What is a REIT (Real Estate Investment Trust)?
Think about the shopping center in your neighborhood or that shiny Downtown skyscraper. Could you buy them? If you already own your house, could you buy another one? What about that big warehouse that is keeping all the products you buy online? Maybe that self storage location you pass by? No? There’s a good chance you can’t buy any of them since those investments are out of reach for the majority of the population.
Imagine now if a lot of people came together and raised enough money to be able to buy that mid-rise building with a bunch of apartments so you can boost your income. Would you participate? Who would get the calls from all the tenants? Who would be responsible for the renovation that will be needed eventually? Who would collect the money and deal with defaults? A Property Manager would certainly be required. If you need the money, would you be able to easily sell your share of the property?
In a simple way, the Real Estate Investment Trusts (REITs) came to free us from all of that burden that comes with Real Estate investing making it accessible to everyone. Through the Stock Market, anyone can buy a fraction of a tax-efficient company that holds many properties diversified in various locations and professionally managed. You can indirectly own many different property types such as Apartments, Self Storage facilities, Hotels, Hospitals, Restaurants, Offices, and many many more. And the best part, receive dividends — paid monthly or quarterly — on your portion of the income generated by that Real Estate portfolio. That’s passive income you earn while sleeping. That’s REIT investing.
It's the easiest, safer, hands-off, more liquid instrument to invest in Real Estate.
For a more in-depth explanation, please visit Investopedia | Real Estate Investment Trust (REIT).
How frequent is the data updated?
Although alreits.com is not a trading platform, we try to update Market data near real-time.
Market data include: price, dividend per share, dividend yield, market cap, price/earnings.
Financial data from Large Cap REITs are updated as soon as they are released. Other REITs might take a couple of days to be updated on the platform.
Financial data include: Earnings metrics (FFO, AFFO, Net Income, among others), Earnings per Share, Assets, Debt ratios, Portfolio information.
Sector and Geography Diversification data is updated at least once a year from audited reports.
Diversification data include: number of properties per country/sector/industry, size, number of states/provinces, percentage of revenue.
Why you don't show only the Funds From Operations (FFO) anymore?
Every REIT will report the accounting adjustments that reflect its operational results. For Equity REITs, the Funds From Operations (FFO) is a common metric that will take into account several accounting adjustments such as amortization and deprecation. However, not all Equity REITs will report FFO. They usually report a variation of FFO such as Adjusted FFO, Normalized FFO, Core FFO, NAREIT FFO or no adjustment at all. To simplify analysis, we named this metric as FFO regardless if it was actually AFFO or Core FFO and this was confusing and led to many support questions.
Mortgage REITs function more like Financial companies. Since they don't own a lot of depreciating assets, they don't report metrics such as FFO and AFFO. Therefore, having FFO on the platform would cause even more confusion. We then decided to call this general metric among all REITs as simply Earnings. The REIT page and the score calculation will show exactly which metric was reported by the company (FFO, AFFO, Net Income etc) in an attempt to improve transparency and to cover the specifics of each company.
What is the Ranking System based on?
Our Ranking System is based on the literature, primarily the book Investing in REITs: Real Estate Investment Trusts by Ralph L. Block. The scoring system does not take into consideration any subjective metric such as price, price/earnings, discount to 52w highs, sentiment analysis or analyst estimates. We have no control over those metrics. The market behavior in the short term is proven to be random therefore cannot be predicted. Longevity as a public company, earnings and earnings per share growth rates, Dividend growth and Payout ratio, Debt analysis - these are facts that can be used to help investors understand the current financial situation of the companies. A high score doesn't mean the REIT will outperform the market, it just reflects the quality of the REIT. Because of that, the market will probably demand a premium on those REITs (higher-than-average price/earnings ratio). Use the Ranking System as a guide to the current financial performance of a REIT and not future returns.