What are Real Estate Operating Companies (REOCs)?

Real Estate Operating Companies (REOCs) are best defined as publicly traded corporations that own and manage income-producing real estate. These companies operate similarly to Real Estate Investment Trusts (REITs) but differ in that they do not have to distribute the majority of their earnings to shareholders as dividends. Instead, REOCs can reinvest profits back into their businesses, allowing them to grow and acquire more properties.

Because REOCs are publicly traded, they also provide investors with a means of gaining exposure to real estate markets without directly buying properties, thus offering liquidity that direct ownership does not provide. They typically invest in various types of real estate, including commercial, office, industrial, and retail spaces, aiming for long-term value through property management and development.

The other choices depict organizations that do not encapsulate the definition of REOCs. Organizations focused solely on residential properties do not represent the broader scope of REOCs, which can encompass various property types. Private entities investing only in international markets and non-profit organizations focused on housing further diverge from the REOC model, as their structures, goals, and operational methods differ significantly from those intended by REOCs.