Complete Guide To Investment Companies, Funds And REITs

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Real Estate Investment Trusts (REITs) - Hybrid And Retail REITs

Hybrid REITs
Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

Retail REITs
Approximately 24% of REIT investments are in shopping malls and freestanding retail. This represents the single biggest investment by type in America. Whatever shopping center you frequent, it's likely owned by an REIT. When considering an investment in retail real estate, one first needs to examine the retail industry itself. Is it financially healthy at present and what is the outlook for the future?

It's important to remember that retail REITs make money from the rent they charge tenants. If retailers are experiencing cash flow problems due to poor sales, it's possible they could delay or even default on those monthly payments, eventually being forced into bankruptcy. At that point, a new tenant needs to be found, which is never easy. Therefore, it's crucial that you invest in REITs with the strongest anchor tenants possible. These include grocery and home improvement stores.

Once you've made your industry assessment, your focus should turn to the REITs themselves. Like any investment, it's important that they have good profits, strong balance sheets and as little debt as possible, especially the short-term kind. In a poor economy, retail REITs with significant cash positions will be presented with opportunities to buy good real estate at distressed prices. The best-run companies will take advantage of this.

Residential, Healthcare And Office REITs


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RELATED TERMS
  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. REIT ETF

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  3. Captive Real Estate Investment ...

    A real estate investment trust (REIT) that is controlled by a ...
  4. Non-Traded REIT

    A form of real estate investment method that is designed to reduce ...
  5. Funds Available For Distribution ...

    An informal measure of the amount of capital that is on hand ...
  6. Finite-Life REIT - FREIT

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    A real estate fund invests in securities offered by public real estate properties directly or indirectly through Real Estate ... Read Answer >>
  3. What are the potential pitfalls of owning REITs?

    Learn about pitfalls to investing in REITs, such as investors having to pay income tax, the REIT having to pay property tax ... Read Answer >>
  4. What is the difference between an Equity REIT and a Mortgage REIT?

    Find out more about real estate investment trusts and the main differences between equity and mortgage real estate investment ... Read Answer >>
  5. Can mutual funds invest in REITs?

    Learn about mutual funds that invest in real estate investment trusts and have their shares traded on major U.S. stock exchanges ... Read Answer >>
  6. Is NAV the best way to assess the value of an REIT?

    Examine and understand the usefulness of net asset value as an accurate metric with which to assess the value of a REIT investment. Read Answer >>

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