What is a Real Estate Operating Company (REOC)? A real estate operating company (REOC) is a company that owns and operates real estate properties, and its shares trade in public exchange markets, such as the New York Stock Exchange (NYSE) and NASDAQ. Unlike real estate investment trusts (REITs), REOCs are allowed to reinvest a majority…
What is Replacement Cost (Real Estate)? Replacement cost refers to the price that it would cost to replace an existing asset with a similar asset at the current market price. The asset in question can be a real estate property, investment security, or account receivable. For example, if a building suffers from damage…
What is a Hospitality REIT? A hospitality REIT is a real estate investment trust that owns, acquires, and manages hotels, motels, luxury resorts, and business-class hotels, and leases out space in the properties to guests. Hospitality REITs also provide and serve meals, non-alcoholic and alcoholic drinks, and other services that are ordinarily provided within households…
What is a Capital Gain? A capital gain is an increase in the value of an asset or investment resulting from the price appreciation of the asset or investment. In other words, the gain occurs when the current or sale price of an asset or investment exceeds its purchase price. Capital gains are attributable to…
What is the Price-to-Cash Flow Ratio? The price-to-cash flow (also denoted as price/cash flow or P/CF) ratio is a financial multiple that compares a company’s market value to its operating cash flow (or the company’s stock price per share to its operating cash flow per share). Essentially, the price-to-cash flow ratio measures the current price…
What is a Stock Split? Publicly-traded companies all have a given number of outstanding shares of stock in their company that have been purchased by and issued to investors. A stock split is a decision by the company to increase the number of outstanding shares by a specificied multiple. More About Stock Splits When a company…
What is a Shareholder? A shareholder can be a person, company, or organization that holds stock(s) in a given company. A shareholder must own a minimum of one share in a company’s stock or mutual fund to make them a partial owner. Shareholders typically receive declared dividends if the company does well and succeeds. Also…
What is Capital Gains Tax? Capital gains tax is a tax imposed on capital gains or the profits that an individual makes from selling assets. The tax is only imposed once the asset has been converted into cash, and not when it’s still in the hands of an investor. For example, assume that an individual…
What is Asset Management? Understanding asset management starts with defining the word “asset.” In the broadest sense, an asset is anything that delivers value to its owner and the stakeholder(s) it serves. Stocks, bonds, residential properties, and commercial office buildings are all examples of assets. In finance, asset management describes managing money on clients’ behalf….
