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To qualify as securities, REITs must payout at least 90% of their net earnings to shareholders as dividends. For that, REITs receive special tax treatment; unlike a typical corporation, they pay no corporate taxes on the earnings they payout.
How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
Beginning with its second taxable year, a REIT must meet two ownership tests: it must have at least 100 shareholders (the 100 Shareholder Test) and five or fewer individuals cannot own more than 50% of the value of the REIT's stock during the last half of its taxable year (the 5/50 Test).
NTA is calculated by taking a company's gross tangible assets and subtracting any liabilities such as bank debt, payables and leave entitlements. The resultant number is then divided by the amount of outstanding securities to get a value per security.
Price/FFO per Share The most popular REIT valuation method is P/FFO. P/FFO (or Current market Price/Funds From Operations) per share is very common amongst retail and institutional investors alike.