What Is an Infrastructure Trust?

An infrastructure trust is a fund formed to finance, construct, own, operate, and maintain infrastructure projects. Infrastructure trusts operate like mutual funds and 澳洲幸运5官方开奖结果体彩网:real estate investment trusts (REITs), with investors purchasing unit𓄧 shares in the trust. The infrastructure trust periodically distributes payments to the unitholders.

Understanding an Infrastructure Trust

Infrastructure trusts may invest in a variety of projects including energy pipelines, waste management, road construction, 澳洲幸运5官方开奖结果体彩网:telecommunication, airports, and shipping. The trusts ꦓinvest in the companies that do business in these areas.

From the investor's viewpoint, Infrastructure trusts are a way to add diversification to a portfolio. They tend to weather market downturns, providing a consistent stream of income.

When evaluating an infrastructure trust, it is important to review the trust's underlying holdings. As with any trust, it is useful to determine the trust's intrinsic value by using any number of valuation techniques, including a discounted cash flow analysis,

Infrastructure REITs

The infras🔜tructure real estate investment trust (REIT) is similar to the infrastructure trust.

A REIT owns, operates, or finances income-producing real estate. For a company to qualify as a REIT, it must meet certain regulatory guidelines, such as distributing 90% of taxable income to shareholders. REITs often trade on major exchanges like other securities and provide investors with a hands-off stake in real estate. REITs are also known for their steady income from 澳洲幸运5官方开奖结果体彩网:dividends.

Infrastructure REITs own and manage infrastructure real estate while🌌 collecting rent from tenants that occupy or use that property. Property types include fiber cables, wireless infrastructure, telecommunications towers, and energy pipelines.

Infrastructure REITs can invest domestically or globally. The ones that invest in the U.S. domestic market are considered safer investments given the country's relatively stable political climate and predictable spending on infrastructure.

Infrastructure REITs in other countries, particularly 澳洲幸运5官方开奖结果体彩网:emerging markets, are riskier but can have better growt🦩h prospects.

How to Invest in an Infrastructure Trust

Individuals can inv🤪est in REITs either by purchasing shares directly on an open exchange or by investing in a mutual fund that specializes in public real estate.

There are popular REIT 澳洲幸运5官方开奖结果体彩网:exchange-traded funds (ETFs) like iShares U.S. Real Estate ETF (IYR), Vanguard Real Estate ETF (VNQ), and the Real Estate Select Sector ETF (XLRE).

Some REITs are Securities and Exchange Commission (SEC) registered public companies but are not listed on an exchange. Otherཧs are private.

Infrastructure trusts that are traded on major exchanges are relatively rꦫare; only a handful ar🌸e available in the U.S.

One reason may be the complexity of their operations. American Tower Corporation, for example, manages 148,000 wireless and broadcast communications facilities in 24 countries. Capital needs are high for such companies and some of their operations are vulnerable to we🐲ather-related events such as hurricanes and other natural disasters.

In general, when evaluating REITs, earnings per share and P/E ratios aren't helpful. One must look at 澳洲幸运5官方开奖结果体彩网:funds from operations (FFO) rather than net income.

Prospective investors should also calculate adjusted funds from operations (AFFO), which deducts the likely expenditures necessary to maintain the real estate portfolio. AFFO provides an excellent tool to measure the REIT's dividend-paying capacity and growth prospects.

Real-World Examples

American Tower Corporation (AMT) is one of the largest global REITs, operating communications facilities globally. It leases space on communications towers, operates outdoor distributed antenna systems and managed rooftops, and provides network deployment. The REIT shares are listed on the NYSE.

Crown Castle (CCI) is the U.S.'s largest provider of shared communications infrastructure. Its infrastructure portfolio consists of more than 40,000 cell towers, 80,000 on-air or under-contract small cell nodes, and 80,000 route miles of fiber.

The Bottom Line

The infrastructure trust is one alternative for the investor seeking a diverse portfolio. Like a bond, a REIT, or a dividend-paying stock, an infrastructure trust provides a stream of income. Ultimately, it is an investment in the essential services ওthat keep our world humming.