An important REIT investment characteristic is that the assets are easily identified and easily valued independently. Investors and analysts can see the buildings, drive by them and often walk in them. They are real and tangible assets.
Listed REITs are held to the same standards and requirements as other publicly traded companies. Listed REIT reporting is governed by the Securities & Exchange Commission, Generally Accepted Accounting Principles, and the various stock exchanges. Listed REITs also report Funds From Operations (FFO) supplementally as a standard component in their financial statements. FFO is often cited by academics as the most reliable metric by which to value real estate companies.
Management Aligned With Shareholder Interest
Studies have shown that investments tend to perform better when there is a material amount of capital invested by management, up to approximately 25 percent. REIT management typically have large equity holdings. Academic research shows that firm value is positively related to insider holdings, especially when institutional investors are also large stockholders, and also positively related to RiskMetrics Group governance scores.
Value of Independent Analysis
Listed REIT investors benefit from a robust group of stock analysts that follow REITs. Independent analysts, such as Green Street Advisors, provide valuation estimates for the assets owned by the REITs.