I remember reading in Level 2 that REITs dont generally sell off their assets. They weigh more towards distributing the rental income from the assets at hand.
Come level 3, I read in the book that REITs do sell off their assets for capital appreciation.
Do REITs sell or do not sell their assets under normal circumstances?
Yes, REITs may sell their assets.
I’m not sure what you read at Level II, but a prohibition against REITs selling their assets wasn’t part of it.
It was in fact, called out as one of the differences between REOcs and REITs. Anyway- I get your point.
Again, I’m not sure what you read there.
REITs must get the bulk of their income from rents or mortgage interest (while REOCs have no such restriction), but that’s not a prohibition against selling assets. In the US, 25% of a REIT’s income can come from sources other than rents or mortgage interest; e.g., capital gains from the sale of assets.
Crystal Clear- thanks a lot S2000magician!
My pleasure.
Yep, most of the time, real estate-business realized returns come from the resell of assets. Cities grow and purchase power of population increases over time, so do prices of real estate. REITs are really likely to resell their assets if lucrative.