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Investopedia explains 'Real Estate Operating Company - REOC'
Because real estate operating companies reinvest earnings rather than distribute dividends to unit holders, they do not get the same benefits of lower corporate taxation that are a common characteristic of REITs.
Investors in an REOC seek capital gains rather than passive cash flows. When analyzing a potential REOC investment, an investor should look for relatively high return on investment capital, return on equity and return on assets, as well as a respectable valuation. These are all measures of how well a company has been using its invested capital, equity and assets to generate profits. The higher these returns, the more likely it is that the company will continue to be profitable.
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