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H.J. Huneycutt » Comments » AMB

  • REITs and the Fallacy of FFO  [View article]
    This article totally misses the point. Real estate does not depreciate to $0. FFOs are earnings estimates, not value estimates.

    However, this does bring up an interesting discussion --- the accounting treatment of REITs needs to be dramatically altered. Depreciation shouldn't be used except when we're talking about certain property additions that might have a well-defined lifecycle. REITs should claim their surveyed property values for their RE assets on the balance sheet --- those values can be written down if they are indeed "impaired", as many RE assets in the current environment have been.
    May 17 16:36 pm |Rating: 0 0 |Link to Comment
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