When it comes to building the most versatile real estate portfolio, it’s important to inform yourself regarding the types of REITs that you should be investing in. Generally, traditional REIT common stock is favored by investors when they are looking to take advantage of publicly listed real estate opportunities, which does make sense- US REIT common stock has, in the last decade, provided attractive returns coupled with income generation, potential diversification benefits, and a potential hedge against inflation. However, for more flexible real estate portfolios, it is shown that there is a unique opportunity for investors to access real estate-like returns with even higher income (and lower volatility) with US REIT preferred stock versus traditional REIT common stock. Read on to learn more about the best REITs to invest in. Luxe Crowdfunding is a top investment management platform in Florida. Call us today to see real returns on your investments!
What are US REIT Preferred Securities?
So what exactly are these US REIT preferred securities, and how can they help you? REIT preferred stock is a type of hybrid security that holds both characteristics of being equity-like and bond-like. Preferred stocks have a senior claim to earnings and dividends within the capital structure of REIT companies, versus common stock, but versus corporate bonds are generally junior. REIT preferred stock pays out dividends that are often considerably higher than REIT common stock and shares generally are issued at a par value. Although there are no voting rights bestowed to REIT preferred shareholders, they can still benefit from investing when issues are trading at discounts to par. Five years after the date of issuance is generally when REIT preferred stock becomes callable, at which point management is able to reserve the right to redeem the shares at par. The potential not only for income but also capital appreciation is provided by this five-year non-call period. Moreover, a more certain return opportunity over the time period is an additional benefit given to investors by this five-year non-call period.
REIT Preferred Stock For Real Estate Portfolios
Let’s look at why REIT companies, given the options of only issuing common equity or traditional corporate debt, even issue preferred stock at all. When REIT companies issue preferred stock (and not traditional corporate debt), rating agencies tend to give them more favorable treatment, which in turn allows these companies to showcase lower leverage levels to their prospective investors and analysts. Moreover, these types of stocks are able to give companies a unique source of capital. Although these shares are typically able to be called after five years at par, company management is able to keep the shares outstanding in perpetuity nf they wish. A wide range of REIT companies offer preferred stock, including companies that operate in sectors that focus on residential, office, retail, industrial, self-storage, data centers, infrastructure, healthcare, and lodging. When it comes to looking for the best REITs to invest in, it is worth looking at and considering investing in preferred stock.
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For flexible real estate portfolios, it may be good for you to invest in REIT preferred stock. If you’re looking for consulting regarding the best REITs to invest in, Luxe Crowdfunding is a top investment management company in Florida. Call us today for your investment queries!