Just as a relatively small amount of yeast can cause an inert lump of dough to rise and become a beautiful loaf of bread, so too, a little real estate stock in an investment portfolio can make the overall returns rise impressively. Which should, of course, put more 'bread' in investors' pockets. I won't even mention how much we all 'knead' better returns or say a thing about 401(k) 'roll'-overs. (Someone please stop me before I pun again!)
On a more serious note, a recent survey, commissioned by NAREIT and conducted by Ibbotson Associates, came to the conclusion that REITs can have a significantly beneficial diversifying effect on investment portfolios. Their conclusions were drawn after examining the relative returns of portfolios that were based entirely on non-REIT stocks and bonds versus portfolios that included a leavening amount of REIT-based real estate.
In our cover story, "On the Rise," Jack McAllister, NAREIT's vice president, institutional investment affairs, discusses how this important ingredient has often been left out of the options available to individual investors who are developing portfolios through employer supplied 401(k) plans. The implications, in the form of reduced performance, for the retirement funds of Baby Boomers' and other investors could be substantial if this situation remains unaltered.
Fishing for Euros
European institutional investors have shown some recent interest in investing in REITs and in our feature titled, "Enticing the Euro" and in our Professional Perspective column, we take a look at some of the ways in which European investors have been willing to invest in U.S. real estate in the last year as well as discussing some of the advantages and difficulties that this type of investing currently poses for Europeans.
Making It on Their Own
Our company profile feature in this issue provides an in-depth look at LaSalle Hotel Properties, a company that has recently become self-advised. LaSalle's new status should prove to be earnings neutral this year according to most analysts, but it should have a positive impact in the future.
Service with a Smile
Finally, we explore some of the options for expanding services that REITs are using to help cement connections with their tenants while improving on the bottom line. From power consulting services to moving supplies to broadband connections to telecom towers, building owners are finding better ways to serve their tenants and reap more rewards from their current assets.
Christopher W. Murphy
Editor-in-Chief