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Stock Strategist

Equity REITs as Part of a Long-Term Investment Plan

Resilience makes equity REITs an attractive component of a long-term strategy.

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Making the Case for Equity REITs as Part of a Long-Term Investment Strategy
We believe equity REITs should be part of a long-term investment strategy based on a number of benefits, including diversification, their ownership of high-quality commercial real estate portfolios, sustainable yield and income growth potential, flexible capital structures, and relative risk, reward, and volatility. We also feel equity REITs are well-positioned to manage through potentially challenging economic circumstances, including slower than expected economic growth and/or rising inflation or interest rate environments.

Despite relatively strong investment performance, equity REITs presently trade 35% below peak valuations, reached in February 2007, and continue to benefit from low interest rates and strong demand for asset classes, providing inflation and interest rate hedging characteristics.

Philip J. Martin does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.