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Investing in REITs: Real Estate Investment Trusts, 4th Edition

ISBN: 978-1-118-00445-6
448 pages
October 2011
Investing in REITs: Real Estate Investment Trusts, 4th Edition (1118004450) cover image


The new Fourth Edition of the definitive handbook on investing in Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs), which provide some of the best total returns in the investment world, along with above-average dividend yields and stable earnings, have become increasingly popular with both individual and institutional investors. Investing in REITs, Fourth Edition has established itself as the definitive guide to understanding this attractive asset class. The book is invaluable for investors, financial planners, and investment advisers interested in understanding REITs and REIT investment opportunities.

As their earnings and dividends are beginning to grow again after the Great Recession—and as they are in a unique position to take advantage of distressed sale opportunities—now is an excellent time for investors to consider REITs for both diversification and strong total returns. The new edition covers:

  • A comprehensive history of the REIT industry
  • How REITs compare with other competitive investments
  • How to spot blue-chip REITs and control investment risk
  • How to value individual REIT stocks, and REIT shares generally
  • How to build a diversified REIT portfolio, directly or with REIT mutual funds
  • Understanding the risk-and-reward dynamics of commercial real estate
  • Assessing non-US REITs and how to invest in them
  • Important new developments and strategies in the REIT industry

Author Ralph L. Block, who has been investing in REIT stocks for 40 years and is widely considered a leading authority on REITs, brings the historical success of Investing in REITs right up to date. This book is an essential read for both individuals and institutions who desire to invest in commercial real estate through REIT stocks.

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Table of Contents



Part I: Meet the REIT.

Chapter 1: REITs: What They Are and How They Work.

Types of REITs.

General Investment Characteristics.

Higher Current Returns.


Chapter 2: REITs versus Competitive Investments.


Convertible Bonds.

Preferred Stocks.

Other High-Yielding Equities.

Other Real Estate Investment Vehicles.


Chapter 3: Today's REITs.

The First REIT.

The Tax Reform Act of 1986.

UPREITs and DownREITs.

REIT Modernization Act and “RIDEA”.

Lending REITs versus Ownership REITs.

Expansion of REIT Property Sector Offerings.


Chapter 4: Property Sectors and Their Cycles.

Ups and Downs.

Property Sectors.


Part II: History and Mythology.

Chapter 5: REITs: Mysteries and Myths.

Changing Attitudes toward REITs.

Myths about REITs.


Chapter 6: A History of REITs and REIT Performance.

The 1960s: Infancy.

The 1970s: Adolescence and Turbulence.

The 1980s: Overbuilding – The Troll Under the Bridge.

The 1990s: The Modern REIT Era—Plus More Growing Pains.

Recent Trends.


Part III: Investing in REITs Intelligently.

Chapter 7: REITs: Growth and Value Creation.

The Significance of FFO and AFFO.

The Dynamics of FFO/AFFO Growth.

Internal Growth.

How to Build Internal Growth into a Lease.

Other Ways to Generate Internal Growth and To Create Shareholder Value.

External Growth.

More External Growth Avenues.


Chapter 8: Searching for Blue Chips.

Investment Styles.

Growth REITs.

Value or “Turnaround” REITs.

Bond-Proxy REITs.

The Virtues of Blue-Chip REITs.

Access to Capital – and its Benefits.

The importance of Allocating Capital Wisely.


Chapter 9: The Quest for Investment Value.

The Investor's Dilemma: Buy and Hold Versus Trading.

The Buy-and-Hold Strategy.

REIT Stock Valuation.

Valuing REITs as a Group.


Chapter 10: Building a REIT Portfolio.

How Much of a Good Thing Do You Want?

Diversification Among REITs.

Toward A Well-Balanced Portfolio.

How to Get Started.


Chapter 11 Investing in Global REITs and Property Companies.

How the U.S. REIT Revolution Spread around the Globe.

Mapping the Size of Global Property Stock Markets.

The Long-Term Evidence Supporting Investments in Global Real Estate Securities.

Managing a Gobal Real Estate Securities Portfolio.

The Practicalities of Investing Overseas for the Individual Investor.

Part IV: Risks and Future Prospects.

Chapter 12: What Can Go Wrong?

Issues Affecting All REITs.

Problems Affecting Individual REITs.


Chapter 13: Tea Leaves: Some Thoughts about the Future.

Additional Real Estate Owners Will “REITize”.

Increasing Investor Demand for REITs.

Larger REITs: Is Bigger Really Better?

Additional New Trends.

So Much More to Come.



Appendix A: Death and Taxes.

Appendix B: Case Study: FFO, AFFO, FAD and CAD.

Appendix C: Cost of Equity Capital.

Appendix D: REIT Portfolio Management.

Appendix E: Largest Global Real Estate Companies as of December 2010.


About the Author.

About the Contributors.


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Author Information

Ralph L. Block, has been an active participant in the REIT industry for four decades, as an individual investor, investment advisor, professional money manager, author, publisher, and consultant. Mr. Block is currently the owner and proprietor of Essential REIT Publishing Co. For his many contributions to the REIT industry, Block received the 2004 Industry Achievement Award from the National Association of Real Estate Investment Trusts (NAREIT).

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Additional Praise for Investing in REITs, Fourth Edition

“I have enjoyed reading Ralph’s insightful and refreshing commentary on the REIT industry for years, and his REIT guide is an invaluable resource for those of us who work in the industry and also invest in REIT stocks. His extensive knowledge comes through clearly in an easy-to-follow guide for both the novice and real estate expert.”
—Robert Elms, Head of Debt & Equity Placement, Cushman & Wakefield, Inc.

Praise for Previous Editions of Investing in REITs

“For over thirty years, Ralph Block has observed and studied Real Estate Investment Trusts and has accumulated a storehouse and reservoir of knowledge and insights, which in this book he dispenses to the reader—simply, lucidly and logically. It is a must-read for anyone interested in the growing market of REITs.”
—Milton Cooper, Chairman & CEO, Kimco Realty Corporation

“Ralph Block has long advocated the merits of investing in REITs, and investors who have heeded his advice have profited handsomely. By making complicated issues accessible for investors of all types, Investing in REITs provides a great introduction to an investment vehicle that offers solid returns, moderate risk, and good diversification benefits.”
—Mike Kirby, Cofounder, Green Street Advisors

“In a clear, direct, and authoritative manner, Ralph Block provides and opens an extensive and illuminating window on investing in real estate investment stocks. He fully explains the story of REITs, flags their investment attributes, and underlines their role in a diversified portfolio. I highly recommend it to the investor considering REITs for the first time, as well as the investor with some knowledge about and experience with real estate stocks.”
—Steven A. Wechsler, President and CEO, The National Association of Real Estate Investment Trusts

“REIT investing has always been something of a ‘no-man’s land’ in the investment world. Common stock investors often look at REITs as real estate while real estate investors consider REITs to be stocks. Ralph Block has written a wonderful book that sheds light on an asset class that is becoming an increasingly important building block for the well-diversified portfolio.”
—Roger C. Gibson, CFA, Author of Asset Allocation: Balancing Financial Risk

“The well-informed author has written the most complete and easy-to-read book about real estate investment trusts yet. The stunning graphics are matched by excellent detailed information concisely arranged.”—The Los Angeles Times

“Ralph Block has made the world of REITs accessible to all. This is a superb book for every investor.”
—Tom Gardner, cofounder of The Motley Fool

Finally, a book that demystifies REIT s for both armchair investors and seasoned professionals. Investing in REITs by Ralph Block is a balanced, clearly written guide that fills a major void in today’s investment literature.”
—Jonathan Litt, Senior Real Estate Analyst, Salomon Smith Barney

“Whether you’re an individual or institutional investor, you won’t find a better primer on REIT investing. Ralph Block takes the complex issues that must be addressed to produce above-average results when investing in REITland, and makes them simple and easy to understand. A must for every serious REIT investor’s library, and a fun read, to boot.”
—Geoffrey Dohrmann, Publisher and Editor in Chief, Institutional Real Estate Securities

Investing in REITs is a must-read for anyone wishing to gain a better understanding of this thriving sector of the capital markets. Given the continued transformation of private real estate to the public markets, this book is an essential resource for students, individual and institutional investors, and anyone else interested in understanding the REIT market.”
—David J. Hartzell, Distinguished Professor of Finance and Real Estate and Director of the Real Estate Program, The Kenan-Flager Business School, The University of North Carolina at Chapel Hill

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