Real Estate Investment Trust Holding Companies

Know the landscape when investing in a real estate holding company
By Doug Dannon, Freelance Writer Land holding companies and real estate holding companies often organize themselves as a real estate investment trust. They sometimes acquire land on a speculative basis, when they think there will be demand for development later on.
 

As an investor, you can purchase shares of publicly traded real estate holding companies that buy land, develop it and then act as investment holding companies to generate long-term revenue. The returns can vary based on the state of the market, but over a 15-year period, real estate investments have beat the S&P and Dow Jones Industrial Average.

Land holding companies specialize in holding land that is later developed into the following property types:

1. Office

2. Retail

3. Residential

4. Hospitality

5. Industrial

Public or private real estate holding firms

There are risks to any investment. Some investment holding companies are publicly held real estate investment trusts, regulated by the SEC and traded on the New York Stock Exchange. Other land holding companies are private and only accept investors on a limited basis or during a fund-raising period.
Try: Public real estate trust holding companies are Forest City Enterprises, Inland Real Estate Corp and American Land Lease. Privately-held commercial real estate holding companies are Bixby Land Co. and Watson Land Company.

Invest in real estate investment holding companies that interest you

If you invest in a real estate investment trust that focuses in land or property holdings, find one specializes in something which you find interesting. There is a wide range of companies specializing in office, residential, industrial, retail or hotel properties. Some are involved in all of the above.
Try: First Industrial Realty Trust specializes in industrial properties and Taubman Centers in retail property. Sun Communities specializes in manufactured residential properties, Hospitality Properties Trust buys, owns and leases hotels and Duke Realty Corp. has a large portfolio of office holdings.

Forming land holding companies

To form a real estate holding company there are regulations to comply with which vary state to state. Overall, publicly-traded real estate investment trusts must be registered with the SEC. Tax laws can vary widely from state to state, so be sure to check with the applicable laws in your state or hire an attorney to be sure the company is in compliance with the law.
Try: The National Association of Real Estate Investment Trusts offers resources for companies that wish to form REITS.

• Before investing in any type of investment holding company or real estate investment trust, be sure to know what the risks are, know about the quality of the management and look at the potential returns for the holdings.