
Weyerhaeuser Timber REIT
Overview Weyerhaeuser Company (NYSE: WY) began operations in 1900. It is an equity timber REIT and one of the world’s main private owners of timberland. As of February 2019, Weyerhaeuser was the 15th largest REIT in the FTSE Nareit All REITs Index with a market capitalization above $19 billion. Weyerhaeuser manages its timberlands on a sustainable basis, with an eye toward maximizing their ... [Read More]
The Nine Ways to Invest in Real Estate
Sensible investors know that portfolios benefit from holding a wide variety of asset types because diversification lowers risk. Many experts believe that portfolios should hold up to 20% of their assets in real estate—distinct from ownership of your own home. That begs the question — how should you invest in real estate? In this overview, we’ll describe your options for real estate investing. ... [Read More]
REIT Net Asset Value
One of the most important questions facing prospective REIT investors is whether the units are fairly priced. REITs present special challenges in this regard compared to regular corporations. That’s because REITs are essentially a collection of real estate properties that throw off rental income, making them closer to bond mutual funds than to stock funds. But bond values are easy to determine – ... [Read More]
REIT Leverage Metrics
The extent to which a REIT uses debt efficiently is a key factor when investors analyze risk/reward tradeoffs. Debt used wisely increases returns and helps boost growth. Underutilize debt and a REIT will fail to maximize its returns and growth potential. Overutilize debt and a REIT risks a reduced credit rating, thereby increasing the cost of capital and the risk insolvency. In this article, we’ll ... [Read More]
Free Cash Flow and Enterprise Value
We previously wrote about a very important pair of REIT metrics, funds from operations (FFO) and adjusted funds from operations (AFFO). REITs report AFFO as a measure of cash available for dividends to unitholders. The definitions of these two measures are: FFO = Net Income + Depreciation + Amortization + Gains/Losses on Property SalesAFFO = FFO – Recurring Capital Expenditures, ... [Read More]
American Tower REIT
Most investors are unaware of the vast real estate holdings that are required for modern telecommunications infrastructure Overview American Tower (AMT) is the biggest American REIT. This infrastructure REIT specializes in the ownership and operation of telecommunications towers and other structures that it rents out to telecom companies and broadcasters. It has worldwide visibility in ... [Read More]
Public Storage REIT
Overview Public Storage (PSA) is one of America’s largest REITs, a far cry from its first self-storage facility built in 1972. Principally, PSA acquires, develops, owns and operates self-storage facilities and is headquartered in Glendale CA. The company owns and operates thousands of facilities throughout the United States and Europe, occupying more than 142M sq. ft. of net rentable real estate. ... [Read More]
Simon Property Group REIT
Overview Simon Property Group (NYSE: SPG) is America’s largest retail REIT and shopping mall operation, it owns, develops and manages premier shopping, entertainment, dining, and mixed-use destinations, specializing in upscale properties of five types: Premium Outlet centers Regional malls The Mills Community/lifestyle centers International properties SPG owns five out of the 10 most ... [Read More]