Reading REITs: What to Look for EXPERIENCED MANAGEMENT: Check the prospectus or annual report for managers who weathered several real estate cycles. OWNERSHIP STAKE: Get ahold of the annual report or 10K filing to determine whether management owns a sizable position in the common stock. DIVERSIFICATION: Examine the annual report to make sure the REIT owns different types of properties (shopping malls, apartments, office space, etc.) in various geographic areas. SUSTAINABLE GROWTH: Look for annual increases in a REIT's cash flow, listed in the prospectus as adjusted funds from operations. LOW LEVELS OF DEBT: Institutional investors recommend that debt be no more than 35% of total capitalization. The lower the level of variable-rate debt, the better. DATA: BW

Updated June 15, 1997 by bwwebmaster
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