Diversified REITs are those REITs that lack a single specialization, instead opting to invest in multiple industry sectors and reap the benefits of diversification. Owning and operating a mix of different properties, a diversified REIT might own industrial, retail and health care properties, for example.
Diversified REITs offer a great way to invest in multiple types of real estate at once. Diversified REITs also mitigate the risks associated with specific property types, as the REIT still has the potential to perform well even when one of its property types isn’t producing much income. The potential pitfalls of diversified REITs varies by individual REIT, and depends on the properties in a given REIT’s portfolio.
This leaves much of the work of diversification to the managers, requiring less work on the part of the investor when you find a REIT you like and trust.\
There are currently 19 diversified REITs trading on major US stock exchanges. Some examples of diversified REITs are W. P. Carey Inc (NYSE: WPC), VEREIT, Inc. (NYSE: VER) and Vornado Realty Trust (NYSE: VNO).