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REITs: Internal Vs. External Growth

Mar. 27, 2023 6:30 AM ETBRX, EPR, FRT, NNN, O, REG55 Comments


  • Two ways REITs can raise cash for investment are by selling stock or by retaining earnings.
  • Each can, in the right circumstances, produce a large rate of growth.
  • Too often ignored are the risks of growth fueled by issuing shares and the opportunity to grow enabled by retaining earnings.
  • I do much more than just articles at High Yield Landlord: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

REIT. Concept image of Business Acronym REIT as Real Estate Investment Trust. 3d rendering


During the research for my most recent article on EPR Properties (EPR), I found myself impressed with their transition in business model across the pandemic. They are now driving growth of cash earnings based on retained


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Investment Yield

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Internal growth

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Rent escalation

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cap rate table

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Internal growth plot

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Shopping internal growth

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External growth formula

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External growth 2

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External growth EPR

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External growth O

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total growth rate

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Net Lease Total Growth

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Net Least total O

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This article was written by

R. Paul Drake profile picture
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.
R Paul Drake brings a retiree perspective to his writing. After investing via employer tax-deferred plans for several decades, he has in recent years broadened into a variety of more focused investments. Paul is a life-long reader of works on economics, finance, and investment. He embraces a value-investing approach, which led him to join the team of authors at High Yield Landlord and to learn to analyze REITs. Most of his writing at present is focused on REITs.

          Paul brings substantial experience in research, and in understanding and developing models of uncertain systems, from his decades working as a physicist. He wrote his first Monte Carlo model aimed at investments in 2006. He has intensively researched and modeled a wide variety of portfolio options. Among other degrees, he holds a doctorate in physics and a bachelors in philosophy. His career began with running large projects for a major research laboratory, and continued with a long, and award-winning run as a professor at the University of Michigan. He has authored nearly 300 articles published in formal academic journals, and two editions of a textbook.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EPR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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