Price-to-Book (P/B) ratio is actually a measure of cash over valuation (COV). Since no buyers like to pay high COV for properties, should REITs be treated the same way? This question has baffled me for some time, and my position has shifted a couple of times. Let us try to tackle this question by understanding why shares can trade above book value and whether the same arguments apply to REITs. Why Shares Can Have COV Shares typically trade at a P/B ratio greater than 1. The main reason is because the assets bear very little relation to the earnings power of the company. A company can have very little assets but have considerable earnings power due to its brand value, intellectual properties and/or favourable regulations. As these factors are considered intangible, they cannot be included as assets in the balance sheet (unless they are taken over by another company, after ...