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Are REITs underrepresented in your clients' portfolios? Commercial real estate represents 16% of the U.S. investment market.

In 2016, S&P Dow Jones Indices and MSCI elevated stock-exchange listed real estate companies (including REITs) from under the Financials Sector to a new 11th headline Real Estate Sector under the Global Industry Classification Standard (GICS).

REITs and commercial real estate in the United States will face a number of important questions in 2017. The economic expansion and the commercial real estate cycle are both more than a half-decade old; what are the risks of a downturn? The Federal Reserve has resumed raising its target for short-term interest rates; what impact will higher rates have on financing costs, on the demand for commercial real estate and on REIT share prices? The Presidential Election surprised most observers; what impact might the incoming Trump Administration have on the economy and commercial real estate?

The underlying economic fundamentals for commercial real estate are gaining more momentum with a higher level of vaccine coverage, which is likely to boost REIT earnings growth over the remainder of this year.

Investing in a 21st century real estate completion portfolio with REITs from tech-related property sectors can reduce the overall volatility of portfolio returns.

Most REITs operate as equity REITs, providing investors with the opportunity to invest in portfolios of income-producing real estate. These companies own properties in a range of real estate sectors that are leased to tenants, such as office buildings, shopping centers, apartment complexes and more. They are required to distribute a minimum of 90% of their income to shareholders in the form of dividends.

How will REITs and the real estate markets perform in 2018? Are REITs poised for growth in 2018 or will they continue to underperform the stock market? Commercial construction has been on an uptrend for several years; will demand growth keep up?

Nareit publishes a number of publications for members as well as the broader investment community. 

Individual investors represent a core component of the REIT investment universe. Whether investing in individual companies, through a REIT mutual fund or exchange-traded fund or through a retirement plan, an increasing number of individuals have recognized the benefits of including a REIT allocation in their investment portfolios.

Institutional investors are increasingly using REITs as part of their portfolio completion strategies. Nareit’s series of institutional investor case studies shows how investors are using REITs to achieve sector diversification, geographic diversification, and to capitalize on tactical opportunities.

As pension, endowment, foundation, and sovereign fund investors evaluate the benefits that exposure to commercial real estate bring to investment portfolios, they should know that stock exchange-listed REITs and real estate securities offer meaningful advantages as a way of obtaining that exposure.