The New York Times' Vivian Marino makes the case for an investment in real estate investment trusts, and I'm inclined to agree.
It's a pretty contrarian investment. With daily headlines about the weakness of the real estate market, equity REITs are down an average of 7.73% this year. Mortage REITs are down more than 43% during the same period.
Marino also take a look at the 6 crucial factors to consider when analyzing a REIT: management, asset quality, growth prospects, balance sheet, value, and yield.
As I said, REITs are a contrarian investment here, but without the risk/integrity issues surrounding even more contrarian real estate plays like Novastar Financial (NYSE: NFI). The dividends also provide a margin of safety for REITs with strong balance sheets and solid prospects. You get paid to wait. The headline shock may be driving investors out of these companies and, while commercial real estate hasn't been hurt the way that residential has, it's been getting hammered as well -- perhaps a case of throwing the baby out with the bathwater.
To learn more about REITs, pick up a copy of Investing in REITs and visit InvestInReits.com.
Are REITs a really good investment here?
Posted Sep 17th 2007 4:39PM by Zac Bissonnette
Filed under: Newspapers, Columns
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