For those that are unaware, simply put, a publicly traded REIT is a company that primarily invests in real estate, trades publicly on a stock exchange and must distribute 90 percent of its taxable income to investors as dividends.
Why do investors care so much about REITs? REITs offer a variety of benefits, but one major reason is that REITs offer the ability to quickly gain exposure to real estate broadly, both diversified and across property types. With publicly traded REITs owning approximately $2 trillion worth of real estate globally, it can be an easy way for investors to access the real estate market.
“Publicly traded REITs in the short term are more correlated to just equities generally, but then as we look over a longer time period, we find that publicly traded REITs are much more corelated, both in terms of returns and volatility, to the private market underlying real estate that the REIT owns,” says Tyler Grant, vice president at AEW Capital Management.
