REIT Fundamentals Look Good
What trends are working either in favor of or against specialized REITs?
It's hard to say, given that each REIT in this subcategory focuses on a very specific part of the economy. But the economy, demographic changes, and commodity prices are expected to play a big part in the appeal of this sector.
DIVERSIFIED REITS
What are they?
This group spreads its bets among several types of properties, representing a diversified collection of real estate.
What's S&P's take?
"We have a neutral fundamental outlook on this group, which holds a mix of office, industrial, retail, and in some cases, residential properties. Accordingly, we expect earnings growth largely in line with the overall REIT average."
What trends are working either in favor of or against diversified REITs?
It depends on what types of properties each REIT owns. S&P believes that those diversified REITs that own a mix of retail, industrial, healthcare, and office properties should see growth based on the health of those sectors and the economy. Those diversified REITs that own a big stake in industrial real estate should see a boost thanks to the health of the global economy. But those REITs with major stakes in residential properties could be pressured by the growing supply of rental properties hitting the market.
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