At CNN, Paul LaMonica's dual role is to report what's hot, hence "The Buzz" title to his column but also to confront conventional wisdom when it doesn't make sense. Those two roles don't always mesh but they did yesterday when he decided to take apart the recent performance of the REIT market.
What's the attraction of REITs in what remains a stormy market for residential and commercial real estate? It's tempting to sum it up in one word. Yield.
Real estate investment trusts pay at least 90% of their taxable income to shareholders in the form of dividends. Doing so exempts REITS from having to pay federal income taxes.
LaMonica starts from widely asserted assumption that commercial real estate is going to be the next market segment to collapse and lines up sources to argue the contrary. He makes the case in doing so that because of yield,diversification and improving retail climate might actually make sense.
I'm dubious than any asset class that highly leveraged can really be that good an investment but he makes the case solidly while acknowledging the risk areas in another thoroughly interesting article.