I’m writing a new book, The Intelligent REIT Investor, which should be complete by summer’s end. I’ve already dedicated it to my friend and mentor, Ralph Block, who inspired me to become a global voice for REIT investors.
As such, I plan to include some of his brilliantly-written chapters from Investing in REITs. (I’ll also include work from leading academic experts at Cornell, NYU, and Georgetown University.)
One of my favorite chapters in Block’s book is called “Searching for Blue Chips.” Here’s part of it:
“The most conservative investors are likely to emphasize blue-chip REITs… Those seeking quality and safety above all else certainly will. And it's vital for all REIT investors to know what makes a blue-chip REIT different from the rest, as it’s the blue-chips that set the standards by which all others should be measured.”
Block explained that there’s “no objective or commonly accepted definition of blue-chip REIT.” With that said, here’s his own excellent blueprint:
“Because they are financially strong and widely respected, they will, in most periods, have access to the additional equity and debt capital that can fuel above-average growth. They will rarely provide the highest dividend yields or even, in many years, the best total returns. Nor can we frequently buy them at bargain prices – but they should provide years of (7%-8%) total returns, on average, with only modest risk.”
In short, they’re worth knowing about.
An Introduction to Blue-Chip REITs – Ralph Block Style
In chapter 8 of his book – my favorite part – Block listed a set of qualities that further set blue-chip REITs apart:
- Outstanding proven management
- Access to debt and equity capital (track record of effective deployment to create value)
- Balance sheet strength and flexibility
- Sector focus and deep regional or local market expertise
- Conservative and intelligent
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