REITs are real estate investment trusts. Essentially, they let interested individuals pool their resources for the purpose of investing in real estate properties as well as other real estate-related assets, thus making them very useful for people who are interested in such assets but unable to come up with the necessary sums on their own. On top of this, it should be mentioned that REITs receive a special tax status so long as at least 90 percent of their income are distributed to their shareholders in the form of dividends, which is something that dividend investors are sure to find interesting. What do you need to keep in mind When investing in REITs?
There Is More Than One Class of REIT
Generally speaking, when people refer to a REIT, they are referring to the kind of REIT that specializes in real estate properties. However, it is important to note that there is more than one class of REIT out there, as shown by mortgage REITs that specialize in mortgages backed by real estate properties. Suffice to say that there are huge differences between REITs and mortgage REITs, meaning that interested individuals should approach them in very different ways.
Gauging the performance of REITs tend to be very similar when it comes to the broad strokes. Essentially, it is a matter of looking at factors such as rent levels, occupancy rates, operating costs, and opportunities for further expansion. With that said, one REIT can still conceal considerable differences from another REIT, not least because REITs tend to specialize in particular kinds of real estate properties. For example, one REIT might specialize in commercial real estate properties that are meant for retailers, while another REIT might specialize in residential real estate properties that are meant for people who prefer to live in apartments. These specializations have huge consequences for a REIT’s prospects, meaning that they can never be neglected.
Think In the Long Run
When it comes to REITs, interested individuals should think in the long run rather than focus on short-term fluctuations. Granted, this is much easier said than done because predicting the future is challenging even for the professionals, but there tends to be enough interest that REIT investors should be able to find out the likeliest broad strokes anyways. In any case, REITs with a better understanding of long-term trends can put themselves in a better position to capitalize on the opportunities while minimizing the risks, which is critical because changing positions in real estate properties can eat up enormous amounts of time, money, and other resources. As such, interested individuals who go with these far-sighted REITs can benefit as well.
Why Should You Consider Ventas For Your REIT Investment?
Ventas is a REIT that owns a portfolio of about 1,200 real estate properties in the United States, Canada, and the United Kingdom. Primarily, these real estate properties fall into one of two categories. One, there are housing communities that are meant for seniors. Two, there are buildings that are meant for healthcare providers. Besides these, Ventas is invested in research centers plus various other categories as well. From a long-term perspective, this seems like a very sensible position to take. In short, the populations of the United States, Canada, and the United Kingdom are expected to age in the decades to come, thus creating an increased demand for specialized housing for seniors. This is because while different seniors will be impacted to different extents by their advancing age, some degree of assistance and various other accommodations can help them live much happier and much healthier lives whether on their own or not than otherwise possible. Due to this, it seems reasonable to say that Ventas’s housing communities for seniors stand to benefit in the long run from this broad trend.
With that said, seniors tend to make much more use of healthcare as well. Combined with the constant advancements being made in the medical fields, this means that healthcare spending is expected to continue increasing in the times to come, which in turn, means a positive environment for healthcare providers as well as other organizations that are reliant on the demand for healthcare. Once more, this means that Ventas stands to benefit because of its investment in healthcare facilities as well as related real estate properties. On the whole, senior housing and healthcare facilities are a promising combination, which is why various other REITs have focused on this particular package as well.
On top of this, it should be mentioned that Ventas seems to have a very competent leadership team as well. In particular, it is worth mentioning that its current CEO and Chairwoman Debra Cafaro took up the reins when the sole tenant for Ventas’s real estate properties was about to file for bankruptcy, meaning that she has brought about a remarkable turn-around in the fortunes of her REIT to say the least. Moreover, there is evidence to suggest that Cafaro can be rather far-sighted as well, seeing as how she was one of the people who saw the 2008 financial crisis coming. Due to this example of farsightedness on her part, Ventas was able to stockpile cash beforehand, which didn’t just enable it to ride out the financial turmoil with relative smoothness but also put it in an excellent position to start making more aggressive moves in the aftermath.
Summed up, Ventas is a healthy REIT with positions in real estate properties that are expected to benefit rather than suffer from long-term trends for decades and decades to come. Better still, it seems to have capable leadership at the top, which is a considerable advantage that should never be underestimated when it comes to either REITs or any other kind of business. Of course, interested individuals should still look further into the REIT on their own to gauge whether it is right for them or not, but on the whole, Ventas seems an excellent choice for those who want something that they can count on for long-term dividends.