Please read the disclaimer at the bottom of my blog if you wish to continue with the contents below.
Bonds are debt instruments, when you buy one, you become a lender. Reits are companies that invest in real estate, when you buy one, you become a shareholder of a company that derive income from rentals. I have seen many groups of people who solely believe in one and avoids the other. There are some who mix both as part of their portfolio.
Personally, I am a proponent for bonds instead of Reits in a modern portfolio. Here are my reasons:
First a bond issue is more senior than a Reit unit of the same company. This means, the bond holders get paid first before the Reit unit holders. Upon liquidation, the bond holders will be the first in line to get whats left, Reits or equities of the same company will always be last in line.
Second bond holders will never get played out by rights issues or placement like Reit unit holders would. Successful rights issue or placement is actually very good for the bond holders(that is why even preference shares and perpetual bonds of good companies are better than Reits.)
Third, bond holders have another line of defense ie getting back your principal on maturity(hence the defensive nature). For Reit unit holders, when price drop sharply, they can only avg down further and pray(no exit strategy). Reits are obliged to distribute 90% of their earnings out, which means its harder for them to repay their debt obligation(rights issue, placement, refinancing).
I am more incline to invest in pure asset class like bonds and equities. Reits is a hybrid class, you get the volatility when interest rate spike, but you don't get the capital protection, a lose lose in my view. The Reit class should not be counted as defensive, because it is not. That does not mean that you cannot make more money from a pure Reit based portfolio, just that the rules that govern the Reit instrument is not to my liking.
To each his own.