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Investing in REITs. Real Estate Investment Trusts. 4th Edition. Bloomberg

  • ID: 2212762
  • Book
  • 448 Pages
  • John Wiley and Sons Ltd
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Praise for Investing in REITs

"A necessary starting tool for anyone interested in building a foundation in understanding the REIT market."
Steve Buller REIT Portfolio Manager, Fidelity Investments

"REITs are a great investment idea as they provide a way for investors to gain exposure to an important asset class that is otherwise hard to access. The sector can, however, be daunting for the uninitiated, as it is filled with jargon, performance metrics, and valuation tools that are not typically employed elsewhere. Ralph Block has cut through the clutter and created a must–read road map for anyone investing in REITs."
Mike Kirby Cofounder, Green Street Advisors

"A perfect blend of street talk and clear thinking that will provide the advice and knowledge that both first–time as well as seasoned REIT investors can benefit from".
Bryce Blair CEO & Chairman, AvalonBay Communities, Inc.

"If you are a REIT investor, or are thinking of becoming one, Investing in REITs will unlock opportunities for you. Since its first publication in 1998, it remains a must–read for anyone interested in REITs. The first thing I did when I joined NHP in 2003 was read Ralph′s book and the best advice I can give you is to do the same."
Douglas M. Pasquale Chairman of the Board, President & CEO, Nationwide Health Properties, Inc.

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Introduction xi

Acknowledgments xv

Part I Meet the REIT

Chapter 1 REITs: What They Are and How They Work 3

Types of REITs 5

General Investment Characteristics 6

Higher Current Returns 11

Summary 17

Chapter 2 REITs versus Competitive Investments 19

Bonds 20

Convertible Bonds 22

Preferred Stocks 23

Other High– Yielding Equities 24

Other Real Estate Investment Vehicles 26

Summary 31

Chapter 3 Today s REITs 33

The First REIT 33

The Tax Reform Act of 1986 34

UPREITs and DownREITs 35

REIT Modernization Act and RIDEA 37

Lending REITs versus Ownership REITs 39

Expansion of REIT Property Sector Offerings 40

Summary 41

Chapter 4 Property Sectors and Their Cycles 43

Ups and Downs 45

Property Sectors 49

Summary 87

Part II History and Mythology

Chapter 5 REITs: Mysteries and Myths 91

Changing Attitudes toward REITs 91

Myths about REITs 97

Summary 108

Chapter 6 A History of REITs and REIT Performance 109

The 1960s: Infancy 109

The 1970s: Adolescence and Turbulence 111

The 1980s: Overbuilding The Troll Under the Bridge 113

The 1990s: The Modern REIT Era Plus More Growing Pains 115

2000 to 2007: Credibility and Market Acceptance 124

2007 through 2010: REITs Survive the Great Recession 127

Recent Trends 134

Summary 139

Part III Investing Intelligently in REITs

Chapter 7 REITs: Growth and Value Creation 143

The Signifi cance of FFO and AFFO 144

The Dynamics of FFO/AFFO Growth 149

Internal Growth 152

How to Build Internal Growth into a Lease 157

Other Ways to Generate Internal Growth and to Create Shareholder Value 158

External Growth 163

More External Growth Avenues 172

Summary 173

Chapter 8 Searching for Blue Chips 175

Investment Styles 175

Growth REITs 176

Value or Turnaround REITs 178

Bond– Proxy REITs 179

The Virtues of Blue– Chip REITs 180

The Importance of Allocating Capital Wisely 190

Summary 212

Chapter 9 The Quest for Investment Value 215

The Investor s Dilemma: Buy–and–Hold versus Trading 215

The Buy– and– Hold Strategy 217

REIT Stock Valuation 218

Valuing REITs as a Group 231

Summary 237

Chapter 10 Building a REIT Portfolio 239

How Much of a Good Thing Do You Want? 239

Diversifi cation among REITs 245

Toward a Well– Balanced Portfolio 248

How to Get Started 251

Summary 259

Chapter 11 Investing in Global REITs and Property Companies 261

How the U.S. REIT Revolution Spread around the Globe 264

Mapping the Size of Global Property Stock Markets 274

Managing a Global Real Estate Securities Portfolio 284

The Practicalities of Investing Overseas for the Individual Investor 287

A Summary: Stocks for All Investment Seasons 298

The Long– Term Evidence Supporting Investments in

Global Real Estate Securities 300

Part IV Risks and Future Prospects

Chapter 12 What Can Go Wrong? 309

Issues Affecting All REITs 309

Problems Affecting Individual REITs 323

Summary 333

Chapter 13 Tea Leaves: Some Thoughts about the Future 335

Additional Real Estate Owners Will REITize 337

Increasing Investor Demand for REITs 344

Larger REITs: Is Bigger Really Better? 353

Additional New Trends 360

So Much More to Come 366

Summary 367

Appendix A Death and Taxes 369

Appendix B Case Study: FFO, AFFO, FAD, and CAD 373

Appendix C Cost of Equity Capital 377

Appendix D REIT Portfolio Management 381

Appendix E Largest Global Real Estate Companies as of December 2010 391

Glossary 413

About the Author 423

About the Contributors 425

Steven D. Burton 425

Kenneth D. Campbell 425

Index 427

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Ralph L. Block
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