Real Estate Investment Trusts (REITs)
Companies in this industry primarily own and manage income-producing real estate such as retail, office, industrial, and multifamily residential buildings. Major US companies include American Tower Corporation, Equity Residential, Host Hotels & Resorts, Simon Property Group, and Vornado Realty Trust; major international companies include H&R REIT (Canada), Icade (France), Landsec (UK), Link REIT (Hong Kong), and Stockland (Australia).
Outside the US, over 40 countries have established real estate investment trusts (REITs), and other countries are considering adopting REIT-like structures. There are about 870 listed REITs worldwide with a combined equity market capitalization of about $2.5 trillion as of December 2021, according to the National Association of Real Estate Investment Trusts (NAREIT).
The US REIT industry includes more than 1,000 companies, with over 225 REITs in the US registered with the SEC, according to National Association of Real Estate Investment Trusts (NAREIT). Industry size is measured by market capitalization and can vary significantly from year to year. These REITs have a combined equity market capitalization of more than $1 trillion, according to NAREIT.
Most REITs, known as equity REITs, own and manage income-producing real estate and constitute a subset of the real estate leasing industry. Equity REITs are distinguished from other real estate leasing companies by their IRS-sanctioned organizational structure, which offers tax advantages designed to attract investors. The REIT industry also includes mortgage REITs, which generate income for shareholders through mortgages on real estate rather than the real estate itself, and hybrid REITs, which own both real estate and mortgages.
The health of the economy drives demand for REITs as investment vehicles. Profitability depends on the value of the properties in the portfolio, which in turn, highly depends on real estate vacancy rates, supply, and competition from other available space. Large companies have advantages in deal-making, and economies of scale in marketing, computer and infrastructure investment, and operations. Smaller companies can compete by specializing not only in real estate type, but also in local markets.
Products, Operations & Technology
REITs are corporations that derive most of their revenue from owning or managing real estate, or from interest earned from mortgages secured by real estate.
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms