With share prices down and yields above 10%, timely bargains are available to the discerning, knowledgable investor. Recession-resistant businesses e.g. BRE properties (BRE) in apartment rental, Ventas (VRE) in health-care facilities, Alexandria Real Estate (ARE) in pharmaceutical and bioscience laboratory space, Public Storage (PSA) in storage warehouses, make REIT (Real Estate Investment Trust) a wise choice, but choose carefully. Last year, the IRS in the US changed the rules allowing REIT to no longer pay out the required 90% of their earnings as dividends and instead may pay with stock which would leave investors with higher taxes if they must sell immediately, a pay-in-kind dividend strategy. This can only erode confidence and prolong recovery of REITS. An example is the mall REITs which have been hit the hardest. These investments are only suitable for investors who can hold strong with multiyear investment.
Those REITs that are able to refinance their debts, like public company Simon Property Groups (SPG) because they are not heavily leveraged, will outrun those leveraged companies, especially privately owned ones, that will have to prove adequate equity before banks agree to finance them.