Real Estate Investment Trust Dividend Payout Policy

Posted: October 17th, 2013

Real Estate Investment Trust Dividend Payout Policy






Real Estate Investment Trust Dividend Payout Policy

Statement of Financial Accounting Standards (SFAS) No.109

A statement that entails an asset and liability approach responsible for financial reporting  and accounting principles in terms of income taxes resulting from an organization’s present and previous year’s activities.

Capital Markets

Capital markets are markets used by individuals and companies to raise money for their operations and investments. Stock and bonds markets are the most common capital markets in the business world.

Marginal Effect of High Amounts of Cash Flow

            High amounts of cash flow results in indiscipline among company executives where managers can steal from their organizations. They can also boost business operations and attract investors and more customers.

GAAP Financials

They are regulations to which businesses adhere when accumulating, recording and reporting their financial statements. Organizations are expected to follow GAAP rules when reporting their monetary statistics through financial statements.

Form 1099-DIV

Is the official form consisting of all chargeable capital gains and dividends paid to an investor and is sent by investment companies. It reflects the common dividends, total capital gains and foreign tax paid from every investment account held by funding companies.



Section 351(a)

It is a section under IRC that gives an individual right to defer tax exchange whether in sole proprietorships or partnerships. It also applies to individuals who are involved in existing organizations and companies.

Positive Marginal Effect on the Payment of Discretionary Dividends

Discretionary dividends are paid at the discretion of the instruments issuers. Recipients of discretionary dividends get to enjoy their labor and investments. It also encourages more people to invest in real estate.

Signaling Effect

            A change in security prices because of some signal. For instance, if interests rates are raised then stock prices are likely to drop. In addition, when companies announce acquisitions their stock prices rise.

Residual Value

            Residual value is the price of property at the end of its depreciation. For example, an organization’s computers have residual value due to obsoleteness. When the organization decides to sell the computers, they will calculate the prices according to the net cash inflow.


            It is the measure of security price and value variations. High volatility means that there are higher security risks in terms of value. Lower volatility means that the security’s value does not oscillate significantly rather it changes at a steady pace over lengthy periods.

Capital Gains Taxes

            Capital gains taxes are realized from the sale of non-inventory properties that were bought at lower prices. Capital gains are differences between the buying and selling prices of assets or properties. They are most achieved through the sale of real estate. It does not apply to personal assets like furniture and cars. It does not also apply to deflating assets such as commercial equipment.

Equity REITs

            Equity real estate investment trusts are security entities responsible for the value of real estate assets. Their revenues are generated from rent. Examples of equity REITs include residential REITs that deal with residential properties leased to persons, retail REITs that specialize in malls and shopping complexes, office and industrial REITs that operate warehouses and office space. There are health care REITs that lease specialty buildings like health care facilities and nursing homes, self-storage REITs that lease large-scale storage space to individuals and organizations. Hotel and resort REITs are specialized in leasing and renting hotels and resorts.








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