Leverage

Reader comment on: REITS and the Cost of Regulation

Submitted by Black Cobalt (United States), Sep 2, 2011 11:57

It's about leverage. The more a REIT can lever in the short term the greater returns it can make in the long run by taking advantage of interest rate spreads (especially lately due to the current near zero short term interest costs).

The fears driving the sell off are not about some scare because investors are afraid of the SEC providing more protection to the public investor (counter intuitive). The sell off was probably from more simple financial reasons: that a REIT required to follow the Investment Company Act will probably not be able to use as much short term leverage, thus it will realize less return, thus less value for the equity holders, and so investors get out.

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Title By Date
Annaly [177 words]Todd S.Sep 6, 2011 16:12
⇒ Leverage [119 words]Black CobaltSep 2, 2011 11:57

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