To REIT or not to REIT

Posted on August 09, 2018

Investors seeking to diversify their portfolios often consider commercial real estate (CRE) as a viable option to achieve their goals. However, the universe of commercial real estate investment options is immense. For one, investors have the option to place their money in publicly traded real estate investment trusts (REITs) that invest in a number of businesses that build, own and manage commercial real estate, or they may instead invest directly in specific CRE properties.

No form of investment is completely devoid of risk; investors must evaluate how potential strategies may fit within their existing portfolio and weigh the pros and cons against their unique goals, risk tolerance and time horizon. For example, because most REITs are publicly traded, investors must be prepared to ride out the wide swings and dips they might find in similar investments in the equity markets. As we near end the first half of 2018, REIT performance has not yet met analyst expectations, and many are feeling the negative effects of recent market volatility and interest-rate hikes. Conversely, direct investment in CRE historically has not experienced the same volatility as the public markets and has even delivered recession-proof returns for many investors in recent years. New markets are opening up around the country, and commercial properties are attracting buyers in up and coming secondary markets. The outlook is positive.

The team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.