Also called real estate investment trust

REIT

A company owning income-producing property, required to pay out most of its income. It runs on funds from operations, which is why a cash-flow DCF cannot value one.

Updated 2026-09-05

A real estate investment trust owns income-producing property and is required to distribute most of its taxable income to shareholders, which is what earns it favourable tax treatment.

REITs are the clearest example of a business a cash-flow DCF cannot value. Property depreciates enormously on paper while often appreciating in reality, so reported earnings understate the economics, and the industry measures itself on funds from operations instead. Angie excludes equity REITs before valuation begins rather than publishing a confident-looking number. See no value.

Real estate SERVICES companies are a different thing entirely and value normally. The exclusion is by industry, not by sector, so brokerages and data providers in the property world are not caught by it.

See also

  • No value — Angie's refusal. A discounted cash flow cannot honestly price a bank, an insurer, a REIT or a company burning cash with no history of earning any, so it declines rather than inventing a number.
  • Dividend — Cash paid out to shareholders. It is a decision about what to do with free cash flow, not a measure of how much of it there is.
  • Stock — A unit of ownership in a company. It carries a vote, a claim on whatever is left after everyone else is paid, and no promise of anything.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

IsiofiaIsiofia