Many REITs are publicly traded on major securities exchanges, and investors can buy and sell them like stocks throughout the trading session. The dividend has been increased each year since then, at an annualized rate of 6.4%. Today, it's estimated that REITs collectively own about $3 trillion in gross assets; publicly traded equity REITs account for $2 trillion. And they make investing in real estate easy -- instead of having to do the work of searching for properties, and managing and maintaining properties, you can buy shares of a REIT with a simple click of the mouse.I also briefly mentioned in the previous section that REITs get a unique tax advantage. With over $1 billion of development scheduled to be completed during 2019, Essex is certainly taking advantage.Since its IPO in 1994, Essex Property Trust has delivered exceptional returns for shareholders. And, perhaps most impressively, the company generated annualized 13.4% total returns for shareholders over the past 20 years. Retirement The SEC has a Investopedia requires writers to use primary sources to support their work. Most REITs rely on borrowed money to some degree as well, so higher interest rates also translate to higher borrowing costs. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.With that in mind, here's a primer on REITs and five excellent apartment REITs you may want to take a closer look at.A REIT (pronounced "reet") is a unique type of investment vehicle that pools investors' money to buy real estate assets, similar to how a mutual fund pools investors' money to buy stocks or bonds.To qualify as a REIT, a company needs to meet certain requirements. In recent years, housing has become less affordable, which has been a positive catalyst for apartment owners. The overwhelming majority of REITs pay above-average dividends to shareholders.REITs are also excellent for adding diversification to your portfolio, as real estate is a separate asset class from stocks or bonds. You can find REITs that invest in office buildings, warehouses, shopping malls, data centers, hotels, and, of course, apartment buildings.There are several good reasons you might want to add REITs to your investment strategy. Over the past three years, the company sold $8.5 billion worth of apartment properties at an impressive 12% unlevered internal rate of return (IRR) -- a measure of the annualized return the company achieved on its investment -- and returned $4.2 billion of this to shareholders as special dividends while reinvesting the rest.Thanks to strong capital management, steady rent increases, and great expense controls (its overhead ratio -- the costs of doing business as a percentage of revenue -- is 5.6%, vs. 6.2% for peers), Equity has performed quite well for investors. Nareit ® is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. In May, UNIT passed the two-year anniversary of its spin-off into a publicly-traded REIT. In other words, Equity isn't just a buy-and-hold REIT. Properties in a REIT portfolio may include apartment complexes, data centers, healthcare facilities, hotels, infrastructure—in the form of fiber cables, cell towers, and energy pipelines—office buildings, retail centers, self-storage, timberland, and warehouses. Learn more about real estate. And, because it avoids the most high-barrier markets, its apartments have much greater price-point diversification than the others.In fact, well over half of its apartments rent for $1,300 or less per month. Most on-campus housing is extremely outdated -- in fact, the median age of on-campus housing in American Campus Communities' markets is more than Enter American Campus Communities. Returns as of 08/31/2020.
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