Potential Advantages of a Hybrid REIT
As a hybrid, MVP REIT seeks to provide its stockholders with the full range of benefits that investments in commercial real estate and real estate secured loans can provide:
|Multiple Revenue Sources||Real estate may provide income generated by rent collected from tenants of a commercial property. Additionally, real estate-secured loans may provide income generated by interest payments made by property owners. These multiple revenue sources are objectives of MVP REIT, which invests in both real estate and real estate-secured loans.|
|Diversification||As commercial real estate property values increase, the value of the REIT increases. However, should property values fall, the value of the REIT declines. MVP REIT’s hybrid nature may provide more diversification than pure real estate REITs, which lack a component of real estate-secured loans. Diversification does not ensure a profit or guarantee against a loss.|
|Flexibility||Investing in both real estate and real estate-secured loans provides MVP REIT potentially greater flexibility in evaluating assets. The REIT can acquire an entire building, an attractive mortgage, or even provide short-term loans—providing greater investment options.|
|Appreciation||Direct ownership of commercial property acquired at favorable prices may provide returns that are not available through investment in real estate-secured loans as a result of value appreciation. The appreciation is limited by the amount of funds invested in real estate as compared to loans secured by real estate.|
Diverse Income Sources May Provide Greater Balance
MVP REIT invests in both direct real estate and real estate-secured loans, providing it with multiple sources of revenue.
Real Estate Returns vs. Inflation
Whether their portfolio can keep pace with the rate of inflation is a common concern among investors. Real estate has long been considered by many to be an effective hedge against inflation, as returns for both public and private real estate generally outpace inflation.
While no one can predict when or if significant inflation will strike, well-balanced investment portfolios typically include assets that serve as protection, or a hedge, against inflation’s corrosive impact on savings.