Real estate investment trusts can generate income and provide inflation protection in retirement

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Real estate investment trusts can generate income and inflation protection in retirement

For example, what drives a hotel's success is different from the factors for, say, a senior housing facility or warehouse space.Yet because rents and property values tend to increase when prices do, the REITs whose properties are able to capitalize on that can provide an inflation hedge.

REITs whose properties strike longer-term lease deals with tenants — for example, retailers at shopping malls — typically have annual increases built in that are based on the movement of the consumer price index. However, those rent hikes also tend to have a limit to how big of a jump can occur, which means inflation could outpace those increases.

 

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