This Investment Is 4X Better Than New Construction
Real estate investment trusts (REITs) have a number of ways they can grow their businesses, each of which has to compete for precious capital. Open-air shopping center landlord Brixmor (NYSE: BRX) has around $1 billion worth of high-return spending in its pipeline -- and it blows the doors off new construction. Here's what you need to know.
There's a big problem for REITs when it comes to growth. In exchange for avoiding the double taxation of dividends, the REIT corporate structure requires passing at least 90% of taxable earnings on to shareholders as dividends. (Those dividends get taxed as if they were regular income at the shareholder level.) That means there's not a whole lot of cash left over for growth spending. So REITs have to tap the capital markets for capital, either by selling stock or issuing debt.
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Source Fool.com
