#13 Good quality REITs can add income and relative stability to investors’ portfolios

By Anton Tagliaferro and Nigel Hale |  15 November 2018
buildings

The Real Estate Investment Trust (REIT) sector – previously called the Listed Property Trust sector – has always been a popular sector with Australian retail investors and currently comprises 7% of the S&P/ASX 300 Index. In this lesson we discuss what we have always believed are the most important aspects to focus on when selecting the appropriate REITs for IML’s portfolios.

While good quality commercial properties have done well over the last few decades there have been periods in the last 20 years when investors in REITs have suffered significant losses. 

So how does one go about selecting the right REIT to minimise the chance of large capital losses or disappointments in future?

Firstly, we need to look at the different classes of commercial real estate that are held by most REITs to understand the dynamics of the sector:

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