Series 79: Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs)

As you would guess from the name, Real Estate Investment Trusts (REITs) are entities that invest in real estate. Much like a mutual fund for real estate, REITs allow individual and institutional investors to invest indirectly without taking direct ownership of the underlying properties.

A REIT is not an organizational structure, but is rather a tax designation available to entities—typically corporations or trusts—that meet certain requirements. The most important of these is the requirement that the entity pay out at least 90% of its taxable income to its investors every year. In addition, at least 75% of the entity’s assets must be invested in real estate, and 75% of its gross income must be derived from investments in real estate or mortgages on real property. Ninety-five percent of its gross income