The Biggest Real Estate Investment Trusts in the World (REITs). For investors, real estate is typically viewed as a desirable asset class.
This is because it provides a number of advantages, including diversification (because of its lower correlation with equities), monthly income, and inflation protection.
The latter is referred to as “inflation hedging,” and it arises from the fact that real estate tends to gain during times of increasing prices.
Affordability is, of course, a key hurdle to most real estate investments. Property markets all across the globe have entered a state of bubble, making it very difficult for newcomers to get a foot in the door.
There are, thankfully, simpler methods to obtain awareness. One of them is investing in a real estate investment trust (REIT), which is a form of a publicly listed firm that owns and runs the income-producing real estate.
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What Is a Real Estate Investment Trust (REIT)?
A corporation must fulfill certain requirements to be classified as a REIT in the United States:
- At least 75% of your assets should be in real estate, cash, or US Treasury bonds.
- Rents, mortgage interest, or real estate sales must account for at least 75% of gross revenue.
- Dividends to shareholders must account for at least 90% of taxable revenue.
- Assume the status of a taxable company.
- A board of directors or trustees will oversee the operation.
- After one year of operation, you should have at least 100 shareholders.
- Have no more than five persons owning more than half of the company’s stock.
Purchasing shares in a REIT is identical to buying stock in any other publicly listed firm. Exchange-traded funds (ETFs) and mutual funds that carry a REIT basket are also available. Finally, some REITs are private, which means they aren’t listed on public stock markets.
The Top 10 by Market Capitalization
As of March 25, 2022, these are the world’s ten biggest publicly listed REITs.
| REIT | Market Cap | Dividend Yield | Property Type |
|---|---|---|---|
| Prologis (NYSE: PLD) | $116.4B | 2.03% | Industrial |
| American Tower (NYSE: AMT) | $109.8B | 2.38% | Communications |
| Crown Castle (NYSE: CCI | $76.8B | 3.35% | Communications |
| Public Storage (NYSE: PSA) | $65.9B | 2.14% | Self-storage |
| Equinix (NYSE: EQIX) | $64.4B | 1.74% | Data centers |
| Simon Property Group (NYSE: SPG) | $48.9B | 5.07% | Malls |
| Welltower (NYSE: WELL) | $43.0B | 2.58% | Healthcare |
| Digital Realty (NYSE: DLR) | $40.1B | 3.55% | Data centers |
| Realty Income (NYSE: O) | $40.1B | 4.44% | Commercial |
| AvalonBay Communities (NYSE: AVB) | $34.6B | 2.62% | Residential |
REITs target distinct market segments, as seen above. Before making an investment, it’s crucial to understand the distinctions between them.
Prologis, for example, maintains the world’s biggest logistics real estate portfolio. Warehouses, distribution centers, and other supply chain facilities may be found all over the world. It’s logical to believe that this REIT will profit from further e-commerce growth—more on that later.
Realty Income, on the other hand, has approximately 11,100 commercial real estate holdings throughout the United States and Europe. It leases these buildings to big retailers such as Walgreens and 7-Eleven, which account for 8.1 percent of the REIT’s yearly revenue.
More Than Just Buildings
Although cell towers and data centers may not seem to be “real estate,” they are both important components of contemporary infrastructure that need space.
This group includes American Tower and Crown Castle, both of which own wireless communications assets in the United States and around the world. Increased use of 5G networks such as The Internet of Things is anticipated to help them (IoT).
Equinix and Digital Realty, on the other hand, are focused on data centers, a rapidly developing market that is benefiting from digitization. Both of these REITs have partnerships with large tech companies like Amazon and Google.
Trends to Keep an Eye On
Overarching patterns discovered throughout the globe may have a big impact on real estate demand. One of these factors is population increase and urbanization, which has driven up housing costs in many cities throughout the globe.
There’s also the growing popularity of e-commerce, which has resulted in a surge in warehouse space demand. Amazon’s tremendous expansion during the COVID-19 pandemic, during which the business quadrupled the number of its warehousing facilities, best exemplifies this.
Ecommerce accounts for just 19.6% of total retail sales globally. Industrial real estate values might see a strong, long-term increase if that number continues to climb.