Origin is in the midst of raising $150 million for its third fund. Its recent acquisitions include: Cherry Creek Plaza I & II, a 313,359 square foot complex in Denver; Trinity Place, a 114,547 square foot class A office building in Raleigh, NC; and Lee Park Towers I & II, a 120,878 square foot complex in Dallas.

“I still believe public REITs are a good place to put money,” Scherer adds, but smart investors will make sure they have a balanced portfolio, with a portion going toward stocks, including some in public REIT, and other portions going into bonds and private real estate. As the performance of real estate is not strongly correlated with the stock market, “you have a smoothing effect.” He strongly advises people to stay away from private REITs which, although they can offer steady dividends, also take a huge bite out of investors' in the form of commissions.

Origin charges its clients fees that amount to about 1% of their investments, but the private REITs have charges that can run up to 18%, a fact that some investors don't know. “It's really difficult to start with less money, and then make up the difference.”

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HICAGO—Investors have recently seen public REITs underperform, and the few months of bad numbers has some wondering whether these companies and their underlying real estate are overvalued. But does that mean it's time to look elsewhere to invest funds, or just that some caution is warranted when it comes to REITs?

“It's our position that public REITs are a good investment option,” David Scherer, a co-founder of Chicago-based Origin Investments, tells GlobeSt.com. But the recent underperformance by many public trusts should be a reminder that the sector can be volatile. “Investors have to understand that there will be much more fluctuation as the market whips around.”

When the stock market rises, for example, the value of REITs tends to increase as well, even though “nothing fundamentally different is happening with the real estate they own.” Leases typically last anywhere from three to ten years, but a public REIT can see daily changes in its stock price. “There is a disconnect there. That's the challenge of a public REIT.” It gives an investor liquidity, an important plus, but “you have to be prepared to be bounced around.”

Origin is in the midst of raising $150 million for its third fund. Its recent acquisitions include: Cherry Creek Plaza I & II, a 313,359 square foot complex in Denver; Trinity Place, a 114,547 square foot class A office building in Raleigh, NC; and Lee Park Towers I & II, a 120,878 square foot complex in Dallas.

“I still believe public REITs are a good place to put money,” Scherer adds, but smart investors will make sure they have a balanced portfolio, with a portion going toward stocks, including some in public REIT, and other portions going into bonds and private real estate. As the performance of real estate is not strongly correlated with the stock market, “you have a smoothing effect.” He strongly advises people to stay away from private REITs which, although they can offer steady dividends, also take a huge bite out of investors' in the form of commissions.

Origin charges its clients fees that amount to about 1% of their investments, but the private REITs have charges that can run up to 18%, a fact that some investors don't know. “It's really difficult to start with less money, and then make up the difference.”