Problem Seven: External Funding

question 11

Essay

Problem Seven: External Funding
You are an analyst examining a Real Estate Investment Trust (REIT) stock. REITs acquire and manage income-producing properties, such as offices, malls, apartment blocks, etc. They are unique in that they do not have to pay corporate taxes. However, they must distribute 90% of their income as dividends. What is the effect of this distribution requirement going to mean to REITs in terms of their need for external funding, growth and leverage?

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Definitions:

Twenty-Dollar Bill

Currency note of the United States valued at twenty dollars, featuring the portrait of President Andrew Jackson.

Empty

Lacking content, occupants, or value; not filled or occupied.

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A film that is made for a specific event, occasion, or purpose, often differing from mainstream cinema.

Food and Drinks

Items consumed for nutrition and enjoyment, including solid foods and liquid beverages.