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Understanding REIT Sectors Learn how REIT sectors respond different to the stages of the economic cycle.
BY Qing Li

INTRODUCTION



In recent years, the U.S. real estate sector expanded to include a wide range of companies that own and operate a diverse set of assets. As recently as 2010, the sector was dominated by companies that owned traditional commercial properties such as office buildings, apartment complexes, warehouses, and shopping centers. However, the recent growth of specialized REITs—like those that own cell towers, data centers, and timberland, among other non-traditional real estate assets—has transformed the sector into a complex array of companies that derive income from highly distinct assets. While all REITs share certain characteristics such as offering relatively high dividend yields, the fundamental differences in the underlying assets owned by REITs across sectors have led to different investment characteristics and patterns of returns and volatility.

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