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Author: yodaorange Big red star, 1000 posts Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79514  
Subject: REITs beat private real estate by 5%/year Date: 5/1/2013 2:02 AM
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Very thought provoking article in Institutional Investor today that claims public REITs beat large private real estate deals by 5% per year. [1] The claim is that large institutional investors do NOT like the pricing volatility in public REITs. The private properties have smoother valuations over time. This kind of reminds me of the argument of non-traded REITs which claimed smoother valuations.

From the brief article:

For the 30 years through December 2011, though, listed REITs returned an average of 11.95 percent annual compared with core private real estate funds’ 6.97 percent.

The article quotes Mike Kirby from Green Street and others that claim institutional investors will up their allocation to public REITs. If this occurs, it would be significant for REIT valuations. The public REIT market cap is NOT nearly large enough to fill up the real estate allocations for institutional funds. . .

Short article is worth your time . . .



[1] Despite REITs’ Virtues, Institutions Still Favor Private Real Estate Funds</I
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