Wednesday, October 17, 2018

Real Estate

Home Sectors Real Estate
The real estate sector includes companies that buy and sell, develop land and manage the use of residential, commercial and industrial land and buildings such as homes, office space, retail centers, storage, warehouses, parking, manufacturing facilities and farms. They are usually referred to as REITs (real estate investment trust) because of their legal structure that allows the company to avoid paying income taxes if more than 90% of their taxable earnings are passed onto investors in the form of a dividend. This causes real estate firms to rely solely on debt to maintain and grow earnings, therefore the value of REITs fall as interest rates rise because debt is more expensive and their dividends are not as attractive.

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