REITs and Transparency

Market and reporting transparency allows investors to easily determine the values of REITs and the assets they own.

Listed REITs give investors access to income-producing real estate combined with the transparency of investments listed and traded on public markets.

Like other publicly registered companies, REITs must disclose financial information to investors and report on material business developments and risks on a timely basis. Unlike other public companies, REITs’ high dividend payouts and limited retained earnings mean they must more frequently seek funding from the capital markets, requiring them to disclose and justify their plans for using the funds. This requirement provides investors with additional visibility into REITs’ finances and operations.

Listed REIT reporting and disclosure is governed by the U.S. Securities & Exchange Commission, Generally Accepted Accounting Principles, and the various stock exchanges on which their shares trade.

REITs also report Funds from Operations (FFO) as a supplemental earnings measure in their financial statements. FFO is considered by many to be the most reliable metric to value property-owning real estate companies, and provides a good indication of the dividend-paying capacity of REITs.