Why REITs are in manufacturing

Article Excerpt

One key criteria for deciding if a company falls into the Manufacturing sector is whether it behaves in a cyclical or non-cyclical manner. A manufacturing company is subject to the ups and downs of the economic cycle. In contrast, consumer firms benefit from continuous and often habitual use of their products and services. Real-estate investment trusts (REITs) lease mostly office space or industrial space to firms that go through swings along with the rise and fall of the economy. So we place them in Manufacturing. Some analysts put REITs in the Finance sector because REITs borrow a lot of money to finance their holdings. However, you need to look at the overall picture, rather than just one aspect such as the method of financing. In terms of the kind of risk they expose you to, REITs have more in common with a manufacturer than a bank bank…

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