Hilton Head Properties Real Estate Investments


Types of Real Estate


When considering an investment in a real estate fund, investors may choose between investments in various types, including listed and non-listed real estate funds (such as those offered or planned to be offered by Hilton Head Investments) and listed REITs (i.e., REITs with shares traded on the New York Stock Exchange, the American Stock Exchange, The Nasdaq Stock Market, or another securities exchange or quotation system or privately held REIT's).

Studies of historical trends have shown that returns on investments in commercial and multi-family real property generally, and REIT's in particular, tend to be negatively correlated to returns on other common investments such as stocks and bonds. This means that, generally, when stock and/or bond returns are lower, private real estate investment fund returns tend to be higher.

A recent study by Prudential Real Estate Investors showed that for the period from 1990 through 2003, returns on non-listed real estate fund investments did not correlate to or were inversely correlated to returns on the other major asset classes (specifically, the S&P 500, small cap growth stock index and small cap value stock index, and the seven to ten year government bond index and credit level bond index).

We believe that exchange listed REITs can be a suitable investment that should be considered as an element of a properly diversified investment portfolio. However, there are significant distinctions between listed REITs and non-listed real estate investment funds. According to the Prudential study cited above, the most important difference between the performance characteristics of a listed REIT stock and a non-listed real estate investment is the listed REIT's higher level of volatility. For example, from 1990 through 2003 annual non-listed real estate equity investment returns ranged from losses of 5.6% to gains of 16.2%, while listed REIT returns for this period ranged from losses of 17.5% to gains of 37.2%. Meanwhile, ten-year cumulative returns for listed REITs and non-listed real estate investments differed by less than 1%, 10.7% versus 9.9% during this period. Thus, we believe that the greater liquidity that investors in listed REITs receive generally comes at the cost of higher stock price volatility.

The Prudential study also found that returns from listed REITs appear to be negatively correlated with returns from non-listed real estate investments. The study found that in no year from 1990 through 2003 did both listed REITs and non-listed real estate investments have negative returns. It also suggested that non-real estate, public market factors tended to make a listed REIT significantly more correlated to small cap value stocks, unlike non-listed real estate investments.

Hilton Head Properties, Hilton Head Investments and related entities, executives, agents and employees provide the information herein solely from public sources and acknowledge here that they are not financial advisors, investment advisors, certified public accountants, attorneys or other professionals giving investment advice, but are solely providing historical information and it is recommended here that you obtain financial and/or legal advice from an attorney, investment advisor or certified public accountant. And that the information on this page is neither provided to advise nor solicit for investment purposes. Investments require considerable due diligence and documentation related to specific investments and qualification of the party making such investments to

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