REIT investors tend to invest in the asset class to gain exposure to real estate as a hard asset that is not highly correlated to the general stock market, and for the dividend income stream that the REIT model necessitates. By law, REITs must distribute at least 90% of their taxable income in order to eliminate the need to pay income tax at the corporate level.
This is an analysis of the performance and dividends for 7 REITs that primarily own and offer office space. Office REITs are sensitive to economic cycles, the strength of the American consumer, entrepreneurial production and several other factors. Companies offering such space also have geographic and population density factors to consider, as well as possible state and local tax/regulation issues.
Alexandria Real Estate Equities Inc. (NYSE:ARE)
- Yield: 2.5%
- 1-month Performance: -16%
- 2011-to-date Performance: -5.83%
Boston Properties Inc. (NYSE:BXP)
- Yield: 2%
- 1-month Performance: -5.96%
- 2011-to-date Performance: 16.83%
Brandywine Realty Trust (NYSE:BDN)
- Yield: 1.9%
- 1-month Performance:-18.82%
- 2011-to-date Performance: -18.19%
CommonWealth REIT (CWH)
- Yield: 7.4%
- 1-month Performance: -17.12%
- 2011-to-date Performance: -22.19%
Corporate Office Properties Trust (NYSE:OFC)
- Yield: 6.3%
- 1-month Performance: -17.57%
- 2011-to-date Performance: -26.28%
Cousins Properties Inc. (NYSE:CUZ)
- Yield: 2.5%
- 1-month Performance: -21.82%
- 2011-to-date Performance: -20.14%
Douglas Emmett Inc (NYSE:DEI)
- Yield: 2.8%
- 1-month Performance: -12.13%
- 2011-to-date Performance: 4.7%
A continued economic downturn will undoubtedly weaken the demand for office space, as businesses will not expand and fewer new ones will be attempted. Conversely, improving economics could bolster expansion and entrepreneurial endeavors. Inflation is often weathered well by such companies, as rent escalation is built into long-term leases, but this does take some time to occur.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.