Hi folks - Wanted to get some perspective from experienced people. I have an offer from a respected middle-market firm for a Research Analyst position in the REIT sector. My questions are. What is the general state of affairs for research people in REIT sector? Currently this sector is in trouble with general downturn in real-estate market, but even in good days during my research I found that this sector is more dividends/income type and not growth oriented? What are the possible future career-options, other than continuing in research, for a sell-side research person? I am about to be done with MBA(Top 20 school) and a Level 3 candidate. I have decent experience on technology side but no professional investment management experience. Thanks in advance.
Short the reits. They’re doomed. Doomed I tellya.
Mortgage REITs are all spread-driven, but it sounds like you are looking at the equity REIT sector. Some general ideas on REITs: Equity REITs have traded roughly in-line or slightly above their NAVs, historically, and are currently trading below NAV. Each property sector is at a different point in its cycle, and certain sectors have strong catalysts for growth, while others are looking at lowering rents and occupancies. Generally, equity REITs are not known for strong growth, though there are certain companies that offer good ROIC through various business models, and do offer strong growth potential. About 2/3 of REIT returns have historically come from dividends, though in recent years, that has decreased to about 20-25% of returns. The last 7 years the industry has experienced strong returns, and this year has seen a pullback in price. As far as the sell-side research position exit opportunities, there are plenty: portfolio managers of real estate funds, PE focused on real estate, working for one of the REITs or a REOC or development company, getting a job with kkent, etc. REITs are not going anywhere. The underlying real estate values are still there, and have not changed dramatically in the last year. There will continue to be investors who wish to diversify their holdings by owning real estate, and REITs offers them a balanced diversification tool. For more information on REITs check out NAREIT dot com. There is a good link there to some basic investment information on the industry.
mcthorp Wrote: ------------------------------------------------------- > Mortgage REITs are all spread-driven, but it > sounds like you are looking at the equity REIT > sector. > > Some general ideas on REITs: Equity REITs have > traded roughly in-line or slightly above their > NAVs, historically, and are currently trading > below NAV. Each property sector is at a different > point in its cycle, and certain sectors have > strong catalysts for growth, while others are > looking at lowering rents and occupancies. > Generally, equity REITs are not known for strong > growth, though there are certain companies that > offer good ROIC through various business models, > and do offer strong growth potential. About 2/3 of > REIT returns have historically come from > dividends, though in recent years, that has > decreased to about 20-25% of returns. The last 7 > years the industry has experienced strong returns, > and this year has seen a pullback in price. > > As far as the sell-side research position exit > opportunities, there are plenty: portfolio > managers of real estate funds, PE focused on real > estate, working for one of the REITs or a REOC or > development company, getting a job with kkent, > etc. > > REITs are not going anywhere. The underlying real > estate values are still there, and have not > changed dramatically in the last year. There will > continue to be investors who wish to diversify > their holdings by owning real estate, and REITs > offers them a balanced diversification tool. For > more information on REITs check out NAREIT dot > com. There is a good link there to some basic > investment information on the industry. Thanks for your valuable insight. I did some research using NAREIT, while preparing for the interview. The position in question involves researching equities. My conclusion was that REIT’s in past have acted like “bonds on steroids” with steady coupon like dividends, though last five years have seen significant capital-gains.