Investing in REITs Real Estate Investment Trusts

by Block, Ralph L.

• ISBN13: 9781118004456
• ISBN10: 1118004450
• Edition: 4th
• Format: Hardcover
• Copyright: 2011-10-11
• Publisher: Bloomberg Press

Summary

The consistency of REITs' earnings and their high dividend yields, together with the low correlation of REIT stock prices with prices of other asset classes, make real estate investment trusts a unique opportunity for investors. Drawing on more than thirty years of successful investing experience with REITs, Ralph L. Block has created the ultimate REIT guide. This fully updated fourth edition explains the ins and outs of this attractive asset class for investors, as well as financial planners and investment advisers, to find what they need to know. The new edition covers the changes in the real estate market and how the volatility of commercial real estate prices can affect REITs. This new edition offers the following: How to spot blue-chip REITs and control investment risk How REITs compare with other investments How to build a diversified REIT portfolio, directly or with REIT mutual funds Understanding the risk-and-reward dynamics of commercial real estate How to invest in non-US REITs Important new developments and strategies in the REIT industry

Author Biography

Ralph L. Block, has been an active participant in the REIT industry for four decades, as an individual investor, investment advisor, professional money manager, author, publisher, and consultant. Mr. Block is currently the owner and proprietor of Essential REIT Publishing Co. For his many contributions to the REIT industry, Block received the 2004 Industry Achievement Award from the National Association of Real Estate Investment Trusts (NAREIT).

Table of Contents

Introduction	p. xi
Acknowledgments	p. xv
Meet the REIT
REITs: What They Are and How They Work	p. 3
Types of REITs	p. 5
General Investment Characteristics	p. 6
Higher Current Returns	p. 11
Summary	p. 17
REITs versus Competitive Investments	p. 19
Bonds	p. 20
Convertible Bonds	p. 22
Preferred Stocks	p. 23
Other High-Yielding Equities	p. 24
Other Real Estate Investment Vehicles	p. 26
Summary	p. 31
Today's REITs	p. 33
The First REIT	p. 33
The Tax Reform Act of 1986	p. 34
UPREITs and DownREITs	p. 35
REIT Modernization Act and RIDEA	p. 37
Lending REITs versus Ownership REITs	p. 39
Expansion of REIT Property Sector Offerings	p. 40
Summary	p. 41
Property Sectors and Their Cycles	p. 43
Ups and Downs	p. 45
Property Sectors	p. 49
Summary	p. 87
History and Mythology
REITs: Mysteries and Myths	p. 91
Changing Attitudes toward REITs	p. 91
Myths about REITs	p. 97
Summary	p. 108
A History of REITs and REIT Performance	p. 109
The 1960s: Infancy	p. 109
The 1970s: Adolescence and Turbulence	p. 111
The 1980s: Overbuilding-The Troll Under the Bridge	p. 113
The 1990s: The Modern REIT Era-Plus More Growing Pains	p. 115
2000 to 2007: Credibility and Market Acceptance	p. 124
2007 through 2010: REITs Survive the Great Recession	p. 127
Recent Trends	p. 134
Summary	p. 139
Investing Intelligently in REITs
REITs: Growth and Value Creation	p. 143
The Significance of FFO and AFFO	p. 144
The Dynamics of FFO/AFFO Growth	p. 149
Internal Growth	p. 152
How to Build Internal Growth into a Lease	p. 157
Other Ways to Generate Internal Growth and to Create Shareholder Value	p. 158
External Growth	p. 163
More External Growth Avenues	p. 172
Summary	p. 173
Searching for Blue Chips	p. 175
Investment Styles	p. 175
Growth REITs	p. 176
Value or "Turnaround" REITs	p. 178
Bond-Proxy REITs	p. 179
The Virtues of Blue-Chip REITs	p. 180
The Importance of Allocating Capital Wisely	p. 190
Summary	p. 212
The Quest for Investment Value	p. 215
The Investor's Dilemma: Buy-and-Hold versus Trading	p. 215
The Buy-and-Hold Strategy	p. 217
REIT Stock Valuation	p. 218
Valuing REITs as a Group	p. 231
Summary	p. 237
Building a REIT Portfolio	p. 239
How Much of a Good Thing Do You Want?	p. 239
Diversification among REITs	p. 245
Toward a Well-Balanced Portfolio	p. 248
How to Get Started	p. 251
Summary	p. 259
Investing in Global REITs and Property Companies	p. 261
How the U.S. REIT Revolution Spread around the Globe	p. 264
Mapping the Size of Global Property Stock Markets	p. 274
Managing a Global Real Estate Securities Portfolio	p. 284
The Practicalities of Investing Overseas for the Individual Investor	p. 287
A Summary: Stocks for All Investment Seasons	p. 298
The Long-Term Evidence Supporting Investments in Global Real Estate Securities	p. 300
Risks and Future Prospects
What Can Go Wrong?	p. 309
Issues Affecting All REITs	p. 309
Problems Affecting Individual REITs	p. 323
Summary	p. 333
Tea Leaves: Some Thoughts about the Future	p. 335
Additional Real Estate Owners Will "REITize"	p. 337
Increasing Investor Demand for REITs	p. 344
Larger REITs: Is Bigger Really Better?	p. 353
Additional New Trends	p. 360
So Much More to Come	p. 366
Summary	p. 367
Death and Taxes	p. 369
Case Study: FFO, AFFO, FAD, and CAD	p. 373
Cost of Equity Capital	p. 377
REIT Portfolio Management	p. 381
Largest Global Real Estate Companies as of December 2010	p. 391
Glossary	p. 413
About the Author	p. 423
About the Contributors	p. 425
Index	p. 427
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