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.
|REIT||Market Cap||Dividend Yield||Property Type|
|Prologis (NYSE: PLD)||$116.4B||2.03%||Industrial|
|American Tower (NYSE: AMT)||$109.8B||2.38%||Communications|
|Crown Castle (NYSE: CCI||$76.8B||3.35%||Communications|
|Public Storage (NYSE: PSA)||$65.9B||2.14%||Self-storage|
|Equinix (NYSE: EQIX)||$64.4B||1.74%||Data centers|
|Simon Property Group (NYSE: SPG)||$48.9B||5.07%||Malls|
|Welltower (NYSE: WELL)||$43.0B||2.58%||Healthcare|
|Digital Realty (NYSE: DLR)||$40.1B||3.55%||Data centers|
|Realty Income (NYSE: O)||$40.1B||4.44%||Commercial|
|AvalonBay Communities (NYSE: AVB)||$34.6B||2.62%||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.
Walmart Owns Most of the Supermarkets in Mexico
Walmart’s presence in Mexico is dominant, with over 2,700 stores. How does their store count compare to companies in the region?
Walmart Owns Most of the Supermarkets in Mexico
The U.S. and Mexico have influenced each other in many ways over the course of their history, through both the exchange of culture and the cross-border trade of goods and services. One lesser-known area of overlap between the two nations? Supermarket ownership.
This graphic from Latinometrics ranks supermarket popularity in Mexico by tallying the number of locations per chain, and showing who owns those brands.
Mexico’s Relationship with Walmart
When it comes to supermarkets in Mexico, no single company comes close to matching the reach of Walmart. Also the world’s largest company by revenue, Walmart has over 2,700 stores in the country, including chains it owns such as Sam’s Club and Bodega Aurrera. The latter is both the largest supermarket within the Walmart category, and also the most popular in Mexico.
Bodega Aurrera was first established in the 1970s, two decades before Walmart entered Mexico’s market directly in 1991. The discount store now has some 2,000 locations across the country.
In fact, it’s almost safe to say that Mexico is Walmart’s second home. After the U.S., which has just over 5,000 stores, the greatest number of Walmart stores reside in Mexico. But on a per capita basis, there are more Walmart-owned stores in Mexico. Specifically, there is about one Walmart-owned store per 47,000 Mexicans, compared to 62,000 for Americans.
|Country||Number of Walmart Stores|
Source: Walmart.com, Statista (International figures, January 2022), *Japan/UK figures from January 2021
The company’s presence in Mexico is so strong that Walmart’s Mexico division trades separately on the Bolsa Mexicana de Valores (BMV) under the name Walmex. In March of 2022, Walmex had a market cap above 1.3 trillion pesos, or $64 billion.
Supermarkets in Mexico by Revenue Market Share
Overall, with the thousands of stores that they operate, Walmart’s revenue in Mexico gives it a 68% market share within the country’s supermarket industry.
Other American grocery retailers to make the list include H-E-B, a San Antonio-based chain with stores in northeast Mexico, and Costco, which opened its first Mexican location in 1992 as Price Club (before the companies merged).
Sorianna, the next biggest supermarket operator, holds about 15% of the industry’s market share. It is joined by Chedraui, Casa Ley, La Comer, and Alsuper as Mexico’s biggest domestic grocery chains, with some of them also extending their reach into the Southwest United States.
American Companies That Failed in China
The Chinese market is notoriously difficult for foreign businesses to gain a foothold in. Here, we look at U.S. brands that tried and failed
American Companies That Failed in China
For decades, China has been a top priority for American companies looking to expand.
This is because the country’s middle class is simply enormous, growing from 3.1% to 50.8% of the country’s total population between the years 2000 and 2018. According to Brookings, there are now at least 700 million people in China’s middle class, and this group has never had more disposable income to spend on consumer goods and services.
Despite the size and potential of the market, China is not an easy place for foreign businesses to enter. As this infographic shows, many of America’s biggest names eventually admitted defeat.
Companies by Tenure
The following table lists the tenures of every company included in the graphic.
It’s worth noting that Google’s parent company, Alphabet, still maintains a physical presence in China. Google’s services were banned by the Chinese government in 2010.
|Company||Enter Date||Exit Date||Tenure in months|
|eBay||July 2003||December 2006||41|
|Amazon||August 2004||July 2019||178|
|Yahoo!||September 1999||November 2021||266|
|Best Buy||May 2006||March 2011||58|
|The Home Depot||December 2006||September 2012||69|
|January 2006||March 2010||50|
|Forever 21 (1st attempt)||June 2008||June 2009||12|
|Forever 21 (2nd attempt)||December 2011||April 2019||88|
|Forever 21 (3rd attempt)||August 2021||Ongoing||Ongoing|
|Groupon||March 2011||June 2012||15|
|Uber||July 2014||August 2016||25|
|Macy's||August 2015||December 2018||40|
|February 2014||October 2021||92|
Dates were gathered from various media reports and sources. There may be small deviations from when a company actually entered or exited.
The reasons for why these companies withdrew are surprisingly similar, and can be broken down into two broad categories.
Retailers Fail to Adapt
Failing to adapt to the cultural differences of Chinese consumers is a common mistake. Here’s how two American retailers learned this lesson the hard way.
Best Buy struggled because Chinese consumers were not willing to pay a premium for brand-name electronics. Local retailers could often source similar (or counterfeit) goods for much cheaper, and undercut Best Buy’s prices.
“Why buy a Sony DVD player or Nokia phone at Best Buy when you can pay less for the exact same product at a local store?”
– Shaun Rein, China Market Research Group
Best Buy also made the mistake of bringing over its large flagship stores, which were out of reach for most consumers. Due to severe traffic congestion, locals preferred smaller shops that were closer to home.
The Home Depot expanded into China around the same time as Best Buy, but unfortunately it was another cultural mismatch.
Home Depot failed to acknowledge that “do it yourself” repairs are not a strong cultural match for China. Labor costs are relatively low, so rather than do the work themselves, many homeowners prefer to rather hire someone else to do it. On the other side of the equation, the American brand failed to win over contractors doing the repairs and renovations.
The Home Depot’s product offerings were also left unchanged from America, making them a poor match for local tastes. As a point of comparison, IKEA has had a presence in China since 1998, and continues to open new stores to this day.
Tech Firms Clash with Regulators
Uber’s experiences in China make a good case study on how American tech firms struggle to succeed in Asia’s biggest economy.
For starters, breaking into the Chinese market was incredibly expensive. Uber spent billions on subsidies to attract customers and drivers, and losses were quickly piling up. To make matters worse, domestic rivals like DiDi were also handing out subsidies.
On the operational side, Uber ran into several hurdles. To avoid issues with China’s data localization laws, the company needed servers on Chinese soil. Its navigation provider, Google Maps, also had limited accuracy in the country. This left Uber with no choice but to partner with Baidu, a Chinese tech company.
The final straw, however, was likely a set of impending regulations which targeted the ride-hailing industry. Under these rules, Uber risked losing control of its data, and would need both provincial and national regulatory approvals for its activities. Even further, subsidies would also no longer be allowed.
Uber realized that doing business in China was unsustainable, but its exit wasn’t exactly a failure. In 2016, Uber sold its assets to rival DiDi and took an 18.8% stake in the company. Ironically, DiDi is now embroiled in a conflict with Chinese regulators over its listing on the NYSE.
The Tech Fallout Continues
Since Uber’s departure, the Chinese government has increased their grip over the tech industry. This has driven more American firms out of the country, including Yahoo and LinkedIn, which is now owned by Microsoft.
Both firms announced their withdrawals in 2021 and were rather clear about why they made the decision. Yahoo cited its commitment to a “free and open” internet, while LinkedIn says its decision was due to a “considerably more difficult operating environment and higher regulatory requirements”.
Given the geopolitical tensions between the U.S. and China, companies that generate data (often seen as a national security concern) are likely to continue facing regulatory hurdles.
Outside of tech, China is still a massive opportunity for American businesses. By 2027, the country’s middle class is expected to reach 1.2 billion people, or one quarter of the global total.
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