1 / 15

CHAPTER 21

CHAPTER 21. Real Estate Investment Trusts (REITs). Real Estate Investment Trusts. Creation of the IRS Pass-Through Entity: No corporate taxes Asset Requirements 75% Test Income Requirements Distribution Requirements 90% Rule. Real Estate Investment Trusts. Ownership Requirements

Download Presentation

CHAPTER 21

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. CHAPTER21 Real Estate Investment Trusts (REITs)

  2. Real Estate Investment Trusts • Creation of the IRS • Pass-Through Entity: No corporate taxes • Asset Requirements • 75% Test • Income Requirements • Distribution Requirements • 90% Rule

  3. Real Estate Investment Trusts • Ownership Requirements • 100 Person Minimum • Management Activity Restriction • 1986 Tax Reform Act • Vertically Integrated Operating Companies • 1991 Kimco Realty Offering • Taubman Realty Offering • Umbrella Partnership REIT

  4. Real Estate Investment Trusts • Tax Treatment • Accelerated Depreciation • 40-Year Asset Life • REIT Dividends • Usually Ordinary Income • Taxable REIT Subsidiaries • 1999 Real Estate Modernization Act

  5. Real Estate Investment Trusts • Equity Trusts • Specializations • Property Type • Trust Duration • Investment Appeal • Diversified Portfolio • Liquidity

  6. Real Estate Investment Trusts • Equity Trusts • Investment Appeal • Mutual Funds • Exchange Traded Funds • International REITS • Closed-End Funds

  7. Real Estate Investment Trusts • Equity Trusts • Caveats • Purchase of original property not arm’s length • Conflicts of interest • Safeguards • Appraisals • Sarbanes-Oxley

  8. Real Estate Investment Trusts • Private REITs • Targeted to institutional investors • Syndicated to investors • Incubator REITs • Mortgage Trusts • Hybrid Trusts

  9. Real Estate Investment Trusts • Funds from Operations (FFO) • REIT equivalent to earnings per share • Depreciation impact • Adjusted Funds from Operations • Funds Available for Distribution • Cash Available for Distribution

  10. Real Estate Investment Trusts • Expansion & Growth • Little Free Cash Flow • Income distribution rules • Secondary Stock Offering • Dilution vs. Accretion • Debt Financing

  11. Real Estate Investment Trusts • Growing Income • Existing Properties • Rental Income • Redevelopment • Acquisitions • Purchase properties with cash at positive spreads • Swap shares for property interests

  12. Real Estate Investment Trusts • Growing Income • Development • Provision of Services • Property management • Financial Engineering • Improve financing terms and lower capital costs

  13. Real Estate Investment Trusts • Additional Issues • Tenant improvements & free rent • Leasing commissions & costs • Straight-line rents • Income from managing other properties • Types of mortgage debt • Ground leases

  14. Real Estate Investment Trusts • Additional Issues • Lease renewal options • Occupancy numbers: Occupied & leased space • Retail REITs: Sales per square foot • Costs of being a public company • Sarbanes-Oxley

  15. Real Estate Investment Trusts • Mortgage REITs • Does not own property; owns mortgage paper

More Related