"I'm having a hard time equating what a giant entity like a trust is doing on their side when they return capital though."
This example walks you through the process. Assuming the measurement of income is correct, the Return of Capital must come from either issuing more shares or more debt or else it will shrink the business.
Real Estate businesses book about 4% depreciation which really overstates those costs. 2% is a better estimate.
Also they have been paying out as distributions part of the unrealized capital gains on the properties they own. Since those values have fallen now, that problem has come home to roost.
This example walks you through the process. Assuming the measurement of income is correct, the Return of Capital must come from either issuing more shares or more debt or else it will shrink the business.
Real Estate businesses book about 4% depreciation which really overstates those costs. 2% is a better estimate.
Also they have been paying out as distributions part of the unrealized capital gains on the properties they own. Since those values have fallen now, that problem has come home to roost.
