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Free-Standing REITs: Separating the Best from the Rest

Sleep Well at Night Free-Standing REITs

Certainly most free-standing REIT investors are being rewarded for investing in safe, reliable, and consistent income streams. According to NAREIT, the free-standing sector has returned 20.9% year-to-date (Sept. 28) and the industrial sector has returned over 25% year to date. Both stand alone sectors beating out the all equity REIT total return average payout of 16.09%.

The sleep well at night (SWAN) investor is seeking a fundamentally safe investment strategy where principal preservation and sustainable income (and growth) are a must. Essentially, this type of investor is seeking a bond-type investment in a real estate wrapper.

Free-standing REITs provide this balanced approach and this low-risk & pain-free investment strategy will often enhance portfolio returns by reducing volatility associated with non dividend paying stocks while also compounding repeatable sources of income. Great investing requires the ability to generate sound returns and also control portfolio risk. That is why free-standing REITs offer an intelligent value proposition that is distinguished at least as much for their ability to control risk they are for generating returns.

As Howard Marks wrote in his book, The Most Important Thing, "When you boil it all down, it's the investor's job to intelligently bear risk for profit. Doing it well is what separates the best from the rest."

Source: SNL Financial

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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