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The Importance Of Capital Allocation Within REITs

From 2008-2010, there were over $12 billion of REIT impairments as management teams had to write down acquisitions, land, and development projects pursued at the peak of the market. Additionally, the sharp decline witnessed with asset values forced dilutive equity raises by many companies to lower inflated leverage ratios and, in many cases, save the company from bankruptcy. Roughly 50% of all REITs were forced to cut dividends. In contrast, there were almost $200 billion in REIT asset and company sales (M&A) from 2006-2007 for which shareholders were rewarded with peak…