10 Things You Did Not Know About US REITs

7 December 2017 | World Views | Mark Mayer

We’re back to the world’s largest REIT market again this week, focusing in on US numbers in this top 10 list of “things you didn’t know about U.S. REITs”. Since REITs were birthed out of a bill passed by congress in 1960, they have grown in popularity and their model has been imported by over 30 countries the world over, including South Africa.

Here are ten ways that US REITs have made an impact in the world’s largest economy:

1)     US REITs contributed an estimated 2 million full-time jobs to the U.S. economy last year. The income earned by these employed tallied a whopping $118.6 billion.

2)     Mortgage REITs (REITs that loan money for mortgages to owners of real estate or that purchase existing mortgages or mortgage-backed securities, earning their revenue primarily by interest on these loans) have helped finance 1.8 million US homes.

3)     An incredible 70 million Americans are owners of REITs in their retirement or discretionary investment portfolios.

4)     The 2016 REIT expense column for new US real estate developments and existing property maintenance came to $52.8 billion.

5)     Two thirds or approximately $2 trillion of the total $3 trillion estimated gross assets owned by US REITs are accessible through publicly traded, listed REIT investments.

6)     Dividend income from US REITs totalled $60 billion in 2016, about as much as the GDP of Luxembourg (ranked 76th largest country by GDP according to the IMF in 2016).

7)     Thirty-two REITs hold pride of place in the S&P 500 stock market index.

8)     In the United States, REITs successfully raised $78 billion in public market offerings from 1 January 2017 to 31 October 2017.

9)     On the 31 October 2017, the FTSE Nareit All REITs index (A US only REIT index comprising all REITs that are listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ National Market List), had a dividend yield of 4.2%. The S&P 500 by way of comparison was yielding 2%, less than half offered by US REITs that make up the FTSE Nareit All REITs index .

10) Research has suggested that as many as 70% of US registered advisers recommend REITs to their clients, a stance supported by numerous studies that have shown portfolios with REIT allocations of between 5% and 15% offer improved returns and reduced risk (measured by standard deviation) over the medium to long term.

REITs continue to grow in numbers and value in the US, the land of their creation. Their impact on the economy is profound and their acceptance by investors reaches far and wide.







Mark Mayer
Investment Specialist at Discovery Invest

Mark graduated with a Business Science Degree from the University of Cape Town in 2007. He then joined Sharenet, during which time he also completed his B.Com Honours through UNISA. Mark has helped to build, launch and manage derivative and share trading brokerage businesses. He is also a JSE Registered Securities Trader, and has worked on the trading desk at Sharenet. After seven-and-a-half years at Sharenet Mark then moved to Reitway Global (a specialist Global Listed Property Fund Manager) where his passion for property was further kindled. Mark currently works for Discovery Invest as an Investment Specialist on their Investec Managed fund offering. He has over ten years of experience in the equity and asset management sector and can be reached at: markm@discovery.co.za

The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Discovery Invest.

The information contained in this article is for informational purposes only and must not be regarded as a prospectus for any security, financial product or transaction. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial issue. Investors should consider this research/article as only a single factor in making their investment decision. We recommend you consult a financial planner/advisor to take into account your particular investment objectives, financial situation and individual needs. The views and opinions (where expressed) in this article are those of the author and do not necessarily reflect the official policy or position of Sharenet.