REIT values move up and down over the short term with cyclical changes in interest rates, capital market flows and real estate markets. Healthy real estate markets, strong capital flows and low interest rates tend to make REIT shares rise; weak real estate markets and capital flows, along with high interest rates tend to have the opposite effect. Macroeconomic cycles can also affect individual sectors of the commercial real estate market differently.
Some REIT investors attempt to "call" these macroeconomic cycles. Phocas Financial believes that this approach cannot succeed over the long term.
Long Term RewardsOur REIT strategy is geared to provide outstanding returns over long time periods with minimal risk, across macroeconomic cycles and commercial real estate sectors. We focus on core positions in REIT equities, using both qualitative and quantitative criteria to choose those companies that provide the best long-term value.
DiversificationWe strive for balance through diversity in our REIT holdings among all major commercial real estate sectors, with an emphasis on management teams able to create value and minimize risk.
Total ReturnWe believe that REIT investing should be viewed as a total return strategy, in which investors should look for a combination of both current dividend yield and long-term capital appreciation. Thus while we do look at dividend yields, we do not place a great deal of emphasis upon them in our stock selection process; rather, we emphasize other factors that bear on total returns, including growth prospects and risk parameters, as well as existing stock price valuations relative to intrinsic values.