Today is a very different time for REITs. The ventures are a way of investing in real estate with stock like liquidity and the risk spread over several or many properties. REIT management is rapidly maturing and directors are more than paid stooges for entrepreneurial founders who, when flush with fresh money, would buy anything that looked good in a brochure. The specter of speculative over building is not breathing fear into most markets because lenders have become more selective and analysts wiser. Buildings are being built for proven markets, not lenders.
Profits come from buildings that satisfy specific demand.
That is rule number one. Rule number two is never forget rule number one. For REITs looking to invest, there are still bargains out there controlled by insurance companies, some institutions and banks, as well as Japanese-owned real estate. Some REITs focus on adding value, therefore they look for under-priced possibly under used properties so they can boost returns and cash flow. If the management has a fine track record, Wall Street will add its own rewards and the stock will be classified as premium.