The Birth of REITs

After the post-1980s real estate crash the savingsEntry level
and loan funding that had driven the speculativeMove-up
boom disappeared. Property values slumped asLuxury
funding dried up, until the next phase in the cycle - aActive adult/retirement
REIT-fueled recapitalization to encourage banks toResort/second home
once again lend to the property investment sector.OTHER
The major force in the process of recapitalizationSelf storage
was the use of Real Estate Investment TrustsManufactured housing
(REITS) - these publicly traded baskets of real estateThese are the general categories that are
assets provided the liquidity needed to reinvigorateunderstood by equity investors into REITs, yet those
the industry. Until mid-2007 U.S. REITs delivered 25%active within each segment have further
annualized returns. The REIT boom was augmentedclassifications, for example, in industrial:
by trading of Commercial Mortgage Backed SecuritiesWAREHOUSE DISTRIBUTION
(CMBS) and the real estate depression of the earlyRegional warehouse
1990s, which had seen 30-50% declines in value, wasBulk warehouse
firmly consigned to history (or is it?!)Heavy distribution
OFFICERefrigerated distribution
Build to suitRack-supported distribution
Suburban/urban speculationMANUFACTURING
Professional/medicalLight manufacturing
INDUSTRIALHeavy manufacturing
Build to suitAirport hanger
WarehouseFLEX
Flex/R&DR&D flex
RETAILOffice showroom
Neighborhood/community centerMULTITENANT
Power center/big boxFREIGHT FORWARDING
Lifestyle/town centerTruck terminal
RENTAL APARTMENTAir cargo
Suburban gardenDATA SWITCH CENTER
Urban high densityThe latest slump tells us that whilst we might have
HOTELfancy categories and investment vehicles there is no
Businessgetting away from the fundamentals of the real
Luxuryestate cycle - it will always keep us on our toes, and
FOR SALE HOUSINGprovide opportunities for savy investors.