Bridge over ocean
1 May 1966 Financial Analysts Journal Volume 22, Issue 3

Real Estate Investment Trusts: An Appraisal

  1. E. Norman Bailey

Real estate corporations, syndicates, certain small business investment corporations, industrial corporations with major land holdings, and real estate investment trusts are the alternative vehicles found in the public securities market through which the individual can invest in real estate. This study is concerned with one of these: real estate investment trusts.

Real estate investment trusts (REITs), burst into the news late in 1960 when a change in the law gave them a federal income tax advantage. They caught the investing public’s fancy and their star appeared bright until the stock market dropped in the spring of 1962. Since then little has been heard about the trusts. They fell from favor with investors, apparently tarred with the same brush as real estate syndicates. REITs currently appear to be regaining some investor interest, even though major brokerage houses have tended to view them skeptically, and some have declined to supply their customers with information on the trusts. While the popular press has contained some information about real estate investment trusts, little has appeared in the more serious financial publications. The purpose of this paper is to present the findings of a study of REITs: their organization, operation, performance, and prospects.

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