Complete Guide To Investment Companies, Funds And REITs

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Real Estate Investment Trusts (REITs) - Real Estate Investment Trusts

A real estate investment trust (REIT) is a dividend-paying stock that focuses on real estate. REITS accumulate a pool of money through an initial public offering (IPO), which is then used to buy, develop, manage and sell assets in real estate. The IPO is identical to any other security offering with many of the same rules regarding prospectuses, reporting requirements and regulations; however, instead of purchasing stock in a single company, the owner of one REIT unit is buying a portion of a managed pool of real estate. This pool of real estate then generates income through renting, leasing and selling of property and distributes it directly to the REIT holder on a regular basis.

Shares are offered to the public via the major exchanges. In this way, a REIT is similar to any other stock that represents ownership in an operating business. Each share REIT represents a proportionate fraction of ownership in each of the underlying properties. Unlike commons stock however, REITs are similar to mutual funds in that they must distribute most of its profits as dividends.

Equity And Mortgage REITs


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RELATED TERMS
  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. REIT ETF

    Exchange-traded funds that invest the majority of assets in equity ...
  3. Funds From Operations Per Share ...

    A metric for the performance of a real estate investment trust ...
  4. Funds Available For Distribution ...

    An informal measure of the amount of capital that is on hand ...
  5. Captive Real Estate Investment ...

    A real estate investment trust (REIT) that is controlled by a ...
  6. Finite-Life REIT - FREIT

    A real estate investment trust (REIT) that aims to sell its real ...
RELATED FAQS
  1. What is the difference between a REIT and a real estate fund?

    A real estate fund invests in securities offered by public real estate properties directly or indirectly through Real Estate ... Read Answer >>
  2. What is the difference between an Equity REIT and a Mortgage REIT?

    Find out more about real estate investment trusts and the main differences between equity and mortgage real estate investment ... Read Answer >>
  3. Can mutual funds invest in REITs?

    Learn about mutual funds that invest in real estate investment trusts and have their shares traded on major U.S. stock exchanges ... Read Answer >>
  4. What are the pros and cons of owning an equity REIT versus a mortgage REIT? (AEC, ...

    Learn about investing in equity, mortgage and hybrid REITs. Explore the different strategies REITs employ to generate income ... Read Answer >>
  5. What are the potential pitfalls of owning REITs?

    Learn about pitfalls to investing in REITs, such as investors having to pay income tax, the REIT having to pay property tax ... Read Answer >>
  6. What average annual return is typical for a long term investment in the real estate ...

    Learn what the average annual return on real estate investments has been over the past 20 years and how it compares to the ... Read Answer >>

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