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Re: Topfuel post# 2266

Monday, 02/24/2014 9:10:29 PM

Monday, February 24, 2014 9:10:29 PM

Post# of 2553
Topfuel, few mREIT buyers know how they work. They only see the huge divs... a very dangerous way to invest especially for retirees who often load up on them.

mTREITs are basically highly leveraged bond funds. ARR is much more leveraged than CIM. Unlike regular corps, mREITS are required to pay out 90% of their earnings as dividends. Thus they have little retained earnings.

If they make bad guesses about the direction of interest rates, they can go to hell quickly as they did in 2013.

In a nutshell: There's a damn good reason the yield is big... these can be dangerous investments.


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