CapEx Worries Loom Larger for REITs

CHICAGO—Although general economic conditions and failure to qualify as a REIT remain the risk factors most likely to keep investment trusts’ leadership up at night, the executives have also been paying more attention to risks stemming from operating expenses and costs of capital improvements. That’s among the findings of locally based BDO USA LLP in its “2014 BDO RiskFactor Report for REITs,” based on analysis of the most recent 10-K filings from the 100 largest publicly traded companies in the sector.

The report found OpEx and CapEx in 82% of the 10-Ks this year, up from 77% in 2013. Also on the rise were concerns about the financial health of tenants, cited by 79% as a risk factor, compared to 75% the year prior.