Real Estate IPOs

The real estate sector includes companies that own, develop, and sell land and property. The sector includes equity REITs, a popular investment vehicle for collecting dividends due to a tax-advantaged status. Real estate tends to be less correlated to market moves than other sectors, and even within real estate, sub-industries exhibit different trading patterns. For example, an office REIT, a real estate broker, a homebuilder, and a commercial property developer will all have different trading dynamics.

Be aware of a company's leverage, geographic concentration, and exposure to one or two niche sub-industries (e.g. an office REIT where most tenants are tech startups). REIT investors should aim for sustainable dividends, and rental properties with low vacancy rates and rising rents. Real estate investors often pay attention to the capitalization rate, or cap rate, of developed or acquired properties, representing the net operating income divided by the property value. A higher cap rate means a higher return on investment, though it can be associated with higher risk as well.