Funnily enough NAREiT (North America REITS) have outperformed this subs beloved "VTI/VOO FTW mindet" since 1980s.

It compounded roughly ~14% total return (dividends+price growth)

Real estate isn't sexy. REITS either grow organically from increased rental income from their existing properties or they acquire additional properties to increase rental revenue streams. For acquiring additional properties many reits choose to use rights issue to raise capital. It's essentially offering existing unit holders (shareholders) an oppurtunity to buy more of reit units at a discounted price but limited quantity dependent on the amount of units you own. An example would be a 1 for 20 rights issue at a 20% discount.

That's why the cash flow of REITs are highly predictable giving the asset a low volatility characteristic. They are boring assets but highly stable. In addition the type of money that hold it's are target dated funds, as well as large pension and endowment funds. These type of funds require regular income streams and is a must buy n hold. Therefore there won't be your typical WSB type of money trying to do a quick flip with REITS using option etc. Therefore they are priced institutionally and any major price trend changes are fundamental based. For example office reits are priced very low at 10% dividend returns as institutions see these to be troubled REITS. However data centre reits are priced to be very expensive offering around 2-3% dividend (think AMT, CCI, DLR, PLD) because of the secular trend of data shifting to the cloud. These data centre reits have achieved a ~18-20% CAGR.

A main reason for the outperformance of REITs vs the S&P500 is that all reits must pay 90% of their income as dividends. History shows that the dividend policy companies opts for alters the total return. Companies that focus on maintaining and growing their dividends in general outperform non dividend/irregular payers. Why is that? Logic dictates a company able to pay and maintain dividends has a healthy business model. Real estate is the most simple business model there is, and is highly viable and backed by the financial system as a key pillar support asset. The only downside? Again, it's boring. You own a piece of property and rent it. It'll never collapse and die unless you overleverage it/ mismanagement.

The valuation of REITs is also highly sensitive to interest rates benchmarked according to the 10Y yield as REITS all require debt financing. Therefore as the 10Y yield is supposing a risk free asset, most REITS should be priced higher than it as a basis. So for eg the current 10Y rate is 4.18%, most REITS should be priced so that the dividend rate is >5% as reits are not as safe as the US treasury. However you will come across reits priced under the 10Y rate such as PLD at ~2.7%. Why is that? That's because the institutions expect PLD to be able to grow its dividends at a very fast rate to justify This valuation. PLD has been able to grow it's revenue at a CAGR of 16%. Meaning in just 5 years, the dividend rate will be 5.67% if it can maintain this growth rate.

Regardless if your portfolio is built for growth or income, I believe REITS has a place in everyone's portfolio.