West Loop Financial LLCBreaking Down REIT Prices – West Loop Financial LLC https://www.westloopfinancial.com Evolutionize Site Wed, 19 Aug 2020 20:50:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Breaking Down REIT Prices https://www.westloopfinancial.com/2016/07/11/breaking-down-reit-prices/ https://www.westloopfinancial.com/2016/07/11/breaking-down-reit-prices/#respond Mon, 11 Jul 2016 09:00:33 +0000 http://evolvemypractice.com/?p=2966 As with all financial assets, real estate investment trust (REIT) valuations should equal the discounted present value of expected future cash flows. REIT prices thus reflect the growth potential of cash flow (rents, expenses) and/or the time variation in expected returns (interest rates and risk premium, which is the discount rate). Given currently low yields...

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]]> As with all financial assets, real estate investment trust (REIT) valuations should equal the discounted present value of expected future cash flows. REIT prices thus reflect the growth potential of cash flow (rents, expenses) and/or the time variation in expected returns (interest rates and risk premium, which is the discount rate).

Given currently low yields on REITs, an important question for investors is: Do high prices today relative to dividends (low dividend yields) mean that there are optimistic expectations of future dividends? Or, do high prices relative to today’s dividends imply low future returns?

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