This factor can make it difficult for an individual or a corporation to make a significant dollar movement into or out of these REITs. The lack of volume, combined with the older age of many of the smaller REITs, has led to lower levels of ownership by the institutional investment community. But limited volume should not be a concern for individual retail investors who are looking to diversify their portfolio with a real estate component. The lower volume of the smaller REITs has kept the larger institutions away. When they decide to add additional properties, smaller REITs can engage in meaningful transactions without including properties that might not fit the company s long-term investment objectives.
Growth is necessary for any real estate company to succeed.
This operating advantage of smaller REITs gives the investor the ability to invest in a company that is making all of its decisions based upon real estate, without the concerns of outside pressures, such as growth demands of large institutional clients and the debt restrictions of corporate bond ratings. Investors should not discount a particular company simply because it is small. However, developing an informed investment decision on the companies not tracked by analysts will require some work on the part of the investor. From there, information for valuing these companies can be retrieved directly from the companies, either with a phone call or from their websites, or from an external provider. Some basic operating values can also be found in the stock pricing tables at the end of this publication.