Growth Forecasted for North American REITs

The “North American REIT Industry – Growth, Trends, COVID-19 Impact and Forecasts (2022-2027)” report has been released by Researchandmarkets.com.

A REIT (real estate investment trust) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate.

Their appeal is simple: The most reliable REITs have a track record for paying large and growing dividends. Still, that potential for growth carries risks that vary depending on the type of REIT.

In North America, Canada, the U.S., Mexico, and Costa Rica only have Real Estate Investment Trusts approach in their real estate markets and economies. In the United States alone, there are 190 REITs with a total market cap of USD 1.3 trillion.

The U.S. is the oldest of all countries to create REITs in 1960 as a way for individual investors to own equity stakes in large-scale real estate companies. In the United States, demand for digital-style real estate continues, whether it’s in the tower sector or the data center sector.

In Canada, there are 48 REITs with a total market cap of USD 78.3 billion as of September 30, 2019. The growing demands for climate change, hazard risk, and ESG disclosure, both from the regulatory side and the investor side are the main issues for the REITs in Canada going forward.

Here are some of the key market trends outlined in the new report:

REITs’ Prominence in Senior Housing and Care Market in the United States
Since 2016, there has been a clear trend in the mix of investors in the senior housing and care transaction market. During this period, private equity buyers (including dedicated senior housing funds, opportunity funds, and commingled funds with core-plus and value-add investment objectives) have become increasingly active in the marketplace.

In 2015, REITs were prominent buyers in this market. Private equity buyers (43.4%) and REIT buyers (26.3%) accounted for 69.7% of all transaction activity in 2019.

REITs Are Debt-Heavy by Nature
The consequence of legal status is that REITs have a lot of debt. They’re usually among the most indebted companies in the market.

However, investors have become comfortable with this situation because REITs typically have long-term contracts that generate regular cash flow - such as leases, which see to it that money will be coming in - to comfortably support their debt payments and ensure that dividends will still be paid out. For more information about this report, visit researchandmarkets.com.