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Another Day In REIT Paradise: Figuring Out The Fundamentals With Global REITs

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  • Global listed real estate securities help spread risk out by lowering the correlation of holdings across different markets and asset classes.
  • Geographic diversification should decrease the risk that an average investor’s real estate holdings will suffer all at once.
  • Come visit us at iREIT on Alpha and learn first-hand why this service is the #1 Site for Reliable REIT Income.

Quote for Today:

"There is no path to Happiness. Happiness is the path. There is no path to Love. Love is the path. There is no path to Peace. Peace is the path." ~ Dan Millman 


It might seem like global REITs are a random topic to end my week-long celebration of getting my book details submitted in full.

After all, we started out with funds from operations on Monday

Moved to adjusted funds from operations on Tuesday…

Tackled capitalization rates on Wednesday…

And worked out the importance of payout ratios on Thursday.

Those are all obvious fundamental calculations and considerations, making global REITs the odd duck of the bunch.

Perhaps. And I won’t go into any detail about why I decided to end on this note. It would be too longwinded, and I want to leave plenty of space for you to see why, one way or the other, it’s a great topic to talk about.

So I’m just going to jump right in with a segment from chapter 16:

“… the who’s who in the capital markets has shifted from mostly individual investors to mostly larger financial institutions. Every sector of the economy seems to go through this transformation eventually… for the U.S. real estate landscape, it began in the early 1990s with pension funds, insurance companies, and mutual funds, in particular, getting in while the getting was good. This is still happening today with their continuing financial backing.

“Now firmly into the twenty-first century, we can definitively say we’re witnessing a similar trend around the world. Slowly but surely (or in significantly sized spurts of enthusiasm), REIT legislation has been adopted in country after country.

“Before 2000, there were barely more than a dozen countries that had legalized their own version of REITs. Today, there are 39 (and Hong Kong), a significant increase to say the least. The vehicle, while not perfectly similar everywhere it’s employed, better allows investors to allocate capital according to their individual risk appetites, regional growth prospects, and other transformational trends.”

Now, as I go on to note, there are definite pitfalls to be aware of. However…

“Those who see the rewards as outweighing the risks cite diversification and competitive dividend yields as major motivations – both of which are valid reasons that deserve to be explored further.

“When it comes to diversification, global listed real estate securities help spread risk out by lowering the correlation of holdings across different markets and asset classes. Since 1990, the local listed real estate equity indices in major markets around the world have generally displayed low to moderate correlation levels with each other…

“It also shows that these individual towns and cities are different, with distinct economic and property cycles. Generally speaking, most of those patterns will be supply- and demand-driven: the result of market-specific events. Consider overbuilding, which is a local issue. While every city and even large towns are bound to experience that problem from time to time, they’re rarely going to be completely synchronized, if at all.

“As a result, geographic diversification should decrease the risk that an average investor’s real estate holdings will suffer all at once. And for those who have the time to be more hands-on with their analysis, the varying bull and bear markets offer the opportunity to take more specific advantage of these opportunities.

“Last but not least, recent dividend yields offered in key listed real estate markets have been generally higher than those of respective government bonds.

And due to global REITs’ varying but always significant dividend payout requirements, rising cash flow from general economic growth will continue to drive them even higher – while serving as a natural hedge against rising inflation.”

I know this was a much longer blog post than normal. But I hope it and its predecessors this week have given you a good idea of the information I’ll be publishing soon.

For my part, I may have said back on Monday that the time will fly until that day comes around. However, I still think it won’t be nearly soon enough.

Wide Moat Research

The World According to Commercial Real Estate

Later this year iREIT on Alpha plans to focus on global REITs, we recently introduced Canadian REIT coverage. We are in the process of developing a sophisticated screening tool that will allow us to cover broader spectrum of listed real estate stocks.

As the Daily REITBeat reports, "Dow Futures up over 50 points at the time of this writing as talking heads focus on the upcoming jobs report due this morning." The Wall Street Journal reports,

"Hiring accelerated sharply in February as restaurants and other hospitality businesses reopened, adding 379,000 to U.S. payrolls and fueling renewed growth as the coronavirus pandemic eases.

U.S. employers added jobs for the second straight month in February, the Labor Department said Friday, in what marks a sharp pickup from earlier this winter."


Also Raymond James upgrades SBAC to Strong Buy from Outperform (maintain $309 price target), and iREIT on Alpha is working on a research report now for our members.

We plan to interview NetStreit's CEO next week (for iREIT on Alpha members) and today the company "announced 4Q Adjusted FFO of $.20/share and commented that they collected 100% of its 4Q’20 contractual rents and for the full year."

 We also had two CEO Interviews yesterday, one was with Store Capital (STOR) CEO, Chris Volk:

iREIT on Alpha

And we interviewed Broadmark Realty's (BRMK) CEO, Jeff Hyatt, last night.

And there's more on the way, with over a dozen CEO interviews coming in the next two weeks.... UMH Properties (UMH), Tanger Outlets (SKT), City Office (CIO), Boston Properties (BXP), and more...

Come visit us at iREIT on Alpha and learn first-hand why this service is...

The #1 Site for Reliable REIT Income

A membership with iREIT on Alpha means you get instant access to insightful articles, profitable portfolios, and our iQ scoring model, where the Q stands for Quality.

This extremely powerful system lets data determine the best REITs to own based on their most basic and essential fundamentals.

Members have full access to this sophisticated screening tool whenever they want… as well as deep-dive details about equity REITs, mREITs, preferreds, BDCs, MLPs, ETFs, and, more.

Join this in-the-know community with a two-week FREE TRIAL that includes my new book as an added incentive to stick around.

I truly think becoming an iREIT on Alpha member will be worth your while considering everything you receive. It’s a long list that involves access to the dozens of C-suite interviews I’m constantly scheduling on my Ground Up podcast, such as those mentioned above.

They’re designed to give you the kind of insider information that puts people ahead of the game. Just think about all the possibilities to profit from when you’re not in the middle of the rat race anymore…

Author's note: Brad Thomas is a Wall Street writer, which means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: written and distributed only to assist in research while providing a forum for second-level thinking.

Analyst's Disclosure: I am/we are long brmk, bxp, cio, skt, stor, UMH.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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