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| The REIT Vehicle; Its Value Today and in
the Future Author: Joseph Gyourko and Todd Sinai Start Page: 355 Abstract: The real estate
investment trust (REIT) structure has come under increasing scrutiny given the problems
the structure poses for firms wishing to retain earnings in depressed real estate equity
and debt markets. We estimate the net benefits of the structure to be no more than
2%–5% of industry equity market capitalization, although the benefits are larger for
firms with lower payout ratios. In addition, the value of the format doubles as the share
of tax exempt/ deferred investment in REITs increases to 40%, the fraction obtaining in
the broader equity market. Educating this investor clientele on the benefits of the REIT
structure is an important goal for REIT management. |
