Investing Experts
REITs: very bond-like
Oct 15, 2024
In this engaging discussion, experts Alex Pettee, Brad Thomas, and David Auerbach dive into the world of Real Estate Investment Trusts (REITs). They explore how REITs function like bonds and the impact of rising interest rates on their performance. The trio breaks down essential insights into different property sectors, the significance of preferred shares, and the long-term strategies for navigating market changes. With a bullish outlook on housing, they also highlight three specific REITs worth considering amidst the evolving landscape.
34:04
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Quick takeaways
- REITs serve primarily as yield-generating investments for many, reacting differently to interest rate changes based on their property sectors.
- Current residential and commercial real estate dynamics highlight a housing supply shortage and demographic shifts, impacting specific REIT growth opportunities.
Deep dives
Understanding REITs and Investor Perspectives
Real Estate Investment Trusts (REITs) are primarily seen by investors as vehicles for yield rather than detailed property-level analysis. Many investors prefer the bond-like characteristics of REITs, as they often prioritize income generation over other factors. This income-oriented focus leads to various responses from REITs to interest rate changes, with some REITs demonstrating higher sensitivity than others based on their economic environment and market capitalization. The average dividend yield across equity REITs stands at approximately 3.71%, while mortgage REITs offer yields exceeding 10%, highlighting the income potential available in different REIT categories.
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