Real Estate Investment Trusts (REITS): A new business model in the FTSE100

Colin Haslam; Nicholas Tsitsianis; Tord Andersson; Pauline Gleadle

doi:10.1016/j.accfor.2015.10.003

Real Estate Investment Trusts (REITS): A new business model in the FTSE100

Colin Haslam, Nicholas Tsitsianis, Tord Andersson, Pauline Gleadle

Hertfordshire Business School

Research output: Contribution to journal › Article › peer-review

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Abstract

This paper is about the Real Estate Investment Trust (REIT) business model. REITs benefit from tax concessions and Fair Value Accounting (FVA) practices. REITs distributing over 90 percent of profits can obtain tax concessions for their shareholders. This encourages profit distribution at the expense of accumulating retained earnings in shareholder equity. The financial viability of REITs depends upon FVA because this records holding gains when property values are increased. These holding gains can be employed to generate additional financial leverage. However, REITs are exposed to property market volatility and this can quickly undermine solvency, credit ratings and financial stability.

Original language	English
Pages (from-to)	239-248
Journal	Accounting Forum
Volume	39
Issue number	4
Early online date	10 Nov 2015
DOIs	https://doi.org/10.1016/j.accfor.2015.10.003
Publication status	Published - Dec 2015

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907228Accepted author manuscript, 475 KBLicence: CC BY-NC-ND

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title = "Real Estate Investment Trusts (REITS): A new business model in the FTSE100",

abstract = "This paper is about the Real Estate Investment Trust (REIT) business model. REITs benefit from tax concessions and Fair Value Accounting (FVA) practices. REITs distributing over 90 percent of profits can obtain tax concessions for their shareholders. This encourages profit distribution at the expense of accumulating retained earnings in shareholder equity. The financial viability of REITs depends upon FVA because this records holding gains when property values are increased. These holding gains can be employed to generate additional financial leverage. However, REITs are exposed to property market volatility and this can quickly undermine solvency, credit ratings and financial stability.",

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AB - This paper is about the Real Estate Investment Trust (REIT) business model. REITs benefit from tax concessions and Fair Value Accounting (FVA) practices. REITs distributing over 90 percent of profits can obtain tax concessions for their shareholders. This encourages profit distribution at the expense of accumulating retained earnings in shareholder equity. The financial viability of REITs depends upon FVA because this records holding gains when property values are increased. These holding gains can be employed to generate additional financial leverage. However, REITs are exposed to property market volatility and this can quickly undermine solvency, credit ratings and financial stability.

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Real Estate Investment Trusts (REITS): A new business model in the FTSE100

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