3 REITs to watch out for

Founder and Chief Investment Officer of Montgomery Investment Management
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A REIT, or Real Estate Investment Trust, is an entity that owns income-producing real estate. Think of a managed fund that concentrates on property rather than stocks and you have the idea for a REIT. REITs offer investors a partial interest in the rental income, capital appreciation and/or development profits of a variety of property classes from residential to industrial.

Property categories include Commercial, which encompasses the Leisure, Retail, Office, Healthcare, Industrial and Hotel subcategories, and overseas, Residential REITS also exist. And of course there is rural or farmland. The big names in property REITs in Australia include: Lendlease, Mirvac, Stockland, Westfield, GPT, Scentre, Vicinity, Goodman Group and Dexus.

The obvious benefits of REITs include diversification through a low correlation with the broader market (although that might arguably be untrue most recently), income source diversification and stability and a possible hedge against inflation. Listed REITs also offer the immediate benefit of liquidity of the fractional interest in the property.

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