Correction day 3. I leave you all with an insightful take on REITs from D.O.G at WallStraits forum:
That depends on who the REIT manager is. For REITs where the managers were originally the asset owners i.e. virtually all the S-REITs, the owners have basically already divested their real estate at a good price in the REIT IPO. Any remaining stake is a call option, and it continues to pay out cash. So these ex-owners are having their cake and eating it – they sold most of their stake, and now they are slowly clawing it back via payment in units.
One analogy might be – I sell you a house for cash, and I manage the tenants for you. Instead of sharing in the rental, I am paid in shares of the house. So each quarter I own a few more bricks in the house. Given enough time, ownership of the house will revert to me. All this while, I get more and more cash from my increasing ownership of the house. So the net effect is that I get cash upfront from selling you the house, then I get paid to wait while the house reverts back to me. Nice deal for me, not so nice for you.
For REIT managers who were not the original owners of the REIT assets, payment in units does increase alignment of interest. However, if they then sell the units for cash (see: ARA Asset Management), alignment of interest is eroded.
Here are today’s figures. Do follow my Dividend Stock Tracker which is updated nightly here.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.
Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.
His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.
You can read more about Kyith here.
- My Dividend Experience Investing in UCITS iShares iBond Maturing in 2028. - April 23, 2024
- We Invest into Popular Funds When They Are Popular, Exactly When They Started Turning to Shxt. - April 22, 2024
- Meal Prep 2.0 – Cooking Your “Go-to” Meal that You Look Forward to Eating Everyday. - April 21, 2024