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Time for a Second Look at REITs -- M*

davfordavfor
in Fund Discussions
The durability of our low interest rate environment caused me to make some small initial investments in individual REITS over the past year or so. Time will tell if doing this winds up helping or hurting my overall portfolio performance. Anyway, this M* article takes a balanced look at REITs and why it is worth considering them as part of a balanced portfolio. Here is a brief excerpt and a link to the article:
As of the end of 2018, the U.S. commercial real estate market totaled an estimated $16 trillion, compared with about $45.8 trillion for equities and $39.2 trillion for outstanding debt based on 2017 data from the Securities Industry and Financial Markets Association. In other words, real estate translates into a roughly 16% slice of the total market pie. Not coincidentally, pensions and endowments often target 10% to 20% of their total assets for real-estate holdings....Given that real estate is both highly cyclical and subject to periodic downturns, though, I’d hesitate to recommend investing quite that much.
https://morningstar.com/articles/964406/time-for-a-second-look-at-reits

Comments

  • MarkMark
    No second look needed here, I've held them for some time now. I bought them primarily for the income but I've enjoyed handsome capital gains as well. Most are a bit stretched at this time so I'm not adding but I do keep an eye out. SPG is a case in point.
  • davfordavfor
    @Mark My thinking involves income but also sometimes involves the potential for continued capital gains in our low interest rate environment. My nibbles included a little SPG. It is my only REIT purchase from last year that is currently in the red (by a few %). The others have done fairly well so far. SPG has reached agreement to participate in the purchase of the Forever 21 assets. Hopefully, they will be able to help turn that lemon into lemonade. Also, they are talking to Taubman Centers again about a possible merger. It will be interesting to watch how all the dust settles out from the retail mall apocalypse.
  • rforno

    I wouldn't touch mall operators or most office REITs.

    I'm holding some speciality REITS in the medical and industrial space (MPW, ILPT) along with one office (OPI) and JBGS, which is a real estate play on Amazon HQ2 in my neighborhood.
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