How Many Jobs Are Available In Real Estate Investment Trusts

How big is the REIT industry?

The market size, measured by revenue, of the Real Estate Investment Trusts industry was $241.0bn in 2022. What was the growth rate of the Real Estate Investment Trusts industry in the US in 2022? The market size of the Real Estate Investment Trusts industry declined -13.3% in 2022.

How many investors are there in REIT?

A Snapshot of Today’s REIT Industry – In 1960, Congress established REITs to provide everyday American investors the opportunity to invest in income-producing real estate—much like mutual funds were created to give Americans from all income levels access to capital markets. REIT properties are critical to the economy.

There are approximately 535,000 REIT-owned properties, which include data centers, hospitals, hotels, housing, industrial facilities, offices, shopping centers, malls, free-standing retail, storage centers, telecommunications infrastructure, and timberlands. REITs help create jobs. In 2021, REITs supported an estimated 3.2 million jobs and $229 billion in labor income.

Today, 150 million Americans, or approximately 45% of the U.S. population, live in households that are invested in REITs through investment accounts and retirement plans. REITs support the economy by channeling capital into—and increasing the transparency, liquidity, and stability of—the markets. Today, U.S. REITs own nearly $4.5 trillion of gross real estate with public REITs owning $3 trillion in assets.U.S. listed REITs have an equity market capitalization of more than $1.3 trillion. In 2021, REITs paid an estimated $92.3 billion in dividends to shareholders. REITs have historically delivered competitive total returns for investors based on high, steady dividend income and long-term capital appreciation. REITs comparatively low correlation with other assets makes them an excellent portfolio diversifier that helps reduce investors’ overall portfolio risk and increases returns,

Multiple studies, including those from Ibbotson Associates, Morningstar, and Wilshire Funds Management have found that the optimal REIT portfolio allocation may be between 5% and 15%. Mortgage REITs (mREITs) provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities and earning income from the interest on these investments.

One million homes have been financed by mREITs in the U.S. REITs are also being used by global institutional investors. In fact, 64% of the top 25 largest U.S. and global institutional investors use REITs in their portfolios. REITs support the economy by channeling capital into–and increasing the transparency, liquidity and stability of–the markets. Additionally, REITs have been real estate innovators for decades. Fifty years after its debut, the FTSE Nareit U.S. All Equity REIT Index, which includes more than 200 REITs, remains the default REIT benchmark for many analysts, investment managers, and investors. REITs are a model for real estate investment globally. More than 40 countries and regions have adopted the U.S.-based REIT approach to real estate investment offering investors access to portfolios of income producing real estate across the globe. Mutual funds and exchange-traded funds offer the easiest and most efficient way for investors to add global listed real estate allocations to portfolios.

While the U.S. remains the largest listed real estate market, the listed real estate market is increasingly becoming global. The growth is being driven by the appeal of the U.S. REIT approach to real estate investment. A total of 865 listed REITs with a combined equity market capitalization of approximately $2.5 trillion (as of Dec.2021) are in operation around the world.

Today, more than 40 countries and regions have REITs, including all G7 countries. Nearly 5 billion people worldwide live in countries that have enacted REITs.

What is the outlook for real estate investment trusts?

REITs are entering this period of slower economic growth with strong operational performance and are well-positioned for economic uncertainty in 2023. Our analysis of CRE and REITs notes that REITs had impressive operational results with record high earnings during 2022, despite their lower stock market valuations.

How big is the global REIT market?

How Many REITs Are There in the World? – A total of 893 listed REITs with a combined equity market capitalization of approximately $1.9 trillion (as of December 2022) are in operation around the world. As the following charts show, REITs have grown dramatically in both number and equity market capitalization over the past 30 years going from 120 listed REITs in two countries to 893 listed REITs in more than 40 countries and regions. In particular, Asia has had strong uptake of REITs, growing from 31 REITs in six countries and regions in 2005 to 223 REITs in 11 countries and regions in 2022. The Middle East also has demonstrated meaningful growth since 2015 with the addition of REITs in Saudi Arabia and Oman.

Is the REIT industry competitive?

Key Success Factors – Market environment The real estate market depends a lot on a good market environment ranging from wages, inflation, interest rates, high mortgage prices and market volatility. A good market environment always helps to lead to successful real estate environment.

Superior financial management A significant amount of capital and debt is used to finance property acquisitions. Therefore, companies must be able to properly manage cash flows, reserves and debt levels to grow and effectively manage property portfolios. Maintenance of excellent customer relations Understanding the needs of, and having good relationships with existing and prospective clients can assist operators in gaining new business and retaining existing customers.

Proximity to key locations Tenants pay a premium for buildings located near business centers, transportation hubs and entertainment venues. Buildings in metropolitan areas usually have higher rental income and less vacancies. Access to highly skilled workforce Real estate firms that employ highly skilled staff with specialized knowledge can develop a reputation for quality service and increase their bargaining power.

• Cost Structure Benchmarks Cost structure may vary depending on the segment in the REITs industry.
• Profits EBIT (earnings before interest and taxes) varies for firms in different segments of the REITs industry.
• Probability has been recovering, since the subprime crisis, in property values and construction projects.

Interest expense makes up a large portion of the real estate holdings after EBIT as companies attempt to raise capital for developments and acquisitions. Purchases The largest of the purchases are associated with contracting and acquiring properties, which can be also financed with debt.

Because some form of debt is typically used in the purchases of properties most firms will have fairly high interest expenses or the gradual elimination of liability, such as loan, from a company’s balance sheet. Another major purchase incurred is construction materials for development projects. Construction materials will vary depending on commodity prices, as most costs are related to concrete, glass, structural steel, concrete panels, panels, structural timber, metal cladding, aluminum fitting, electrical power, fuels and lubricants.

Other Costs Depreciation and amortization usually accounts for a large portion of the REITs costs. REIT properties experience annual wear and tear or loss of utility, so companies depreciate real estate assets over time to account for this deduction. Selling, general, administration and development also make up a decent amount of expenses incurred throughout the year for firms.

What is Europe’s largest REIT?

What is the largest European REIT? – The largest REIT in Europe is Cellnex Telecom SA ( CLNXF ) ( website ), owning and operates +100,000 wireless towers in Europe. The second largest is Europe’s largest residential property owner, Vonovia (a European REIT I own in my All-Weather Portfolio ).

What is the 90% REIT rule?

How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.

What is the most successful REIT?

Best-performing REIT stocks: July 2023

Symbol	Company	REIT performance (1-year total return)
SVC	Service Properties Trust	80.3%
SKT	Tanger Outlets	61.4%
PLYM	Plymouth Industrial REIT, Inc.	39.4%
AIV	Aimco	38.3%

Will REITs recover in 2023?

Key takeaways –

The sharp rise in interest rates created significant challenges for REITs in 2022, even as fundamentals such as occupancy rates and income measures remained solid. We anticipate a stabilization in the REIT market in 2023 if interest rates stabilize. One area of potential opportunity may be in residential rentals, given that renting is currently much more affordable than buying in many parts of the country. A particular bright spot: residential REITs in the Sun Belt.

After facing performance headwinds in the past year, real estate investment trusts (REITs) could see some stabilization in 2023 if the pace of interest-rate increases slows. REITs that rent out residential apartments and homes, in particular, could fare strongest given current dynamics in the housing market. Sign up for Fidelity Viewpoints weekly email for our latest insights.

Why is REIT losing money?

REITs Are Getting Caught Up in the Wave of Banking Fear Ripples from worries about the banking system have claimed real estate investment trusts—known as REITs—as their most recent victim. The sector, favored by investors for its high dividend yields, has fallen nearly 10% in March.

Among the stocks hit hardest in the sector have been office REITs, which rent out office spaces and amenities to businesses. On average, office REITs saw their stock valuations drop about 24% during the month, making it the worst-performing industry in the sector during the month. The broad stock market, as measured by the Morningstar US Market Index, is down 1.4% during this time frame.

Among the REITs covered by Morningstar’s equity analysts, SL Green Realty, Vornado Realty Trust, and Boston Properties were some of the worst-performing REITs so far this month, falling at least 25%. REITs are companies that own portfolios of properties: office buildings, shopping centers, hotels, apartments, and more. The properties generate income from rent and capital appreciation. They differ from traditional stocks in that they are then required to pay out at least 90% of that income to investors in the form of dividends, making them an attractive play for income-focused investors.

1. Real estate stocks more broadly have suffered over the past year.
2. The sector has fallen by nearly 26% from one year ago as higher interest rates increased companies’ funding costs, cut into earnings, and tempered expectations for shareholder returns.
3. Meanwhile, the overall stock market is down 12.4% from a year ago.

The recent banking crisis has raised fresh concerns. Bianca Rose, senior portfolio manager at Morningstar Investment Management, argues that the recent bank run emphasized two risks to the real estate sector: tenant risk and financial system stability.

Are REITs doing well?

Outlook For REITs – The last year has not been good to REITs. As of February 15, 2023, the S&P U.S. REIT index was down more than 11% over the prior 12 months. By comparison, the S&P 500 dipped only 7.2% in the same time frame. There is some positive news: year to date the S&P U.S. REIT index is outperforming the S&P 500.

Which country has the most REITs?

To qualify for a REIT, companies need to distribute 90 percent of their taxable income to shareholders. This model originated in the United States – the largest REIT market worldwide.

What is the longest running REIT?

Federal Realty Investment Trust ( FRT ) – Federal Realty Investment Trust was founded in 1962 and is one of the oldest real estate investment trusts still operating today. FRT is a shopping center REIT that owns and develops retail-based and mixed-use properties that are located in first-ring suburbs that have densely populated areas with high-barriers to entry.

• Their properties are primarily located in the Northeast and Mid-Atlantic, but their portfolio also includes properties located in California, Florida, and Illinois.
• FRT owns or has an ownership interest in 103 properties that include approximately 3,300 commercial tenants and around 3,000 residential units.

In total, their open air shopping centers and mixed-use properties cover roughly 26 million square feet and were 94.5% leased and 92.8% occupied as of year-end 2022. FRT – Investor Presentation Federal Realty has the longest running dividend streak in the REIT industry as they have paid and increased their dividend for 55 consecutive years. I like the chart below because it puts the current economic environment in perspective.

1. Most REITs have suffered large declines over the past year in large part due to concerns over inflation and interest rates, but as seen below, FRT has operated through multiple crises and economic environments and has not suspended or cut its dividend.
2. A lot of focus has been put on the rate of inflation over the last year, but in 1980 inflation in the U.S.

was almost 15% and FRT raised its dividend. Likewise, during the Great Financial Crisis and the covid pandemic FRT continued to raise its dividend. FRT – Investor Presentation Federal Realty pays a 4.42% dividend yield but its dividend payout ratio needs to be monitored as they currently have an adjusted funds from operations (“AFFO”) payout ratio of 91.86%. While the payout ratio is high, it has been improving over the last several years, going from 123.46% in 2020, to 97.48% in 2021, to its current level of 91.86%.

Over the last 10 years FRT has an average dividend growth rate of 4.41% but dividend growth has moderated over the last 2 years with a 0.95% increase in 2021, and a 0.94% increase in 2022. The lower dividend growth rate over the last several years is likely by design to get their payout ratio to a more conservative level.

FRT has an average FFO growth rate of 3.96% since 2013 and are expected to increase FFO by 2%, 4%, and 6% in the years 2023, 2024 and 2025 respectively. The stock is trading at a P/FFO of 15.34x, which is well below their normal P/FFO of 22.96x. At iREIT, we rate Federal Realty Investment Trust a BUY. FAST Graphs

What is the weakness of REITs?

Disadvantages of REIT Investment REITs are subject to interest rate risk, which is the risk associated with changes in interest rates. REITs may be subject to liquidity risk, making it difficult for investors to sell their REIT investments quickly.

What is better than REITs?

Pros and Cons of Investing in REITs – More than 45% of American households own REITs, nearly double the estimate from two decades ago. They can be a good fit if you want the diversification benefits of real estate without the commitment and responsibilities of directly owning property. REITs can be a good choice because:

Buying and selling REIT shares is easier than it is with a physical property.They obviate the need for market-specific knowledge and property management while making it easier to diversify your real estate portfolio. Instead of owning one concentrated position, you own a fraction of tens, hundreds, or thousands.They won’t require you to start a mortgage on an investment property and make investing in out-of-state real estate easier.

Finally, the issue of taxes. REITs enjoy favorable corporate tax treatment, avoiding them entirely if they pass along an adequate share of earnings directly to investors. However, this typically means REITs have large dividend yields, and dividends are unfavorably taxed relative to capital gains for high-income investors.

Why are REITs doing so well?

REIT Returns vs. Interest Rates – During periods of economic growth, REIT prices tend to rise along with interest rates. The reason is that a growing economy increases the value of REITs because the value of their underlying real estate assets increases.

1. In a growing economy, the demand for financing also increases, resulting in increased interest rates.
2. Conversely, in a slowing economy, when the Fed is tightening money, the relationship turns negative.
3. This relationship can be seen in the following chart, which details the correlation between REIT total returns and the yields on 10-year Treasuries from 2000-2019.

Image by Sabrina Jiang © Investopedia 2021 For the most part, REIT returns and interest rates had a positive correlation, moving in the same direction. This is evidenced primarily between 2001-2004 and 2008-2013. The periods of inverse correlation, right after 2004, 2013, and 2016, all relate to Fed monetary tightening policies, reversing the actions of monetary stimulus actions that were put into place mainly after recessions.

• Here interest rates rose but REIT values decreased.
• Further bolstering this argument is a study done by the S&P, which analyzed six periods beginning in the 1970s where the yield of the 10-year Treasury grew significantly.
• The study compared the increased interest rates to REIT and stock performance during those periods.

The information is presented in the following table. Source: S&P Dow Jones Indices LLC, Bloomberg, The Federal Reserve. https://ssd2.s3.amazonaws.com/tmp/2018-07-23/1532386146501-image.png Of these six periods of interest rate increases, REIT returns increased during four of them and outpaced the stock market during three of them.

1. However, there are other factors and other detailed observations to consider, which may indicate positive or negative returns for REIT investments depending on the interest rate environment.
2. The biggest factor is that not all REITs are created equal.
3. First and foremost, REITs operate in many types of industries.

These include healthcare, hotel, residential, industrial, and many more. Each of these industries has different variables in play that react differently to the economic environment. Another important factor is the debt profile of a REIT; how much financing they take on to grow their business.

The debt profile determines a REITs ability and timeframe to pay down debt, which will be impacted by different interest rate environments. The observations discussed indicate that REITs may not really have any dependency on interest rates scenarios and that there are many other factors at play in determining how a REIT will perform during times of different interest rates.

The returns from REIT investments may actually remain free from interest rate variations. As with any investment, it is crucial to look at the specific REIT in question, its performance, dividend payout history, and debt levels.

Can you buy REITs in Europe?

Anyone, from retail investors to large institutional investors, can invest in the underlying assets of publicly quoted REITs, the same way as investing in other industries – through purchasing shares.

What is Europe’s largest equity market?

Europe’s biggest stock exchange is the Euronext which combines five markets based in Amsterdam, Brussels, Dublin, Lisbon, London, Oslo and Paris.

What are the largest REITs public?

Notable REITs The five largest REITs in the United States in 2021 are: American Tower Corporation, Prologis, Crown Castle International, Simon Property Group and Weyerhaeuser.

What percentage of the S&P 500 is REITs?

REITs were first deemed eligible for inclusion in the S&P 500 in October 2001. Since 2001 the representation of REITs in the S&P 500 has grown from,2% to 2.8% as of December 31, 2019 (see Exhibit 1). During this time the market value of the constituent REITs grew from $20 billion to $773 billion. REIT constituents of the S&P equity indexes are updated monthly and can be found in REITWatch, This post has been updated with data through Dec.31, 2019.

What is the market cap of the REIT industry?

The real estate investment trusts (REITs) market in the United States compressed in 2022, reaching a market cap of 1.3 trillion U.S. dollars.

What is the 90% REIT rule?

How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.