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Investing in REITs: Real Estate Investment Trusts, 4th Edition by Ralph L. Block

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Additional Real Estate Owners Will “REITize”

A successful and growing real estate organization could list several reasons why it might choose to go public as a REIT. Some of these have to do with the pricing of real estate on Wall Street compared with its pricing on Main Street, while others are attributable the advantages of the REIT format.

Arbitrage

REIT stocks have traded at prices above their estimated net asset values (NAVs) during most periods over the past 15 years (the primary exceptions being 1999 to 2001 and 2008 to 2009). To the extent this trend continues and NAV premiums expand, many private real estate owners—and particularly real estate organizations—will be tempted, for this reason and several others we'll discuss shortly, to ...

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