PADSCTR
PADSCTR Description
The Benchmark Apartments & Residential Real Estate SCTR℠ Index measures the performance of publicly-traded real estate securities, primarily Real Estate Investment Trusts (REITs), of exchange listed companies in the U.S. that own and manage various forms of residences and rent space in those properties to tenants. The residential securities include real estate investment trusts that specialize in apartment buildings, student housing, manufactured homes and single-family homes.
Portfolio Application & Uses
Risk Management &
Hedging
Strategic Real Estate
Investment
Tactical Asset
Allocation
PADSCTR Considerations
Apartment and Residential real estate tends to have stable cash flows, and their prospects are influenced by employment and wage growth, household formation, and the single-family home markets. Apartment owners do well when the economy is expanding because of the new jobs thereby created and the rise in the formation of new households.
Today’s renters are a different breed who want a place offering a convenient, quality lifestyle, a comfortable living space, a place to exercise, and a place to socialize all in one package. According to the government, the biggest change in the renting population came from seniors aged 55 and over and the PAD sector is positioned to capitalize on this demographic change.
Publicly traded apartments have a long history of superior asset appreciation as their Class A properties historically double in value every 10 years (Cushman & Wakefield)
PADSCTR Index
| SYMBOL: | PADSCTR |
| CALCULATOR: | NASDAQ |
| NUMBER OF HOLDINGS: | 20 |
| RECONSTITUTION: | ANNUAL |
| REBALANCE: | QUARTERLY |
| WEIGHTING:# | MODIFIED MARKET CAP |
| METHODOLOGY: | GUIDE |
Advantages of Real Estate SCTRs
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Optimal Exposure
Correlation and risk-adjusted return metrics demonstrate that listed equity real estate investment trusts provide optimal exposure to the real estate asset class.
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Daily Liquidity
Allows investors to take or adjust positions quickly and efficiently by buying and selling positions corresponding to the weights of all constituents which are traded on liquid public markets such as NYSE & Nasdaq.
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Institutional Access
Provides direct access to institutional office real estate diversified over many geographic areas and management teams without investing in properties or with a real estate equity managers
Portfolio Investment Thesis
Real Estate SCTRs℠ provide tailored solutions for commercial real estate investment management. Main drivers for each real estate SCTR℠:
- Market “cap rates”
- Supply/ demand conditions
- Competition from nearby properties
- Economy
- Employment growth
- Consumer and business spending
- Interest rates
- Inflation
- Location
- Lease revenues
- Property expenses
- Occupancy rates
- Prevailing market rental rates
- Tenant quality and replacement cost
