The FTSE NAREIT Equity REIT Index is what most investors use to gauge the performance of the U.S. real estate market. Between 1990 and 2010, the index's average annual return was 9.9%, second only to mid-cap stocks, which averaged 10.38% per year over the same period.. With backing from one of the country’s leading institutional investors and largest banks, Restore Utah has … "FTSE Nareit All Equity REITs Index," Page 1. Real Estate Investment Trust (REIT) Definition, Important Factors for Real Estate Investments, Habits of Successful Real Estate Investors, Mistakes Real Estate Investors Should Avoid, your focus should turn to the REITs themselves. On the plus side, REITs are easy to buy and sell, as most trade on public exchanges—a feature that mitigates some of the traditional drawbacks of real estate. REITs have been a popular … They include the following: The federal government made it possible for investors to buy into large-scale commercial real estate projects as far back as 1960. You can learn more about the standards we follow in producing accurate, unbiased content in our. National Association of Real Investment Trusts. "REITs by the Numbers." While the S&P 500 … Investopedia requires writers to use primary sources to support their work. There are more than 225 publicly-traded REITs in the U.S., which means you’ll have some homework to do before you decide which REIT to buy. Be sure to consider the REIT’s management team and track record—and find out how they’re compensated. More recently, the three-year average for REITs between March 2013 and March 2016 was in line with the averages in the 20 year period, clocking in at 11.21% over that time. Historically, investors looking for yield have done better investing in real estate than fixed income, the traditional asset class for this purpose. A majority of the operators of these facilities rely on occupancy fees, Medicare and Medicaid reimbursements as well as private pay. Reasons for this include low-interest rates, which forced investors to look beyond bonds for income-producing investments, the advent of exchange-traded and mutual funds focusing on real estate and, until the 2007-08 real estate meltdown, an insatiable appetite on the part of Americans to own real estate and other tangible assets. As part of their structure, they must pay 90% of income back to investors. So, only 10% of taxable income can be reinvested back into the REIT to buy new holdings. A particularly helpful metric is the REIT’s funds from operations (FFO), which is calculated by adding depreciation and amortization to earnings, and then subtracting any gains on sales. REITs generally own and/or manage income-producing commercial real estate, whether it's the properties themselves or the mortgages on those properties. You can invest in the companies individually, through an exchange-traded fund, or with a mutual fund. Real estate refers broadly to the property, land, buildings, and air rights that are above land, and the underground rights below it. These include white papers, government data, original reporting, and interviews with industry experts. On the downside, REITs don't offer much in terms of capital appreciation. In addition, REITs tend to focus on a specific sector of properties, for instance, retail or shopping centers, hotels & resorts, or healthcare & hospitals. REITWatch: A Monthly Statistical Report on the Real Estate Investment Trust Industry, May 2010. In a low-interest rate environment with the prospect of rising rates, most mortgage REITs trade at a discount to net asset value per share. 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