REIT's and Jasper have some similarities, they both offer diversification away from traditional asset classes, they both pool capital from multiple investors to lower the barrier to entry and improve diversification, and they both improve liquidity compared to direct property ownership. However, there are also some important differences.
What is a public REIT?
A public REIT (which stands for ‘real estate investment trust’) is a publicly listed company that either owns, operates, or finances income-producing property. Since investing in real estate is expensive, a REIT allows investors to pool their money together to fund large real estate investments. REIT managers then take that money and decide which properties to invest in. If the properties yield a return, every investor who owns shares in the REIT will receive a share of the profits. A REIT can be thought of as similar to a mutual fund for real estate, because several investors buy shares and contribute money into a pool, and professional managers decide how to invest it.
Similarities between Jasper & REITs:
When investing in commercial real estate traditionally, most investors only have enough capital to put funds into one single property. However, when investing in a REIT or with Jasper, investors put small amounts of money into several different real estate investments. This diversification method may lead investors to reap the returns on several different investments rather than only relying on one single property.
REITs and Jasper both offer investors the opportunity to pool capital from multiple investors to lower the barrier to entry and improve diversification. Jasper’s target minimum investment amount in the future will be around $1,000, meaning an individual at any stage in their investing career – from beginner to institutional – can invest.
Investing in commercial real estate traditionally is fairly illiquid in that it cannot be easily sold or exchanged for cash. When an investor chooses to sell a property, they may wait several months until the deal closes. On the flip side, both Jasper and REITs offer improved liquidity by offering investors the ability to exit their positions before the end of a projected hold period.
Advantages to investing with Jasper vs. public REITs
Although Jasper and REITs do share some similarities, Jasper has several key advantages when compared to REITs:
Asset level control
With Jasper, investors can select the markets, locations, and properties they prefer and have complete control on a deal-by-deal basis. REIT investors have no choice over the investments made by the REIT managers, and there is less transparency about the underlying investment properties. This allows investors to create a unique and personalised portfolio tailored to their risk and return preferences.
Although REITs have strict reporting guidelines, most investors know very little about the properties in a REIT portfolio or the fees applied at the property level. Jasper provides investors with absolute clarity on every property they invest in and the associated fees.
Public REIT prices are moving in near lockstep with equity markets, meaning they are subject to the same broader market volatility. Direct property ownership through Jasper, on the other hand, offers significantly lower volatility than equity markets and is more closely tied to the performance of the underlying asset.