Which type of REITs are in your portfolio and why?

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thethinker
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Which type of REITs are in your portfolio and why?

Post by thethinker »

For those who have a portfolio tilt including REITs, is there a specific portion of that industry you invest in?
It’s my understanding that there are different type of REITS, though, do they all focus around commercial and not residential land/property?
I’m familiar with REITs of commercial properties such as maybe retail industries. And aware that some REITs deal with mortgages. Are there other REIT subsets? Is there a specific theory as to which one people would likely invest in or that some investments are better fit for specific types of investors and risk tolerance? Or, are their funds that own all of the above plus more, as more of a loose equivalent to owning the total stock market index fund?

I’m still in the research phase and not making any changes to my AA until i have a better understanding as to what REITs are out there and the theories people use to decide which one works best for them. So I welcome the education below please
7eight9
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Re: Which type of REITs are in your portfolio and why?

Post by 7eight9 »

I recently purchased some Vornado Realty Trust (VNO).

Vornado Realty Trust (NYSE:VNO) has a collection of premier assets and a focused strategy of growing its dominant positions in New York City office and Manhattan high street retail.
https://www.vno.com/

My thesis is that since New York City is the capital of the United States - if it doesn't recover the country doesn't recover.

New York City didn't "Drop Dead" in the 1970s. I don't think it will in the 2020s.
https://www.nydailynews.com/new-york/pr ... -1.2405985
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thethinker
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Re: Which type of REITs are in your portfolio and why?

Post by thethinker »

7eight9 wrote: Thu Jan 14, 2021 2:57 pm I recently purchased some Vornado Realty Trust (VNO).

Vornado Realty Trust (NYSE:VNO) has a collection of premier assets and a focused strategy of growing its dominant positions in New York City office and Manhattan high street retail.
https://www.vno.com/

My thesis is that since New York City is the capital of the United States - if it doesn't recover the country doesn't recover.

New York City didn't "Drop Dead" in the 1970s. I don't think it will in the 2020s.
https://www.nydailynews.com/new-york/pr ... -1.2405985
That’s an interesting idea. Are there any REITS for residential property too, or are REITs focused on just commercial properties?
7eight9
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Re: Which type of REITs are in your portfolio and why?

Post by 7eight9 »

thethinker wrote: Thu Jan 14, 2021 3:45 pm
7eight9 wrote: Thu Jan 14, 2021 2:57 pm I recently purchased some Vornado Realty Trust (VNO).

Vornado Realty Trust (NYSE:VNO) has a collection of premier assets and a focused strategy of growing its dominant positions in New York City office and Manhattan high street retail.
https://www.vno.com/

My thesis is that since New York City is the capital of the United States - if it doesn't recover the country doesn't recover.

New York City didn't "Drop Dead" in the 1970s. I don't think it will in the 2020s.
https://www.nydailynews.com/new-york/pr ... -1.2405985
That’s an interesting idea. Are there any REITS for residential property too, or are REITs focused on just commercial properties?
There are lots of residential REITs.

7 Best Apartment REITs to Own for a Rental Market Slump
https://money.usnews.com/investing/real ... rket-slump
I guess it all could be much worse. | They could be warming up my hearse.
92irish
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Re: Which type of REITs are in your portfolio and why?

Post by 92irish »

I have a core holding of VNQ (REIT index) of about 10% of my portfolio. I then hold about 10% of my portfolio in some "apartment" and "net lease" REIT individual names. I do this because I believe apartments are under represented in the index relative to the value of residential apartments in the U.S. (i.e. lots of apartments are not held in REIT structures) and find the net lease type REITs to be attractive on a risk / reward perspective. VNQ has a lot of "specialized" REITs such as cell towers (which have done great over the past several years), but as a result take a large part of VNQ's portfolio.

The individual holdings I have on the apartment side are: AVB (Avalon bay); EQR (Equity Residential); UDR (United Dominion); ESS (Essex). The NNN lease reits are: WPC (WP Carey); O (Realty Income); and (NNN) National Realty Income. I view these as long term buy and hold investments for appreciation and income, not for trading. At the end of the day, these name may not beat VNQ (who knows), but they all pay sold reliable dividends in excess of what the broader REIT index pays and are certainly not trendy. Many roads to Dublin.
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Re: Which type of REITs are in your portfolio and why?

Post by BroIceCream »

I just use Fidelity's REIT index fund (FSRNX). I hadn't looked at it before, but was pleased with the diverse weighting.

Residential 21%
Industrial 17%
Specialized 14.45%
Retail 13.89%
Office 11.84%
Health Care 11.66%
Diversified 5.03%
Hotel & Resort 4.50%
Angst
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Re: Which type of REITs are in your portfolio and why?

Post by Angst »

A generic US REIT index did well today, compared to the rest of the market.
Utilities were pretty good too.

Code: Select all

VTI    US Total Mrkt  –0.87%
VBR    US SC Value    –1.16%
VXUS   Total Int'l    –1.53%
VSS    Int'l Sm Cap   –1.82%
VNQI   Int'l REIT     –1.01%
VWO    Emerg Mrkts    –1.15%

VNQ    US REIT         1.15%
VPU    Utilities       1.00%

BND    US Total Bond   0.08%
klaus14
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Re: Which type of REITs are in your portfolio and why?

Post by klaus14 »

I would invest in REZ if it wasn't that expensive (ER 0.48%)
Residential REITs are better diversifiers and they better represent real estate value.

I am considering holding small amounts of AVB + EQR (largest 2 Residential REIT). I don't own any real estate. If I had, i wouldn't even look into REITs.
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Re: Which type of REITs are in your portfolio and why?

Post by ChinchillaWhiplash »

I hold some individual REITs over a fund.

Medical = LTC, MPW
Apartment = AIV and it’s spin-off AIRC
Entertainment = EPR (bought a bunch after March crash)

Figured that these are all things that will be needed at all time. EPR took a hit due to Covid though. I sold a storage unit REIT after it went way up. If these go up enough I might just cash them out for total market index funds to keep it simple. Or I might just sit on them for a long time.
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Re: Which type of REITs are in your portfolio and why?

Post by zonto »

BroIceCream wrote: Thu Jan 14, 2021 6:40 pm I just use Fidelity's REIT index fund (FSRNX). I hadn't looked at it before, but was pleased with the diverse weighting.

Residential 21%
Industrial 17%
Specialized 14.45%
Retail 13.89%
Office 11.84%
Health Care 11.66%
Diversified 5.03%
Hotel & Resort 4.50%
I also use this in my BrokerageLink account. Note that it followed a less diversified index until December 2020, when it switched to basically the same MSCI index that Vanguard's REIT index follows. Tracking performance between the two over the last month show them nearly identical; over the last three months not so much. Bogleheads thread here: viewtopic.php?t=288542.
Prior to December 1, 2020, Fidelity ® Real Estate Index Fund normally invests at least 80% of its assets in securities included in the Dow Jones U.S. Select Real Estate Securities Index℠.

Effective December 1, 2020, Fidelity ® Real Estate Index Fund normally invests at least 80% of its assets in securities included in the MSCI US IMI Real Estate 25/25 Index.
(prospectus)
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Re: Which type of REITs are in your portfolio and why?

Post by MishkaWorries »

Does my house count? It's one of my largest assets so that means I'm already tilting to real estate.

A few years ago, when I thought I'll become a marijuana millionaire, I bought a good chunk of Innovative Industrial Properties (NYSE: IIPR). It's been very very good to me but I sold it recently for a big gain. I'm glad I had it in my Roth.
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SlowMovingInvestor
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Re: Which type of REITs are in your portfolio and why?

Post by SlowMovingInvestor »

7eight9 wrote: Thu Jan 14, 2021 3:48 pm
thethinker wrote: Thu Jan 14, 2021 3:45 pm

That’s an interesting idea. Are there any REITS for residential property too, or are REITs focused on just commercial properties?
There are lots of residential REITs.

7 Best Apartment REITs to Own for a Rental Market Slump
https://money.usnews.com/investing/real ... rket-slump
There are also a few REITS (not many) that hold and rent out single family homes -- AMH and INVH come to mind.
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Re: Which type of REITs are in your portfolio and why?

Post by AerialWombat »

BroIceCream wrote: Thu Jan 14, 2021 6:40 pm I just use Fidelity's REIT index fund (FSRNX). I hadn't looked at it before, but was pleased with the diverse weighting.

Residential 21%
Industrial 17%
Specialized 14.45%
Retail 13.89%
Office 11.84%
Health Care 11.66%
Diversified 5.03%
Hotel & Resort 4.50%
+1

FSRNX is just over 5% of my securities portfolio.
For entertainment purposes only.
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Re: Which type of REITs are in your portfolio and why?

Post by abuss368 »

klaus14 wrote: Fri Jan 15, 2021 6:01 pm I would invest in REZ if it wasn't that expensive (ER 0.48%)
Residential REITs are better diversifiers and they better represent real estate value.

I am considering holding small amounts of AVB + EQR (largest 2 Residential REIT). I don't own any real estate. If I had, i wouldn't even look into REITs.
I recall looking at REZ in the last year. The fund was approximately $350 million. That could be an issue.

Tony
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Re: Which type of REITs are in your portfolio and why?

Post by abuss368 »

MishkaWorries wrote: Sat Jan 16, 2021 10:38 am Does my house count? It's one of my largest assets so that means I'm already tilting to real estate.
How do you rebalance your house?

Tony
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Re: Which type of REITs are in your portfolio and why?

Post by abuss368 »

I would not recommend individual REITs and the risk of individual stocks.

REITs are included in Total Stock at market weight. If you want an additional allocation, Vanguard REIT is a low cost option. The fund only includes equity REITs and not Mortgage REITs. In my opinion that is a good idea.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Which type of REITs are in your portfolio and why?

Post by CCG84 »

A lot of the smart money in Commercial Real Estate is focused on "Sheds and Beds" or Industrial and Multifamily before and especially after COVID hit. Both property types are hot and the institutional money that was previously allocated towards Office and Retail is being reallocated to Sheds and Beds. The high demand is dropping the exit caps therefore reducing the yield.

Employers are hesitant to pay $35/SF+Expenses for Class A back office space when the employees can work from home at least a portion of the time. This gives office tenants more leverage in negotiations with landlords for higher TI's, more flexible terms, and lower rents. Landlords have no choice due to the high cost of operating an empty building.

Check the headlines on Retailers, the majors are closing down locations every quarter and there is no relief in site due to consumer behavior. Supply and Demand of retail space gives the strong retailers leverage over the landlords in negotiations. The Landlords have no choice, if they lose a grocer or even an apple store in a mall they will lose traffic and slowly bleed cash as the other tenants move out as their lease expires or co-tenancy clauses.

Keep the major trends in mind while selecting REITS, Real Estate moves relatively slow.Also remember that LP/REIT investors in Commercial Real Estate is not a get rich quick scheme. LP investors in Commercial Real Estate want to maintain and grow their wealth slowly and reliably. The operator or sponsor who executes the business plan receives the fees and promotes.
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Re: Which type of REITs are in your portfolio and why?

Post by NoRegret »

thethinker wrote: Thu Jan 14, 2021 2:29 pm For those who have a portfolio tilt including REITs, is there a specific portion of that industry you invest in?
It’s my understanding that there are different type of REITS, though, do they all focus around commercial and not residential land/property?
I’m familiar with REITs of commercial properties such as maybe retail industries. And aware that some REITs deal with mortgages. Are there other REIT subsets? Is there a specific theory as to which one people would likely invest in or that some investments are better fit for specific types of investors and risk tolerance? Or, are their funds that own all of the above plus more, as more of a loose equivalent to owning the total stock market index fund?

I’m still in the research phase and not making any changes to my AA until i have a better understanding as to what REITs are out there and the theories people use to decide which one works best for them. So I welcome the education below please
I own a couple of residential mREITs for yield as part of my bond replacement strategy. If I were to invest in commercial REITs I would give my money to Sam Zell. Data center is another sub category I might be interested in.
Market timer targeting long term cycles -- aiming for several key decisions per asset class per decade
CCG84
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Re: Which type of REITs are in your portfolio and why?

Post by CCG84 »

I forgot to mention I prefer selecting individual REIT's over the index due to the negative trends of certain property types i described. I prefer not to invest in single tenant net lease, retail, or office properties, therefore the index isn't for me.

A REIT is a geographically diversified portfolio of properties, do your homework on the REIT and if you agree with their current portfolio and strategy.
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Re: Which type of REITs are in your portfolio and why?

Post by j sleazy »

I have a number of REITs and I regret most of them since while their business models prospered in the pre-covid world most of them have hit major down turns and only one has gone green due to some dollar cost averaging I was doing during the dip.

Someone recommended Innovative Industrial Properties and I couldn't agree more. I have a very small portion of my portfolio in it and it's grown remarkably. I suspect it will continue to grow as we get closer to marijuana legalization. However like most of the high quality reits out their it's yield has become puny (less than 3%) so if you want cash flow its not the best choice.

Another great one that I've invested in a few months ago was PLD. They are a REIT that leases warehouse space to e-commerce giants. I'm very bullish on this one and although I bought it at the end of its miraculous rise and it's currently down 6-8% for me I have no intention of selling until it becomes a long term holding in my portfolio (gotta save on tax season) because I do believe that it's going to have a second wind and have another cycle of rapid growth.

If I could invest more in reits and didn't already have too high of a concentration in them I'd choose medical reits. Those seem to have the best recovery story and yields right now plus they will likely be stable despite covid lasting longer than we'd like
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Re: Which type of REITs are in your portfolio and why?

Post by joebruin77 »

Like others have mentioned, Vanguard VNQ is my main REIT holding. I have also supplemented with some specific REITS:

O - Realty Income Corp

MPW - Medical Properties Trust

DLR - Digital Realty Trust

RIOCF - RioCan (for some Canadian Exposure)
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Re: Which type of REITs are in your portfolio and why?

Post by nedsaid »

abuss368 wrote: Sat Jan 16, 2021 11:05 pm
MishkaWorries wrote: Sat Jan 16, 2021 10:38 am Does my house count? It's one of my largest assets so that means I'm already tilting to real estate.
How do you rebalance your house?

Tony
I suppose if your home value increases relative to stocks and bonds, you start knocking walls out and downsize your house. Conversely, if a stock/bond portfolio increases in value faster than your house you just remodel and add another room. A simpler version would be to let your landscaping and lawn deteriorate when the house gets to be too big a part of your net worth and then if the house gets to be too small a portion, you start mowing the lawn again. :wink:
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Re: Which type of REITs are in your portfolio and why?

Post by abuss368 »

nedsaid wrote: Sun Jan 17, 2021 3:58 pm
abuss368 wrote: Sat Jan 16, 2021 11:05 pm
MishkaWorries wrote: Sat Jan 16, 2021 10:38 am Does my house count? It's one of my largest assets so that means I'm already tilting to real estate.
How do you rebalance your house?

Tony
I suppose if your home value increases relative to stocks and bonds, you start knocking walls out and downsize your house. Conversely, if a stock/bond portfolio increases in value faster than your house you just remodel and add another room. A simpler version would be to let your landscaping and lawn deteriorate when the house gets to be too big a part of your net worth and then if the house gets to be too small a portion, you start mowing the lawn again. :wink:
That was good! I actually laughed out loud.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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