The Benchmark Hotel and Lodging Real Estate SCTR℠ Index measures the performance of publicly-traded real estate securities, including Real Estate Investment Trusts (REITs), of exchange listed companies in the U.S., that primarily own or manage various forms of hotel, motel, and lodging related real estate and rent space in those properties to tenants.
Portfolio Application & Uses
Risk Management &
Strategic Real Estate
Hotel and lodging real estate depends on the economy, forecasts for spending and travel patterns of businesses and consumers, and the levels of new and expected hotel construction in various markets as this sector is more economically sensitive than any other.
Hotel brands are continually evolving to adapt to consumer needs. During the next few years, hotels will continue to develop and adopt technology that provides guests with greater optionality and control over their stay.
Publicly traded hotels have scale, access to information, and the best geographically diversified portfolio of iconic hotels, combined with an investment-grade balance sheet, really differentiate their models from the private market. The vast, geographically diverse portfolio of hotels provides stability and mitigates the inherent volatility related to lodging real estate.
Advantages of Real Estate SCTRs
Correlation and risk-adjusted return metrics demonstrate that listed equity real estate investment trusts provide optimal exposure to the real estate asset class.
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.
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
- Employment growth
- Consumer and business spending
- Interest rates
- Lease revenues
- Property expenses
- Occupancy rates
- Prevailing market rental rates
- Tenant quality and replacement cost