REOC or Real Estate Operating Company

Refers generally to a public company that owns, manages, and/or develops real estate but which has not elected to qualify for REIT status under federal law. These compaines are thus not required to make any specific dividend payments to their shareholders, nor are they subject to other requirements applicable to REIT organizations, which gives them more flexibility with respect to capital deployment. They pay income taxes at normal corporate rates and often use more debt leverage than do REITs, which creates interest deductions that can offset taxable income. Due to their very low (or non-existent) dividend yields, their shares can be more volatile than REIT shares.