30.09.2008 - Don't waste your cash on REITs
From Thestreet.com: As the credit crisis that started over a year ago enters its next phase, and Wall Street bankers look to Washington, D.C., and taxpayers to rescue them from their own mistakes, the world of commercial real estate has just begun to recognize what is happening and how it will change the industry. Commercial real estate, which is broadly defined as income-producing properties such as office buildings, malls, industrial parks, hotels and apartments, is a fairly simple business to understand. The value of income properties is determined by the demand vs. the supply of space by tenants, the demand for properties by investors, and the availability and cost of credit to purchase these properties. The most common way to evaluate earnings multiples in commercial real estate is referred to as a capitalization rate (or cap rate), which is basically the inverse of a price-to-EBITDA ratio..... Full Article: Source
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