Creating a Diversified REIT Portfolio Part II: Geographic Diversification

In my previous post I discussed how my the only REIT currently in my portfolio (other than the iShares XRE ETF) is Artis REIT, but because that is my only holding, I am exposed to a certain level of geographic risk. To help mitigate that risk, I need to make some additions to my portfolio which spread the REIT holdings throughout the rest of the country. The easiest way to do this is to plot all of the properties for all of the REITs I am interested in. Because Artis is a "diversified" REIT, I went and solicited a list of all properties for each of the diversified REITs identified in my previous post.

The exercise was a little tedious, but I’ve managed to build a database of all of the properties for the major diversified REITs which trade on the TSX. To create the map plot, I headed over to the geocommons, a great site I found for creating maps based on user provided data. After all of that, here is the result:

REIT Plot

REIT Property Holdings

The screen grab above does not really give the plot justice, but you can head over to view the interactive map at geocommons.

Now that I’ve got the properties all plotted out, I have to sit down and figure out which REIT(s) would be a good addition to the portfolio, with the following objectives in mind:

  • Geographic diversification (i.e., properties not concentrated in only one part of the country)
  • Strong FFO1
  • A strong history of increasing distributions over time

Over the Christmas break from classes I’ll be doing a deeper dive into some REITs, once I determine which ones best satisfy the first criteria above.


1 Free Cashflow From Operations; the cash leftover to distribute.

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