In Third Avenue Real Estate Value Fund’s Q1-18 report, co-portfolio managers Jason Wolf and Ryan Dobratz explained:
“While not widely discussed, another impact of the tax-code changes could include certain US REITs electing to become C-corps or de-REITing. Fund Management would welcome this move as Third Avenue has always preferred the real estate operating company (REOC) structure.
In our view, REOCs have two key advantages. One, it seems to be a more reliant business model as the companies can typically self-finance their expansion whereas REITs are more often forced to rely on asset sales