Why investment in REITs is appealing to investors?
A REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable in the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. In 2007, U.S. REITs paid about $13 billion in dividends. Dividend payments increased to $17.8 billion in 2008. Until recently REITs which paid dividends in shares to save cash are now paying dividend in cash. US REITs may pay out about $11 billion in cash dividends this year and a similar amount next year if their profits don’t change drastically. So for investors who need regular cash payments REITs appeal very much. Bullish REITs I am bullish on office REITs, retail REITs, and industrial REITs. I feel the outlook for Boston Properties, Inc. (BXP), Kimco Realty (KIM), Simon Property Group (SPG), ProLogis (PLD)
