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Problem Seven: External Funding

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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?


Definitions:

Cross-Bridges

The connection formed between the heads of myosin molecules and actin filaments during muscle contraction.

Tropomyosin

A protein found in muscle tissue that regulates muscle contraction by blocking or exposing binding sites for myosin on actin filaments.

Troponin

A protein complex involved in muscle contraction; found in cardiac and skeletal muscles, its levels in the blood are used as a diagnostic indicator for heart attacks.

Sarcomere Distance

The length between two Z lines in a muscle fiber, defining the fundamental unit of muscle contraction.

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