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Land generates no revenue on its own. Shareholders are not interested in 100 square feet of dirt. They're interested in a slice of the revenue generated by see
by bregma 6y ago
Land generates no revenue on its own.
Shareholders are not interested in 100 square feet of dirt. They're interested in a slice of the revenue generated by seeking rent on the dirt someone else is using.
- R0b0t1 6y agoOwnership provides insulation from cash flow problems. It seems like it's just a book trick and real estate speculation is so lucrative that any investor wants to optimize businesses against their best interest as long as they own real estate.
- kmeisthax 6y agoIn the defense of the "spin off a REIT" crowd, a business with cash flow problems is making uneconomic use of commercially zoned land by keeping restauraunts nobody owns on it, and could make more money by either selling or renting the land to a more profitable competitor. My personal retort to that would be some long-winded complaint about how America's cities deliberately mismanage land to inflate it's value, but radical political explanations don't make businesses profitable. If the land is going to be ridiculously expensive, you might as well try to make something off of it, eh? That doesn't excuse the fact that most restauraunt REITs are nearly-transparent scams for well-connected shareholders to siphon off land from valuable businesses, though.