Real estate investment trusts (REITs) make it easy for the average investor to own a sliver of a large portfolio of cash-flowing commercial real estate. However, in real estate investing, quality is more important than quantity. That's why it's vital to know what's in a REIT's portfolio. Here's where to find what properties a REIT owns.
The first place to look
Some REITs make it easy to determine what properties they own. For example, office REIT Empire State Realty Trust (NYSE: ESRT) took on the name of the crown jewel of its portfolio: the iconic Empire State Building. However, that's only one of the 14 office properties in its portfolio that also includes premier retail space in the New York City area. In this case, the REIT makes it easy to find more details on those properties, as it has a full write-up on each one on its website.
Many REITs follow this blueprint of featuring their properties prominently on their website. That's because they use this as a marketing tool for potential tenants. This marketing information can also help investors learn what properties a REIT owns, enabling them to make better-informed investment decisions.
Digging a little deeper
However, a REIT's website isn't always the best place for investors to find what properties they own. An even better option is to check out quarterly supplemental operating and financial data packets. REITs publish this document on the investor relations side of their website along with their quarterly financial results. It gives investors more data on their operations, financials, and portfolios. Many REITs will provide information on each property in their quarterly supplemental report, though some own so many properties that they group their portfolio into regions or property types.
Leading office REIT Boston Properties (NYSE: BXP) provides detailed information on each of its 196 properties in its quarterly supplemental data packet. For example, investors will discover that the REIT owns a 60% interest in the iconic GM Building in Manhattan. Further, the REIT provides additional data on that property, including that it had nearly 2 million square feet of rentable space, 89.3% of which it leased at the end of 2020 at an average rate of $161.94 per square foot. Readers can also learn that the office REIT owns a hotel in Boston and residential properties in several cities.
Not all REITs go into as much detail on a property level in their supplemental data package. However, most at least give regional information about how many apartment communities, retail centers, or industrial buildings they own in each area. These quarterly supplemental data packages contain a tremendous amount of additional portfolio information that REIT investors will find useful, including top tenants (along with their credit ratings and remaining lease terms), industry concentrations, and upcoming lease expirations. They also usually contain data on recent property acquisitions, dispositions, and development/redevelopment projects a REIT has in its pipeline.
The supplemental data package is the go-to source for a REIT investor to understand what sets a REIT apart from others in its subgroup. For example, investors can discover that office REITs Cousins Properties (NYSE: CUZ) and Hudson Pacific Properties (NYSE: HPP) have opposite strategies. Cousins Properties' supplemental data shows that it focuses on properties in the Sun Belt region. On the other hand, Hudson Pacific Properties' supplemental report shows that it favors the West Coast, especially San Francisco, with a high tenant concentration of technology and media companies, including stakes in several Hollywood studio properties. The difference in what's in their portfolios could cause investors to favor one of these office REITs over the other.
Make data-driven investment decisions
It's vital to know the types of properties a REIT holds in its portfolio before buying shares. That's why investors should explore a company's website and quarterly supplemental data to learn more about what a REIT owns, since that can give them insight into its strategy for creating shareholder value. More data gleaned ahead of time can enable investors to make more informed investment decisions.
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