7. Real Estate Investment Trusts

  1. H. Kent Baker and
  2. Greg Filbeck
  1. Brad Case

Published Online: 2 APR 2013

DOI: 10.1002/9781118656501.ch7

Alternative Investments: Instruments, Performance, Benchmarks, and Strategies

Alternative Investments: Instruments, Performance, Benchmarks, and Strategies

How to Cite

Case, B. (2013) Real Estate Investment Trusts, in Alternative Investments: Instruments, Performance, Benchmarks, and Strategies (eds H. K. Baker and G. Filbeck), John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118656501.ch7

Author Information

  1. Senior Vice President, NAREIT

Publication History

  1. Published Online: 2 APR 2013
  2. Published Print: 18 MAR 2013

ISBN Information

Print ISBN: 9781118241127

Online ISBN: 9781118656501

SEARCH

Keywords:

  • REITs;
  • core;
  • core-plus;
  • liquidity;
  • principal–agent issues;
  • capital market discipline

Summary

This chapter focuses on the return characteristics of commercial real estate investments made through real estate investment trusts (REITs). REITs enable investors to access the commercial real estate asset class indirectly through ownership of equity shares in a company whose assets consist primarily of commercial properties or mortgages and whose revenues derive primarily through commercial property leases or mortgage payments. Investments in equity shares of listed REITs preserve liquidity while exposing the investor to short-term fluctuations not related to property market developments. Historical performance data suggest stronger risk-adjusted returns for investments in listed REITs than for other real estate investments. This result may be attributable to differences in principal–agent issues, financing practices, and capital market discipline.