why are reits externally managed?
430055
Externally managed REITs are considered more efficient and simpler in their organization, but manager fee structures can create conflicts of interest and corporate governance problems. Internally managed REITs have less conflicts of interest and are generally thought to be a more shareholder-friendly structure.
630653
A REIT's mode of operation is similar to that of a mutual fund in that investors combine their capital to buy a share of commercial real estate and then earn income from their shares. REITs are required to pay a minimum of 90% of taxable income in the form of shareholder dividends each year.
1135860
Liquidity: Most REITs, particularly publicly-traded REITs, offer much greater liquidity than rental properties. ... Unlike rental properties, which usually provide monthly cash flow in the form of rental income, REIT dividends offer monthly or quarterly cash flow.
867611
Real estate investment trusts (REITs) and master limited partnerships (MLPs) are both considered pass-through entities under the U.S. federal tax code. ... However, the pass-through status of REITs and MLPs allows them to avoid this double taxation since earnings are not taxed at the corporate level.
1056615
Investing in Real Estate Investment Trusts (REITS) Essentially, the money from investors is pooled and invested. The REITS income is then distributed to shareholders in the form of dividends. ... Exchange Traded Funds generally invest in 15 or more of these securities, giving investors access to a basket of REIT stocks.
1236632
REITs' income is taxed only once, at the shareholder level. This is unlike corporate dividends, which are taxed once at the corporate level and then taxed again to shareholders. Hence the term double taxation. Because of this, REITs are best suited for tax-deferred entities such as IRAs and 401(k) accounts.
968773
statsguy wrote: REITs re highly leveraged. In a financial crisis (like the recent recession) highly leveraged firms are going to be the most volatile. Even without a financial crisis, leverage increases volatility.
659564
The government currently imposes a 10% withholding tax on REIT dividends to local and non-resident individual investors. Listed REITs in Malaysia are exempted from annual tax assessment if they distribute 90% of the year's total income to unitholders. ... Both countries apply 10% rate on dividends for foreign institutions.
852134
A REIT is a corporation, trust, or association that invests directly in income-producing real estate and is traded like a stock. A real estate fund is a type of mutual fund that primarily focuses on investing in securities offered by public real estate companies.
156780
The dividend payments made by the REIT are taxed to the unitholder as ordinary income unless they are considered qualified dividends, which are taxed as capital gains. Otherwise, the dividend will be taxed at the unitholder's top marginal tax rate. ... These payments also reduce the cost basis for the unitholder.
1137798
Due to the nature of real estate investing, REITs typically do better in low-interest-rate environments. ... Generates at least 75% of its net income from real estate. 95% of its income must be passive like rent. At least 90% of its taxable income is paid to shareholders via dividends.
337159
Open-ended REITs can issue new shares and redeem shares at any time. ... Because they're traded on an exchange each day, publicly traded REITs are simple for investors to buy or sell and offer great liquidity.
1206141
If you went and bought a property on your own or if you partnered with friends and purchased a property under your partnership, that's direct investing. Indirect investing involves buying shares in a real estate fund, such as buying shares of a publicly-traded real estate investment trust (REITs).
490831
Because they often invest in debt securities secured by residential and commercial mortgages, mortgage REITs can be similar to certain investment companies that are focused on real estate. ... Many REITs (whether equity or mortgage) are registered with the SEC and are publicly traded on a stock exchange.
1095213
Many real estate companies are incorporated as REITs to take advantage of their special tax status. A company with REIT incorporation is allowed to deduct its dividends from taxable income. Real estate companies are usually highly-leveraged due to large buyout transactions.
451983
Real Estate Investment Trusts (REITs) are known as a tax efficient way to invest in real estate. ... For shareholders of REITs, the conventional wisdom is to hold shares in tax advantaged accounts because distributions are taxed as ordinary income rather than qualified dividends.
963237
For that reason, healthcare REITs have historically been core holdings in many retail and institutional investors' portfolios, especially those geared towards long-term growth. The stability of the healthcare sector means that healthcare REITs are more recession-proof and offer less risk than other types of REITs.