Price Dislocation In Diversified REITs

REIT tax law dictates that at least 75% of their income must be derived from passive real estate assets. For equity REITs, this means ownership of physical real estate leased out to tenants for a rental income stream. In practice, the number is much higher than 75% with many REITs having almost all of their assets as physical real estate aside from a little bit of cash and working capital. Since REITs are essentially a conglomeration of a bunch of physical real estate, the market price of a REIT should trac ...