Real Estate Investment Trusts (REITs)
Founder Mel Cutler has been involved in the commercial real-estate industry since 1954 and founded Cutler Associates, an architecture, engineering and contracting firm, in 1972. He has applied his knowledge of real estate to shape Cutler Capital's approach to researching Real Estate Investment Trusts (REITs).
REITs enable investors to pool their capital to invest in real estate with limited liability. REITs can avoid double taxation of dividends, because they are exempt from income taxes if they distribute at least 90% of their taxable earnings.
The dividend income from REITs can enhance a portfolio's return and reduce risk. In addition, because REITs are not strongly correlated with other asset classes, they can enhance a portfolio's asset allocation. The resulting increase in diversification reduces risk.
The approximately 200 publicly traded REITs are typically categorized by the nature of their real estate investments. REITs are available in the following categories:
- Apartment
- Industrial
- Healthcare
- Office
- Hotel
- Shopping Center
- Diversified Real Estate
- Net Lease
How Cutler Capital Management Invests in REITs
Generally, we are still avoiding many of the higher priced office, mall and industrial REITs and are focusing on REITs within the healthcare and hotel sector which demonstrate stronger fundamentals and more reasonable prices.
Companies we follow include: Ashford Hospital, Nationwide Health Properties, Host Marriott, and Health Care REIT, Inc.
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