Learn the stock market › Sectors › Lesson 2 of 6
Key numbers for real estate companies
Eight REITs in numbers
| Company | P/B | Debt / assets | Interest cover |
|---|---|---|---|
| American Tower | 24.9 | 71.2% | 3.6 |
| Simon Property | 19.4 | 71.9% | 3.3 |
| Equinix | 6.9 | 56.6% | 3.7 |
| Public Storage | 6.4 | 50.7% | 7.4 |
| Welltower | 3.7 | 31.8% | 0.5 |
| Digital Realty | 2.4 | 39.8% | 2.1 |
| Prologis | 2.2 | 36.1% | 3.5 |
| Realty Income | 1.4 | 40.3% | 2.3 |
| Middle of all 101 companies | 5.8 | 26.0% | 11.1 |
None of the 101 largest US companies in our list is a real estate company, so the table takes eight large REITs on their own. A REIT, a real estate investment trust, is a company that owns property and pays out most of its taxable income.
Why a real estate company looks different
Large loans. Debt is 45.5% of assets in the middle, against 26.0% for the largest companies. Rents come in at about the same pace every year, so it is possible to borrow a lot against them. Most REITs also pay out at least all of their taxable income, so growth is paid for with new loans or new shares rather than kept profit. How debt is measured in general is in the lesson on debt.
Interest decides. Interest cover is 3.4 in the middle, against 11.1 for the largest companies. A loan renewed after rates have risen costs more, and less of the rent is left. That is why real estate stocks often move a lot on news about rates. More on that is in the lesson on interest rates.
What the book value means. Under the international rules (IFRS) a company may carry its buildings at fair value, measured again every year, or at what they cost minus depreciation. US companies report under US rules, which carry buildings at cost minus depreciation. With P/B at 5.1 in the middle, these REITs' book value says more about what the buildings once cost than what they are worth, so price-to-book is a weak guide here.
Profit and cash are far apart
Depreciation on the buildings is taken out of profit every year, even when the buildings keep their value. So REITs also report funds from operations, or FFO: profit with that depreciation added back and gains from selling property taken out. A P/E on ordinary profit makes a REIT look more expensive than its cash suggests.
Which company suits whom depends on what you look for. Low debt, high interest cover and a high payout rarely come in the same company. The table compares, it does not rank. Occupancy and how long the leases run are in the companies' own reports.
Test yourself
A REIT has interest cover of 2. What does that mean?
Sources
- IFRS Foundation, IAS 40 Investment Property: fair value or cost model, read November 6, 2026.
- Investor.gov (US Securities and Exchange Commission), Real Estate Investment Trusts (REITs): payout of taxable income, read November 6, 2026.