12 Of The Greatest Moat-Worthy REITs

 In Free Articles

Summary

  • REITs are unique in terms of their ability to grow moats; there are essentially two valuable levers that the company can (and should) utilize to build competitive advantage.
  • Although they are not entirely exclusive (scale and cost of capital), REITs that generate the best long-term performance have typically demonstrated that they must capitalize on both.
  • These 12 moat-worthy REITs were all screened for their durability and scalability attributes.

In a Harvard Review article, Martin Reeves and Mike Deimler explain: “The goal of most strategies is to build an enduring competitive advantage by establishing clever market positioning (dominant scale or an attractive niche) or assembling the right capabilities and competencies for making or delivering an offering (doing what the company does well).”

Recently I ran across an article by James Allen (with Bain & Co.) explaining that “sometimes the largest companies lead an industry, but in many cases, the leaders that create exceptional value don’t rely on scale alone. They use other skills to move into pole position.”

Allen went on to explain that Bain & Co. defines profit as “economic profit minus the cost of capital from the reported earnings before interest and taxes of each company. That produced the earnings of companies above their cost of capital.”

Allen’s article suggests that “the classic strategic imperative for challengers-build scale or get out-is only one of several options…In most markets, one or two companies make all the money while others either struggle to return their cost of capital or destroy value. Scale can help, but companies that consistently outperform their competition build competitive advantage beyond scale.”

Keep in mind, REITs are unique in terms of their ability to grow moats; there are essentially two valuable levers that the company can (and should) utilize to build competitive advantage: scale and cost of capital.

Although they are not entirely exclusive (scale and cost of capital), REITs that generate the best long-term performance have typically demonstrated that they must capitalize on both (scale and cost of capital) to become the greatest moat-worthy REITs.

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12 of the Greatest Moat-Worthy REITs

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