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The World’s Largest Real Estate Investment Trusts (REITs)

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World's largest real estate investment trusts

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The World’s Largest Real Estate Investment Trusts (REITs)

Real estate is widely regarded as an attractive asset class for investors.

This is because it offers several benefits like diversification (due to less correlation with stocks), monthly income, and protection from inflation. The latter is known as “inflation hedging”, and stems from real estate’s tendency to appreciate during periods of rising prices.

Affordability, of course, is a major barrier to investing in most real estate. Property markets around the world have reached bubble territory, making it incredibly difficult for people to get their foot in the door.

Thankfully, there are easier ways of gaining exposure. One of these is purchasing shares in a real estate investment trust (REIT), a type of company that owns and operates income-producing real estate, and is most often publicly-traded.

What Qualifies as REIT?

To qualify as a REIT in the U.S., a company must meet several criteria:

  • Invest at least 75% of assets in real estate, cash , or U.S. Treasuries
  • Derive at least 75% of gross income from rents, interest on mortgages, or real estate sales
  • Pay at least 90% of taxable income in the form of shareholder dividends
  • Be a taxable corporation
  • Be managed by a board of directors or trustees
  • Have at least 100 shareholders after one year of operations
  • Have no more than half its shares held by five or fewer people

Investing in a REIT is similar to purchasing shares of any other publicly-traded company. There are also exchange-traded funds (ETFs) and mutual funds which may hold a basket of REITs. Lastly, note that some REITs are private, meaning they aren’t traded on stock exchanges.

The Top 10 by Market Cap

Here are the world’s 10 largest publicly-traded REITs, as of March 25, 2022.

REITMarket CapDividend YieldProperty Type
Prologis (NYSE: PLD)$116.4B2.03%Industrial
American Tower (NYSE: AMT)$109.8B2.38%Communications
Crown Castle (NYSE: CCI$76.8B3.35%Communications
Public Storage (NYSE: PSA)$65.9B2.14%Self-storage
Equinix (NYSE: EQIX)$64.4B1.74%Data centers 
Simon Property Group (NYSE: SPG)$48.9B5.07%Malls
Welltower (NYSE: WELL)$43.0B2.58%Healthcare
Digital Realty (NYSE: DLR)$40.1B3.55%Data centers
Realty Income (NYSE: O)$40.1B4.44%Commercial
AvalonBay Communities (NYSE: AVB)$34.6B2.62%Residential

As shown above, REITs focus on different sectors of the market. Understanding their differences is an important step to consider before making an investment.

For example, Prologis manages the world’s largest portfolio of logistics real estate. This includes warehouses, distribution centers, and other supply chain facilities around the globe. It’s reasonable to assume that this REIT would benefit from further growth in ecommerce—more on this near the end.

Realty Income, on the other hand, owns a portfolio of over 11,100 commercial real estate properties in the U.S. and Europe. It rents these properties out to major brands like Walgreens and 7-Eleven, which together account for 8.1% of the REIT’s annual income.

More Than Just Buildings

Cell towers and data centers may not seem like “real estate”, but they are both critical pieces of modern infrastructure that take up land.

REITs that focus on these sectors include American Tower and Crown Castle, which own wireless communications assets in the U.S. and abroad. They are likely to benefit from the increased adoption of 5G networks and the Internet of Things (IoT).

On the other hand, Equinix and Digital Realty are focused on data centers, a fast growing industry that is benefitting from digitalization. Both of these REITs work with major tech firms such as Amazon and Google.

Trends to Watch

The demand for real estate can be heavily influenced by overarching trends found around the world. One of these is population growth and urbanization, which has drastically pushed up the cost of housing in many cities around the world.

There’s also the rising prevalence of ecommerce, which has triggered a boom in demand for warehouse space. This is best captured by Amazon’s massive growth during the COVID-19 pandemic, during which the company doubled the number of its warehouse facilities.

Globally, ecommerce accounts for just 19.6% of total retail sales. Should that figure continue to rise, industrial real estate prices could be in store for robust, long-term growth.

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United States

Charted: U.S. Median House Prices vs. Income

We chart the ever-widening gap between median incomes and the median price of houses in America, using data from the Federal Reserve from 1984 to 2022.

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A cropped chart with the ever-widening gap between median house prices vs. income in America, using data from the Federal Reserve from 1984 to 2022.

Houses in America Now Cost Six Times the Median Income

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

As of 2023, an American household hoping to buy a median-priced home, needs to make at least $100,000 a year. In some cities, they need to make nearly 3–4x that amount.

The median household income in the country is currently well below that $100,000 threshold. To look at the trends between median incomes and median house prices through the years, we charted their movement using the following datasets data from the Federal Reserve:

Importantly this graphic does not make allowances for actual household disposable income, nor how monthly mortgage payments change depending on the interest rates at the time. Finally, both datasets are in current U.S. dollars, meaning they are not adjusted for inflation.

Timeline: Median House Prices vs. Income in America

In 1984, the median annual income for an American household stood at $22,420, and the median house sales price for the first quarter of the year came in at $78,200. The house sales price-to-income ratio stood at 3.49.

By pure arithmetic, this is the most affordable houses have been in the U.S. since the Federal Reserve began tracking this data, as seen in the table below.

A hidden caveat of course, was inflation: running rampant towards the end of the 70s and the start of the 80s. While it fell significantly in the next five years, in 1984 the 30-year fixed rate was close to 14%, meaning a significant chunk of household income went to interest payments.

DateMedian House
Sales Price
Median Household
Income
Price-to-Income Ratio
1984-01-01$78,200$22,4203.49
1985-01-01$82,800$23,6203.51
1986-01-01$88,000$24,9003.53
1987-01-01$97,900$26,0603.76
1988-01-01$110,000$27,2304.04
1989-01-01$118,000$28,9104.08
1990-01-01$123,900$29,9404.14
1991-01-01$120,000$30,1303.98
1992-01-01$119,500$30,6403.90
1993-01-01$125,000$31,2404.00
1994-01-01$130,000$32,2604.03
1995-01-01$130,000$34,0803.81
1996-01-01$137,000$35,4903.86
1997-01-01$145,000$37,0103.92
1998-01-01$152,200$38,8903.91
1999-01-01$157,400$40,7003.87
2000-01-01$165,300$41,9903.94
2001-01-01$169,800$42,2304.02
2002-01-01$188,700$42,4104.45
2003-01-01$186,000$43,3204.29
2004-01-01$212,700$44,3304.80
2005-01-01$232,500$46,3305.02
2006-01-01$247,700$48,2005.14
2007-01-01$257,400$50,2305.12
2008-01-01$233,900$50,3004.65
2009-01-01$208,400$49,7804.19
2010-01-01$222,900$49,2804.52
2011-01-01$226,900$50,0504.53
2012-01-01$238,400$51,0204.67
2013-01-01$258,400$53,5904.82
2014-01-01$275,200$53,6605.13
2015-01-01$289,200$56,5205.12
2016-01-01$299,800$59,0405.08
2017-01-01$313,100$61,1405.12
2018-01-01$331,800$63,1805.25
2019-01-01$313,000$68,7004.56
2020-01-01$329,000$68,0104.84
2021-01-01$369,800$70,7805.22
2022-01-01$433,100$74,5805.81

Note: The median house sale price listed in this table and in the chart is from the first quarter of each year. As a result the ratio can vary between quarters of each year.

The mid-2000s witnessed an explosive surge in home prices, eventually culminating in a housing bubble and subsequent crash—an influential factor in the 2008 recession. Subprime mortgages played a pivotal role in this scenario, as they were issued to buyers with poor credit and then bundled into seemingly more attractive securities for financial institutions. However, these loans eventually faltered as economic circumstances changed.

In response to the recession and to stimulate economic demand, the Federal Reserve reduced interest rates, consequently lowering mortgage rates.

While this measure aimed to make homeownership more accessible, it also contributed to a significant increase in housing prices in the following years. Additionally, a new generation entering the home-buying market heightened demand. Simultaneously, a scarcity of new construction and a surge in investors and corporations converting housing units into rental properties led to a shortage in supply, exerting upward pressure on prices.

As a result, median house prices are now nearly 6x the median household income in America.

How Does Unaffordable Housing Affect the U.S. Economy?

When housing costs exceed a significant portion of household income, families are forced to cut back on other essential expenditures, dampening consumer spending. Given how expanding housing supply helped drive U.S. economic growth in the 20th century, the current constraints in the country are especially ironic.

Unaffordable housing also stifles mobility, as individuals may be reluctant to relocate for better job opportunities due to housing constraints. On the flip side, many cities are seeing severe labor shortages as many lower-wage workers simply cannot afford to live in the city. Both phenomena affect market efficiency and productivity growth.

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