Page 44 - IreitEbook
P. 44

In short, it measures how profitable a piece
                                                                   OUR FINALS THOUGHTS
               or group of properties are by themselves
                                                                   ON BUYING REITS
               without factoring in the REIT’s corporate-
                                                                    While it’s tempting to get into bed
               specific expenses.
                                                                    with any REIT that has a high yield, that

                                                                    would be exceptionally foolish. Always
               Same-Store (Organic) Earnings typically
                                                                    look at the fundamentals and whether
               refers to revenue, operating expenses,
                                                                    the dividend is secure instead.
               and net operating income, though only

               from property a REIT has owned for a year
                                                                    Dividend safety is MUCH more
               or more. This allows investors to see how
                                                                    important than dividend yield. And it’s
               well newer acquisitions may fare under the
                                                                    more important every single time.
               same management team.


                                                                    (Yield is calculated as the current
               FFO Growth is equivalent to a regular
                                                                    quarterly dividend multiplied by four,
               company’s earnings growth. It’s just
                                                                    divided by the current share price.)
               that traditional C-corporations (i.e.,
                                                                    iREIT takes all of that into
               corporations that are taxed separately
                                                                    consideration, along with a whole
               from their owners) measure their growth in
                                                                    host of other information with every
               EPS, or earnings per share. Whereas REITs
                                                                    investment possibility it evaluates.
               measure theirs by how much they take in
                                                                    In addition, whenever possible,
               through funds from operations.
                                                                    we analyze the character of each

                                                                    company’s management team as well.
               FFO is calculated very simply by adding

               same-store growth with any external

               growth from developed or otherwise

               acquired properties, minus that from any

               properties sold.










                                                                                                               44
   39   40   41   42   43   44   45   46   47   48   49