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Investments / The Ticker

What the paradigm for REITs has become

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It's clear that debt leverage in real estate is no different from leverage in other investments; the more debt you use, the greater potential for gain or loss.

When we buy stocks on margin, we are simply leveraging investment returns with debt.

Mortgage REITs and other assets carried on high margin involve substantial risk, since a small decline in the asset's value will cause a much larger decline in principal.

Source: Seeking Alpha
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