Publicly traded real estate investment trusts (“Public REITs”) are a way to gain exposure to real estate and complement the illiquidity of a private real estate portfolio. Idle capital waiting to be used in private investments can take advantage of the liquidity of public real estate and provide exposure to sectors such as healthcare, data centers, and timber that may not be as easily accessible in the private markets. Past performance shows that public REITs have outperformed the broader S&P 500 on an absolute and risk-adjusted basis over the last 40 years.1 Its 20-year total return average from 1998 to 2018 also averaged 12.55 percent compared to 7.73% for the S&P 500. REIT’s are also a great source of passive income. By law, REIT’s must pay 90% of their earnings as dividends.2 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
Public REITs are vetted by our public securities investment team. The team uses both in-house and third-party research to conduct both top-down and bottom-up analysis in selecting REIT securities.
REIT Blocks are collections of REIT securities, which could include common equity, preferred stock, or ETFs and typically hold between five to 20 securities. With our REIT Blocks, investors can build a custom public real estate portfolio or use them in conjunction with our recommended portfolio. The REIT Blocks have different investment objectives such as producing growth or income or a combination of both. Our thematic REIT Blocks use public REITs to gain exposure to certain sectors such as Healthcare, Technology and Mortgage REITs. While some REIT Blocks are diversified, certain REIT Blocks may be more concentrated in a specific sector such as multifamily, industrial and office. REIT Blocks can be bought and sold individually or used with other blocks to create a more customized portfolio.
Path by Origin’s model REIT Blocks are constructed by our public securities investment team. Each block consists of a variety of different securities that meet the objective of the given block. These securities may include but are not limited to common and preferred stock of real estate companies. In constructing the model blocks, Path by Origin uses both top-down and bottom-up analysis. The top-down analysis may also include a variety of macroeconomic factors such as GDP growth, employment statistics, demographic trends, capital market conditions, real estate supply and demand indicators, rental or space market trends and asset market pricing. Origin’s bottom-up analysis uses fundamental equity analysis to assess an individual real estate company’s portfolio, current business strategy, capital structure, and management track record. Securities are then selected with the given block objectives and constraints in mind.
Click “offerings” on the bottom navigation menu of our app. The various REIT Blocks are displayed in the section titled “Build Your Own” and are organized by return-based and thematic portfolios. Click on a portfolio to learn more about each REIT Block and the underlying holdings within. When you are ready, click the “Invest Now” button on each portfolio page. You will need to do two additional things before you are able to invest: create an account with Apex Clearing, and transfer money into your account. If you haven’t done either of these, the app will prompt you to do so. See the section above for information on how to create an Apex account and transfer money into the app. You’ll need to follow these steps again after these tasks have been completed. If you’ve properly set up your Apex account and deposited money, after you click “invest now,” you’ll see a screen that displays your available balance and asks how much you’d like to invest. Follow the prompts and we will take it from there.
Our REIT Blocks are collections of REIT securities that are actively managed but priced as competitively as passively managed ETF’s (see below for more detail on what a REIT Block is). More importantly, we provide a solution not available through ETF’s. Passively managed ETFs that track an index typically hold all securities in an index ─ the good, bad and the ugly ─ making it simple and easy, but also potentially over-diversifying individual investors. Our REIT Blocks typically consist of a limited number of high conviction securities hand-picked by our REIT securities team. We are knowledgeable about every company we include in each REIT block, giving us a distinct advantage in understanding value, potentially limiting risk and providing the potential to better optimize an investor’s returns. Our securities team periodically rebalances each portfolio and may swap one stock for another that we believe has greater potential. Our only incentive when making these portfolio changes is to attempt to better optimize gains and potentially minimize risk because we do not earn fees for this service and investors do not have to pay commissions when this happens. Additionally, we believe that there are few if any ETF equivalents for many of our REIT Blocks. For example, an investor who wants to buy a portfolio of stocks focused in the multifamily, industrial or office sectors may have a hard time finding this in an ETF but may do so via Path by Origin. Our REIT Blocks are also fully customizable, so an investor who owns industrial or office holdings directly already can build a complementary public portfolio using our REIT Blocks and exclude these sectors. Furthermore, the stocks in our REIT Blocks, while they generally follow the index weightings, are tilted slightly to generate a higher risk adjusted return. Investors who want to customize their own weightings, can use multiple REIT Blocks and fully customize the weightings across their portfolio.
The recommended portfolio is constructed around an investor’s primary investment objective (income, growth, or growth and income) and their risk tolerance, as captured in the risk score. We use a combination of REIT Blocks to create a portfolio to match an individual’s score and objective. Our portfolio risk ratings are calculated using third-party Riskalyze methodology and take into consideration the correlation, covariance, volatility and diversification of the portfolio. We attempt to match an individual’s portfolio to their risk rating and then we also show the recommended portfolios that are slightly higher and lower risk. Under certain circumstances we may not have a pre-built portfolio that exactly matches an investor’s investment objective and risk rating score, in which case we will display the closest matching portfolio of the same investment objective.
To invest, you’ll first need to complete three steps: create an Origin account, create an Apex Clearing account and then transfer money into your account. See the section before this for more details on how to create these accounts and transfer money securely.
Geoff Shaver leads the construction and monitoring of the public real estate securities portfolios available in our Path by Origin app. Our public securities team uses both in-house and third-party research to conduct both top-down and bottom-up analyses in selecting REIT securities. Geoff joined Origin in fall 2018 as Director of Public Securities. Prior to Origin, Geoff spent the last 12+ years focused on researching and investing in public REIT securities at both Duff & Phelps Investment Management Co. and J.P Morgan Asset Management.