Funds available for distribution

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A friend wants to learn about the nature of equity securitized real estate, specifically real estate investment trust (REITs). Now write an essay explaining to your friend, the nature of REITs by discussing how REITs are created, how REITs differ from direct real estate investment, the key requirement of REITs formation, the financial consequences of the key requirements of a REIT including 90% payout requirement, and how in practice a REITs may end up paying more than 90% of its GAAP Net Income to beneficial shareholders. Be sure to explain why Funds From Operation (FFO) and Funds Available for Distribution (FAD) are needed to properly evaluate the performance of REITs.

Reference no: EM133110451

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