Characteristics of REITs
There are a number of reasons to consider including REITs in your investment portfolio.
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Investment performance When diversifying your investments, you want choices that will go the distance as you work toward building and creating wealth. Historically, real estate securities have performed solidly as a long-term asset class when stacked up against other equities and bond investments.2 |
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Income Opportunity If you're looking for income to meet present or future needs, REITs should be on your short list of investments to consider. To qualify as a REIT for federal income tax purposes, a real estate company must distribute at least 90% of its taxable income to shareholders annually in the form of cash distributions or dividends. This feature may translate into attractive current income potential for investors. Please note that a REIT distribution is not guarenteed and may consist of return of capital, capital gains, and distribution income. Please note that Wells REIT II is a generally long-term, illiquid investment that is not suitable for all investors. |
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Diversification Sound financial planning means keeping your portfolio in balance with your goals. You want investments that tend to move in different economic cycles when certain sectors or markets are down. Real estate can help you diversify a portfolio of stocks, bonds, and cash. Studies have shown that including real estate investments in certain established portfolios may improve your overall returns and may lower certain investor's overall long-term volatility.3 |
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Professional property management With REITs you can personally own shares of investment-grade commercial real estate - without leaving your living room. A REIT allows you to pool your money with other investors and give a professional firm the authority to acquire and manage properties on your behalf. |
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Tax advantages Generally, REITs are not taxed on income at the corporate level if they distribute 100% of their taxable income. While tax legislation is subject to change, currently this feature means that they may pass more of their income through to investors. In addition, REIT distributions typically include a "return of capital" component that translates into some tax-deferral to the investor. |
2,3 Source: Ibbotson Associates.
A nontraded REIT is not suitable for all investors. An investor must meet certain income, net worth and other suitability standards
An investment in Wells REIT II is subject to substantial risks. These risks include:
- Limited transferability and lack of liquidity
- Limited operating history
- Reliance on our advisor and its affiliates
- Payment of significant fees to the advisor and its affiliates
- Potential conflicts of interest
- Failure to qualify as a REIT for federal income tax purposes
- Inability to invest all of the net offering proceeds promptly
- Continuing high demand for the type of properties we desire to acquire
