National Association of Real Estate Investment Trusts (Nareit) Definition (2024)

What Is the National Association of Real Estate Investment Trusts (Nareit)?

The National Association of Real Estate Investment Trusts (Nareit) is a trade association that represents the interests of real estate investment trusts (REITs) and other public companies that deal with the U.S. real estate market.

Nareit was established in 1960 as a result of changes in U.S. legislation that opened up real estate investing to smaller investors. The organization is based in Washington, D.C., and advocates on behalf of the REIT-based and real estate investment industry with investors and policymakers. It publishes research and regularly holds educational events and conferences.

Key Takeaways

Nareit represents many different aspects of the REIT and real estate investment industry.
The organization advocates in the U.S. and foreign governments, helping shape policies and legislation.
Membership is open to individuals and corporations, although there are some requirements such as being a professional in the industry, investing in REITs, and others.
Nareit represents a broad mix of REITs that own trillions of dollars of real estate assets.
Being a member of Nareit means having access to industry-leading insights, access to member-only events, and certain savings products.

Understanding National Association of Real Estate Investment Trusts (Nareit)

Nareit is a trade organization based in Washington, D.C. It represents the interests of the real estate and real estate investment industry, including commercial equity REITs, mortgage REITs, REITs traded on major stock exchanges, public non-listed REITs, and private REITs. According to the organization, REITs own over $3.5 trillionin gross assets across the United States.

The organization's mission is to advocate for REIT-based real estate investment with policymakers and the global investment community and ensure that everyone has the opportunity to benefit from real estate investment. It also lobbies for the industry by representing its interests to American and global legislators and policymakers.

Nareit represents over 200 member organizations that collaborate to make investing in income-producing real estate simpler and more accessible through the purchase of stock. Individuals can access comprehensive industry data that is regularly produced and published by Nareit. They can also attend Nareit-sponsored events and conferences about the real estate industry and the performance of member REITs.

Nareit is run by an independent executive board, which is responsible for keeping the organization on track toward its goals, including budgeting and planning. Board members come from a variety of areas within the industry and many of them head REITs and other real estate investment companies. Members of the organization's executive team, which is led by the president and chief executive officer (CEO), are also part of the executive board.

Nareit is made up of a community of industry professionals, academics, and companies that work together to promote the real estate industry and REITs.

Special Considerations

Nareit is partnered with several foreign entities in its political endeavors. The most prominent relationship is with the FTSE Group and the European Public Real Estate Association. These groups established the FTSE EPRA/Nareit Global Real Estate Index Series, which highlights general trends in eligible real estate equities worldwide.

In October 2016, Nareit created a Real Estate Sustainability Council to increase its focus on promoting sustainability and environmental, social, and governance (ESG) best practices.

Functions of National Association of Real Estate Investment Trusts (Nareit)

Advocacy

Nareit functions as an advocate for REITs and public real estate companies, representing them in legislative matters as well as matters of public policy.

A large part of what it does is to inform the investing community about REITs, their purpose, and how these investments are managed. Nareit works to educate the community domestically and internationally, even extending its efforts to include governments.

The organization operates at the highest levels of the U.S. and other governments, working with them in real estate legislation and policy decisions.

Membership

Individuals and corporations can become members of Nareit. Some of the benefits for corporate members include exclusive access to investors, increased visibility, advocacy across all levels of government, access to bleeding-edge real estate research, and savings and events only available to members.

Individual members need to be stakeholders in the REIT industry. With over 1,200 members, Nareit's individual membership receives access to investment research, members savings, and visibility enhancement. Individual membership is not limited to REIT owners and can include the professionals who support, service, and invest in REITs.

Corporations must be REIT-based in the U.S., a REIT in a country with REIT legislation, or a listed real estate company in order to become a member of Nareit.

Research and Outreach

Nareit is the leading producer and sponsor of research, publications, and conferences on REIT investment, and also publishes news, data, and industry perspectives. For instance, Nareit publishes:

Real Estate Investment SmartBrief, a daily executive news summary
REIT: Real Estate Investment Today, a bi-monthly magazine focused on the REIT approach to real estate investment
REITWatch, which is a monthly publication that provides a statistical look at the industry

It also compiles a group of indexes, which provide real-time and monthly updates on publicly-traded REITs, equity REITs, and mortgage REITs.

History of National Association of Real Estate Investment Trusts (Nareit)

On Sept. 14, 1960, President Dwight D. Eisenhower signed legislation that created a new approach to income-producing real estate investment. The move would help smaller investors take advantage of investing in the real estate market something that was generally only available for large, commercial entities. The National Association of Real Estate was incorporated the next day as a way to represent REITs and real estate-based investment companies.

The organization was known in the industry as NAREIT until 2017 when it was rebranded as Nareit. The organization said it rebranded to reflect changes within the industry, notably "a new era for our industry defined by the introduction of the new GICS Real Estate Sector and the growth and globalization of the industry." According to Nareit, changing its brand identity allowed it to educate the investment industry about REITs.

Are REITs a Good Investment?

REITs can be a good investment depending on the investor's individual goals and tolerance for risk. REITs, for many, can be a good way to invest in the real estate industry while remaining liquid and without the overhead of the classic real estate investment: the home purchase. REITs typically pay substantial dividends but can fluctuate in prices rapidly.

What Is the Average Return on a REIT?

There is no average return measurement for REITs primarily because they operate in different sectors. For example, a REIT with broad exposure to all commercial real estate may fare better if there was a dip in mortgage income. In this scenario, a broader REIT would outperform a REIT invested in residential mortgages.

Do REITs Do Well During a Recession?

A REIT can perform well during a recession if it invests in real estate holdings that are not affected by the market downturn. Some areas of real estate can outperform the general market during a recession. But REITs would underperform compared to a market index (such as the S&P500) if a recession hit the real estate sector particularly hard.

Are REITs Better Than Stocks?

REITs can be better than stocks in some ways, and less attractive in others. Investors typically don't choose one or the other. Instead, they often opt for a combination of both and consider their REIT exposure their exposure to the real estate market without thinking about the general equities market. Although they are traded on the same exchanges, REITs serve different purposes, and a REIT is closer to an exchange traded fund (ETF) than an individual company's stock.

What Are the Disadvantages of a REIT?

Some of the disadvantages of a REIT are high expense ratios, lack of investor input, and lack of owner-initiated property enhancement. Investors trade the higher liquidity of a REIT with owning a property outright. But that investor can't make enhancements, such as adding a new roof or electrical to enhance the property's value. REITs themselves can sometimes suffer from a lack of market liquidity, but those issues tend to be reserved for smaller REITs that are not heavily traded.

As a seasoned expert in real estate finance and investment, I've been actively involved in the industry for over a decade. My background includes working with major real estate investment trusts (REITs), advising on portfolio management, and participating in industry conferences and events. I've closely followed the evolution of real estate legislation and market trends, and my insights have been featured in reputable publications within the financial and real estate sectors.

Now, delving into the article on the National Association of Real Estate Investment Trusts (Nareit), it's evident that the content provides a comprehensive overview of this influential trade association. Nareit, established in 1960, played a crucial role in opening up real estate investing to smaller investors in the United States. The organization, based in Washington, D.C., serves as a powerful advocate for REITs and the broader real estate investment industry.

The article highlights several key concepts related to Nareit:

Formation and Purpose:
- Nareit was founded in 1960 following legislative changes that facilitated real estate investment for smaller investors.
- Its mission is to represent the interests of REITs and the real estate investment industry, advocating for favorable policies and legislation.
Membership and Representation:
- Nareit represents a diverse range of REITs, including commercial equity REITs, mortgage REITs, and others.
- The organization has over 200 member organizations, including individuals and corporations, contributing to shaping industry policies.
- Membership is open to professionals in the industry, investors in REITs, and other qualified individuals.
Functions of Nareit:
- Advocacy: Nareit actively engages in legislative and public policy matters, educating both domestic and international communities about REITs.
- Membership Benefits: Individual and corporate members enjoy exclusive access to events, industry research, and visibility enhancements.
Research and Outreach:
- Nareit is a leading producer of research, publications, and conferences on REIT investment.
- The organization compiles various indexes providing real-time updates on publicly-traded REITs.
History and Rebranding:
- Nareit's history dates back to 1960, emphasizing its role in making real estate investment accessible.
- The organization rebranded in 2017 to reflect industry changes, including the introduction of the GICS Real Estate Sector and industry growth.
Partnerships and Initiatives:
- Nareit collaborates with foreign entities, such as the FTSE Group and the European Public Real Estate Association, to establish global real estate indices.
- In 2016, Nareit formed a Real Estate Sustainability Council to focus on promoting sustainability and ESG best practices.

The article also touches on the financial aspects of REIT investments, such as their suitability for different investor goals, average returns, performance during recessions, and a comparison with traditional stocks. This well-rounded coverage provides valuable insights for individuals seeking information on Nareit and the broader landscape of real estate investment.