Book review: The Intelligent REIT Investor: How to Build Wealth with Real Estate Investment Trusts by Stephanie Krewson-Kelly
The Brits love their property. Indeed, it remains the dream of most young adults in this country to own a property of their own one day. With the advent of buy-to-let and other purchasing schemes, they also like to invest in it.Stephanie Krewson-Kelly’s book The Intelligent REIT Investor: How to Build Wealth with Real Estate Investment Trusts, is therefore timely.
The author’s experience as a sell-side Reit analyst and investor relations specialist for a major US Reit renders her well-qualified to write this book. It was borne out of the idea that basic information on Reits is very difficult to find.
Moreover, she believes the rapid growth of the Reit market (both in the US and globally) over the past 15 years is creating a demand for more information.
Reits are a misunderstood asset class. Are they real estate, similar to direct real estate funds that own assets, or are they equities? What kind of returns can you expect from REITs, and what is their risk profile? Ms Krewson-Kelly’s book sets out to answer these and other questions about Reits.
So what exactly are they?
Ms Krewson-Kelly defines them as public companies open to investors who want to benefit from receiving real estate income without purchasing, managing or financing property directly. Reits were created under the Reit Act of 1960, she continues, and are structured in such a way that they pay no corporation tax if they pay out 90 per cent of their taxable income as dividend. This, she explains, gives investors the attractive income that has come to be associated with real estate investment.
Ms Krewson-Kelly’s book aims to give readers all the tools they require to analyse and evaluate property companies. Organised into two parts, it starts with a simple What is a Reit? and Why Invest in Reits? This provides a good general understanding of the characteristics of Reit shares, the companies behind them, their dividend profile, how to analyse their stocks, and how to look at the different property types. The second part examines the more technical aspects of the asset class such as the structures of different Reits and valuation metrics. Both parts of the book are explained in a very user-friendly manner.
The principal reason why people invest in Reits is usually dividends. Indeed, many investors buy them solely for the attractive dividend yields they offer. But they have other benefits as well, argues Ms Krewson-Kelly, such as acting as a very effective diversification tool. According to her: “a wealth of research has proven that investing in Reits helps to lower risk and increase returns on a portfolio of stocks and bonds”.
In short, Ms Krewson-Kelly’s book is lively and engaging. It is easy to read and provides readers with a solid methodology for understanding the asset class and how to apply that understanding in making solid choices in investing in US Reits.
Published by Wiley
Gillian Tiltman is a portfolio manager for Neuberger Berman’s UK and continental European real estate portfolios
