Say a property developer builds a supermarket and manages it. And after a certain period the developer no longer wants to manage it and go on to develop other properties (rightfully so as a developer). So he sets up another company where he transfers the property to, which in turn sells the shares to investors who will receive income in the form of rental and other fees from the properties managed.
The developer then has the asset removed from his books, but also the liability and extra cash flow..
Is that how REIT works/benefits for the property owner?
In: 1
When he transfers the property to the REIT he gets paid. Either in cash or in shares of the REIT. Either way he has exited the real estate and holds financial assets.
Latest Answers