REITs Producing High Dividends from Investor Demand

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Real-estate investment trusts are looking to raise as much money as possible in financial markets in order to take advantage of the booming investor demand this year. Throughout 2015 alone, REITs have raised nearly $12.25 billion, which is 3.5 times more money raised compared to 2014. Already-public companies made up about 80% of this $12.25 billion by selling extra shares. In addition to the companies flourishing from money raised, shareholders are seeing high dividend yields on their investments. As of last week, “the dividend yield on the FTSE Nareit Equity REITs Index was 3.35%, compared to a 1.84% yield on the overall S&P 500 stock index.”

Although this year has been extremely successful regarding REITs, some investors predict poor REIT performance if the Federal Reserve were to raise rates. Last year, REIT indexes returned about 32.2%, including dividends, compared to 14% return for the S&P 500 index. As of last week, REIT indexes returned 4.9% versus 2.4% for the S&P. The REIT market’s direction will most likely mirror the Fed’s decision on interest rates, but many are having a hard time predicting when rates will rise.

Fund managers express that the positive outlook on REITs help support demand for new shares. Brian Jones, a portfolio manager for the Neuberger Berman Real Estate Fund has a positive outlook on the real estate industry. “When REIT investors think about the operating environment for REITs, we see continued strength generally. The fundamental picture for commercial real estate and REITs continues to be attractive.”

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Virginia MacKoul

Virginia is a graduate from the University of Florida's College of Design Construction and Planning with a degree in Sustainability and the Built Environment, and a minor in Urban Regional Planning. Virginia joined the Front Street team in 2011, as an intern. Upon graduation, Virginia joined the Front Street team full-time as the Director of Client Services. Ms. MacKoul’s addition furthers Front Street’s continued growth and expansion within Gainesville and other North Central Florida markets. She was promoted to Director of Marketing in 2014 and now manages the firm’s team of interns and oversees all marketing and branding activity. Virginia was born in Boston and moved to Lee County, Florida in 1997. Virginia graduated her high school's International Baccalaureate program and started at the University of Florida with a focus on Architecture. Virginia shares Front Street's passion of giving back to the community and those in need. Virginia's hobbies include photography, cooking, football, movies, music, and spending time with her dog, Brinkley.

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