Page 42 - IreitEbook

CHAPTER 5:

While most REITs, in theory, are great defensive portfolio picks, they’re not all

created equal.

Far from it, as we’ve already shown.

So while the “how” of buying into them can be as simple as opening up

a brokerage account and adding the appropriate ticker symbols into the

appropriate boxes, there’s a lot that should go in between those first and final

steps.

It’s best to have – or get – an understanding of how REITs operate and how they

report those operations, which can get tricky. While every publicly traded REIT

files a quarterly Form 10-Q and then an annual Form 10-K with the SEC, the way

they fill out those reports isn’t exactly streamlined.

It’s true that each company provides information about its history and current

financial performance. And the facts and figures they list do follow generally

accepted accounting principles, also known as GAAP.

Yet one company may ultimately report how it calculated its funds from

operation (FFO) into its adjusted funds from operation (AFFO)… while another

may leave those details out. (More on them shortly.)

Then there are the supplemental information packages. (Investors are also

advised to get ahold of these.) REIT’s often file them with the SEC as a Form 8-K.

They’re not always entirely mandatory, but most real estate investment trusts

do fill them out nonetheless.

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