What are the advantages of owning a diversified REIT?
The advantages of a diversified REIT is that by diversifying a portfolio geographically, by product type or both, you reduce the risk of major value changes since it is unlikely all locations and product types will be faced with the same market conditions simultaneously. As an example during the last recession, there was a much greater negative impact to Ontario ‘s real estate market than in British Columbia . High vacancies in Ontario reduced the cashflow received by landlords. In British Columbia occupancy levels remained high resulting in higher cashflow. By investing in both markets your return was higher than investing only in Ontario while lower than in British Columbia .
