Cash Preservation Strategies For REITs

Not long ago, corporate coffers were flush with cash and activist shareholders were insisting that companies distribute cash rather than retain it to fund growth or future operations. Today, cash is precious. Many companies, including REITs, are facing unprecedented liquidity and capital resource constraints. Keeping internally generated cash on the balance sheet has become a priority even for companies with adequate liquidity because the current financial market environment has limited their options for raising new capital. For example, in recent weeks, REITs with corporate bonds have experienced historically wide spreads at the same time that the value of their equity securities have fallen sharply. It is not expected that the credit markets for corporate debt in or out of the REIT industry will improve significantly over the near term, and REIT executives who have the option not to issue equity at these depressed prices are unlikely to do so until the REIT equity