The Intelligent REIT Investor Guide

CHAPTER 9REITs: Mysteries and Myths

“The essence of investment management is the management of risks, not the management of returns.”

—Benjamin Graham

The more time that progresses, the more REITs have a chance to settle into investors' minds as investing norms. That's especially been true this century, as one REIT after another was ushered onto the S&P 500 index. It began with Equity Office Properties – the largest REIT at the time – in October 2001 and progressed from there. By the end of 2019, there were 31 such listings, representing $773 billion in market value, according to Nareit.

This isn't to say that everyone knows about them. They're still somewhat “niche‐ish” and too often viewed as an alternative to Treasury Bills and utilities on a yield‐comparison analysis. Even so, there are a growing number of people becoming very familiar with them as the long‐term wealth‐builders they are. And that's an intense improvement from the hard feelings and misunderstandings of the past.

Some investors have walked away from REITs because of the unique combination they offer, being both real estate and stock plays at the same time. That's hardly a traditional mix. Traditionally, you were either a landlord or a business big enough to be publicly listed. The two didn't combine. And though REITs trade as stocks by another name, that other name can make investors tense, automatically conjuring up the potential for complicated buying, selling, and tax operations.

Today, we know that ...