A real estate asset like the type managed by Salus can serve as an effective complement to a diversified portfolio, alongside traditional asset classes such as stocks, bonds and Treasuries. Despite the current downturn, stocks are customarily a component of a traditional, long-term investment portfolio. Yet, real estate has historically proven to have low correlation with equities, meaning that the two asset classes move in opposite directions. Because of this relationship, investing in real estate may help offset performance and volatility in equity investments. By investing in U.S. government-leased properties investors may be able to stabilize their portfolio. These may mitigate the volatility of the stock market by providing investors with consistent returns through a stream of monthly income distribution paid by U.S. government leaseholders.
GSA properties may be able to also help balance a sobering trend for equity investors. One of the advantages of investing in stocks is the opportunity to earn a dividend, but the number of companies paying them is dwindling. Sixty-two of the companies in the S&P 500 lowered their dividends last year, wiping out $40.6 billion in income for shareholders. Even with this increasingly rare benefit, gains from increases in share prices are unrealized. An investor who enjoys gains of 10 percent per year on an equities portfolio may celebrate, but he is unable to extract any spendable income from it until the stock is sold. Real estate investments in the Salus program potentially earn investors income distributions, as well as the potential for asset appreciation through long-term ownership of a property. And, because of the payments that reduce mortgage debt, investors should see their equity continue to increase over time.