The overriding goal of this course is to provide participants with the information and analytical framework needed to make wise investment decisions regarding investment choices in REITs, an important asset class available to investors. This course considers REITs primarily from the view of the investor. We consider the characteristics of REITs, most especially the different types of REITs, the different investors and their investment appetites, and the available investment strategies. The risks, returns, and costs of investments in REITs are compared to the risks, returns, and costs of investments in portfolios of individual securities (stocks, bonds, and related financial investments) by individual and institutional investors. A primary goal is to provide potential investors the information they need to determine whether and when investments in a REIT rather than investments in individual stocks, bonds, and other financial instruments should be undertaken.
Types of REIT asset classes are explored and the nuances that accompany each type of asset class are detailed.
This introductory course primarily relies on lecture and class discussion, although we also utilize in-class individual and group exercises to illustrate theory and practice relevant to financial decision-making regarding investment in REITs. Class participants should bring a laptop to the course, preferably with Excel, and should have a basic familiarity with the workings of Excel software. Basic uses of Excel will be reviewed in class. A limited number of more advanced calculations will be explained in detail during the class.
- Understand the importance of REITs as a stand-alone investment and as an asset in a more diversified portfolio
- Understand characteristics, advantages, and disadvantages of investments in REITs
- Understand the formation and operating model of REITs
- Understand how the valuation of REITs is determined
- Basics of establishing a REIT
Individual investors, investment advisors, institutional investors, developers, as well as finance professionals looking to deal with real estate
- REIT characteristics and organizational structures: Goals and investment objectives of various real estate investments
- Advantages, risks, expected returns, and costs of REITs
- Identifying different investment strategies in the different REITs offerings that meet desired investment goals.
- What is a REIT?
- The history of REITs
- REIT Market overview, both US and Global
- How do REITs work for you?
Important Characteristics of REITs
- Why are REITs an important asset class?
Who invests in REITs?
- Is homeownership a substitute for investing in REITs?
- How to Qualify as a REIT
- Equity REITs
- Mortgage REITs
- Public Non-listed REITs
- Private REITs
- Lodging (Hospitality)
The REIT Life Cycle
Most REITs follow a similar life cycle of operations:
- Public Fundraising
- Property Acquisition
- Portfolio Management
- Exit Strategies
Investing in REITs & REIT Valuation
- How do I invest in REITs?
- REIT Mutual Fund or REIT ETF
How is the value of REIT shares typically assessed?
- Earning Growth
- Total Stock return, price growth and dividend yield
- Management Quality and Corporate Structure
- Underlying assets of the REIT
Net Asset Value (NAV)
- Net Operating Income (NOI)
- Capitalization (Cap) Rates
Examining Funds from Operations
- Adjusted Funds from Operations
- Examining Growth
- Applying a Multiple to FFO/AFFO
REIT Investment Strategies
Why Invest in REITs
- Competitive Long-Term Performance
- Substantial, Stable Dividend Yields
- Portfolio Diversification
REITs vs. Other Investment Vehicles
- REIT Operating Model and Returns
- REIT similarity to Mutual Funds
REIT risk and return profiles compared with:
- Equities (Stocks)
- Fixed Income (Bonds)
- Mutual Funds
- Investing directly into real estate
- Private Equity Funds
- Hedge Funds
How to form a REIT
- Summary of the basic tax law requirements applicable to REITs.
To qualify as a REIT, an entity must meet a number of organizational, operational, distribution and compliance requirements in the following areas.
- Examples of Law Firms with REIT expertise
- Examples of Accounting Firms with REIT expertise
- Examples of Investment Banking Firms with REIT expertise
Class evaluation of course and instructor