Real Estate Investor Magazine South Africa May 2016 | Page 26

SA REITS

The Perfect
Investment
Five types of REITs and how to invest in them
BY DREW HOOK

R

eal estate investment trusts (REITs) are a key
consideration when constructing any equity or
fixed-income portfolio. They provide greater
diversification, potentially higher total returns and/or
lower overall risk. In short, their ability to generate
dividend income along with capital appreciation
make them an excellent counterbalance to stocks,
bonds and cash. REITs generally own and/or manage
income-producing commercial real estate, whether
it’s the properties themselves or the mortgages on
those properties. You can invest in the companies

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MAY 2016 SA Real Estate Investor

individually or through an exchange-traded fund or
mutual fund. Here we look at a few of the main ones
and their historical returns.

Retail REITs

Approximately 24% of REIT investments are in
shopping malls and freestanding retail. This represents
the single biggest investment by type worldwide.
Whatever shopping center you frequent, it’s likely
owned by an REIT. When considering an investment
in retail real estate, one first needs to examine the
www.reimag.co.za