Valuation Of Real Estate Investment Trust
Real Estate Investment Trusts are the type of companies that own, operate, and/or finance Income Generating Real Estate. REITs can be considered to be a mutual funds for the real estate investment sector. REITs provide their investors (“Unitholders”) with a steady return in form of dividend pay-outs, at least once every 6 months. This makes REITs attractive to people looking to actively invest in the real estate sector without having to go through the troubles of owning, managing, or maintaining physical Real Estate.
In the article linked below, we will discuss in detail the technicalities of the valuation of REITs.
Because of the business model that REITs operate on, their valuation becomes a very interesting case in terms of the dynamics of valuation. The difference here is that, unlike conventional companies, REITs generate revenues from the assets that are usually recorded at book value in the books of accounts and do not contribute much to a company’s valuation implying that are in the business of using these assets to generate cashflows making REIT valuation stand aside from conventional valuations.
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