The Intelligent REIT Investor
The Intelligent REIT Investor is a go-to primer and practical roadmap to understanding essential aspects of smart Real Estate Investment Trust Investing. A definitive guide to providing a clear, concise resource for anyone who prioritizes dividend income and risk management as major components to wealth-building, it also contains illustrative charts, useful summary tables, and historical anecdotes that explain how different property types have performed in various market conditions. This book contains a comprehensive list of publicly-traded REITs, which provides key reference, giving you access to an important resource most investors and stockbrokers lack, and illustrates industry-specific concepts you need to know to invest wisely and manage your real estate risk effectively.
The Intelligent REIT Investor is the ultimate, clear, and concise guide for achieving investment success. It includes insights on how to:
- Apply easy-to-use equations to assess the strength of a REIT's balance sheet and dividend safety
- Understand research reports and public information on REITs across the spectrum of different commercial property types
- Weigh the risks and benefits of each property type to optimally balance investment portfolios with specific goals
This book will help you:
- Understand REITs processes, mechanisms, and industry
- Calculate key metrics to identify suitable companies
- Access historical performance tables and industry-specific terminology
- Identify publicly-traded REITs quickly and easily
Table of Contents
PART I: An Introduction to REITs
Chapter 1 What Is a REIT?
- Size of the REIT Industry
- Categories of REITs
- Equity REITs
- Mortgage REITs
- Classification by Property Type
- Size and Index Inclusion
- Geographic Focus
- Growth Strategy
- Where to Find Information on REITs 15
- FTSE NAREIT All REITs Index
- Company-Specific Websites
- Indexes for Tracking REIT Performance
- Exchange-Traded Funds for Investing in REITs
Chapter 2 Why Invest in REITs?
- Double-Digit Total Returns
- Dividends
- Liquidity
- Portfolio Diversification
- Hedge Against Inflation
- Transparent Corporate Structures
Chapter 3 REIT Dividends
- Rockland REIT
- REIT Yields
- Are REIT Yields Safe?
- Quantifying Dividend Safety
- Dividend/FFO Payout Ratio
- Debt Ultimately Determines Dividend Safety
- Debt-to–Total Market Capitalization Ratio
- Debt-to–Gross Book Value Ratio
- Legal Standing of Leases Supports Dividend Safety
- REIT Dividends and Taxation
- REITs Do Not Pay Out All of Their Cash in Dividends
- The Components of a REIT’s Common Dividend
- REIT Dividends and the Bush Tax Cuts
- Preferred Stock Dividends
- Preferred Stock Basics
- Risks to Owning Preferred Shares
- Conclusion
Chapter 4 Leases
- Lease Terminology
- The Four Major Types of Leases
- Leases and Tenant Bankruptcy
- FASB and the New Standard for Accounting for Leases
- Lease Duration and REIT Stock Price Performance
Chapter 5 REITs by Property Type
- Diversified and Specialized REITs
- REITs that use Triple-Net-Leases
- Risks and Rewards of REITs That Use Triple-Net Leases
- Health-Care REITs
- Risks and Rewards of Health-care REITs
- Industrial REITs
- Risks and Rewards of Industrial REITs
- Lease Terms
- Lodging/Resort REITs
- Hotel Revenue
- Hotel Expenses
- Technical Aspects Specific to Hotel REITs
- Risks and Rewards of Hotel REITs
- Mortgage REITs
- Risks and Rewards of Mortgage REITs
- Office REITs
- Lease Terms
- Risks and Rewards of Office REITs
- Residential REITs
- Apartment REITs
- Manufactured Housing REITs
- Single-Family-Home REITs
- Retail REITs
- Shopping Center REITs
- Mall REITs
- Freestanding Retail REITs
- Risks and Rewards of Retail REITs
- Self-Storage REITs
- Risks and Rewards of Self-Storage REITs
- Conclusion
PART II: Investing in REITs
Chapter 6 Getting Technical
- REIT Structures
- UPREITs
- OP Units
- OP Units and Estate Planning
- DownREITs
- Publicly Traded, Public Nonlisted, and Private REITs
- Volatility versus Liquidity
- Transparency and Corporate Governance
- Costs and Fees
- Externally Advised and Externally Managed REITs
- Qualifying as a REIT
- REITs Are Not Limited Partnerships
Chapter 7 REIT Performance
- Historical Total Returns
- Factors Influencing Demand for REIT Shares
- Events That Increased Demand for REIT Shares
- REITs versus the Attractiveness of Other Investments (Lessons from History)
- Growth Stocks versus REITs, 1998–1999
- Treasury Yield versus REITs, 2004–2006
- Safety and Yield, and the Big League of Benchmarks, 2000–2006
- REITs During the Financial Crisis of 2007–2008
- Company Attributes That Affect Performance
- Real Estate Fundamentals and REIT Performance
- Performance by Property Type
- How Lease Length and Structure Affect REIT Returns
- Weighted Average Cost of Capital and REIT Performance
- Debt as a Four-Letter Word
- Competitive Advantage or Disadvantage—Why Cost of Capital Matters
- REIT Performance in a Rising Interest Rate Environment
- Conclusion
Chapter 8 Analyzing REITs
- Operating Metrics
- Net Operating Income (NOI)
- Same-Store (Organic) Earnings
- ‘Earnings Growth‘ for REITs Is ‘FFO Growth‘
- Management’s Track Record as a Screening Tool
- Profitability Metrics
- Funds from Operation
- Adjusted Funds from Operations (AFFO)
- Cash Available for Distribution (CAD)
- Balance Sheet Metrics and Analysis
- Leverage
- Debt-to–Total Market Capitalization Ratio
- Debt-to–Gross Book Value Ratio
- Debt-to-EBITDA Ratio
- Weighted Average Cost of Capital (WACC)
- Valuation Metrics
- Price/Earnings Multiple
- PEG Ratios
- Dividend Yield
- Dividend Safety
- Dividend Coverage, or Payout Ratios
- Dividend Discount Model
- Net Asset Valuation (NAV)
- Implied Capitalization Rate