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REITs to be reclassified

9/10/2016 | Real Estate Blog

Investors in Pennsylvania who have real estate as part of their investment portfolio may be aware that equity real estate investment trusts, also known as REITs, will be reclassified into a separate sector from the financials sectors. This will have a number of implications for investors.

The popularity of REITs is one reason for this movement, and the sector is expected to grow in the years ahead. With the move, REITs are likely to be less volatile because their performance will no longer be tied to other financial securities. Investment in REITs may increase because now that they are in their own sector, their performance will be more visible to investors, and this is likely to make them more attractive. However, mortgage REITs are not included in the move to the new sector. These are already a riskier investment than other types of REITs, and they may become riskier since the volatility of the financial sector will continue to be an issue.

There might also be a drop in dividends from exchange-traded funds. Although it will probably be a small one, it may be significant for investors who have many assets in ETFs. Overall, it is likely that real estate demand will increase among investors.

First-time and experienced real estate investors might want to work with an attorney. The purchase of residential or commercial real estate may come with a variety of complicated issues depending on the type of real estate that is purchased and what it will be used for. These issues could range from zoning issues to environmental cleanup to dealing with various types of contracts and more. An attorney may be able to guide a new investor through the process and assist an experienced investor with more complex issues that may arise.