Investing in REITs : real estate investment trusts

450 Pages·2012·3.04 MB·English

by  Block

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Investing in REITs
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Investing in REITs
REAL ESTATE INVESTMENT TRUSTS
FOURTH EDITION
Ralph L. Block
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Copyright © 2012 by Ralph L. Block. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging- in- Publication Data:
Block, Ralph L.
Investing in REITs : real estate investment trusts / Ralph L. Block. -- 4th ed.
p. cm. — (Bloomberg ; 141)
Includes index.
ISBN 978–1–118–00445–6 (cloth); ISBN 978–1–118–11258–8 (ebk);
ISBN 978-1-118-11259-5 (ebk); ISBN 978–1–118–11260–1 (ebk)
1. Real estate investment trusts. I. Title.
HG5095.B553 2012
332.63’247— dc22
2011012859
Printed in the United States of America
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To my father, Jack,
who led me into REITville,
and without whom this book,
in more ways than one,
would never have been possible.
My only regret is that he was not
able to witness its birth and popularity.
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Contents
Introduction xi
Acknowledgments xv
Part I Meet the REIT
Chapter 1 REITs: What They Are and How They Work 3
Types of REITs 5
General Investment Characteristics 6
Higher Current Returns 11
Summary 17
Chapter 2 REITs versus Competitive Investments 19
Bonds 20
Convertible Bonds 22
Preferred Stocks 23
Other High- Yielding Equities 24
Other Real Estate Investment Vehicles 26
Summary 31
Chapter 3 Today’s REITs 33
The First REIT 33
The Tax Reform Act of 1986 34
UPREITs and DownREITs 35
REIT Modernization Act and RIDEA 37
Lending REITs versus Ownership REITs 39
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viii Contents
Expansion of REIT Property Sector Offerings 40
Summary 41
Chapter 4 Property Sectors and Their Cycles 43
Ups and Downs 45
Property Sectors 49
Summary 87
Part II History and Mythology
Chapter 5 REITs: Mysteries and Myths 91
Changing Attitudes toward REITs 91
Myths about REITs 97
Summary 108
Chapter 6 A History of REITs and REIT Performance 109
The 1960s: Infancy 109
The 1970s: Adolescence and Turbulence 111
The 1980s: Overbuilding—The Troll Under the Bridge 113
The 1990s: The Modern REIT Era—Plus More Growing Pains 115
2000 to 2007: Credibility and Market Acceptance 124
2007 through 2010: REITs Survive the Great Recession 127
Recent Trends 134
Summary 139
Part III Investing Intelligently in REITs
Chapter 7 REITs: Growth and Value Creation 143
The Signifi cance of FFO and AFFO 144
The Dynamics of FFO/AFFO Growth 149
Internal Growth 152
How to Build Internal Growth into a Lease 157
Other Ways to Generate Internal Growth and to Create Shareholder Value 158
External Growth 163
More External Growth Avenues 172
Summary 173
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