Growth REITs
Some believe that the term growth REIT is an oxymoron; by their very nature, REITs cannot grow per-share earnings at rapid rates. A real estate business is a higher-yielding but slower-growth enterprise, and REITs must, by law, pay out most of their free cash flow to shareholders and thus cannot retain much of their earnings to plow back into the business to generate growth. Yet there have been times in the past when some REITs have been viewed as growth stocks, and such periods will undoubtedly occur again.
Growth REITs, then, are those viewed by investors as having the ability to increase their funds from operations (FFO) at rates much faster than historical norms of 4 to 5 percent annually, perhaps at times even at rates exceeding ...
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