Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-producing real estate across various property sectors. They provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.

REITs typically operate under a specific framework that allows them to avoid corporate tax to a significant extent, as long as they distribute at least 90% of their taxable income to shareholders in the form of dividends. This structure often makes REITs attractive for income-seeking investors.

Examples of types of REITs include:

• Equity REITs: These invest in and own properties, generating revenue primarily through leasing space and collecting rents on the properties they own.

• Mortgage REITs (mREITs): These provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities, earning income from the interest on these financial products.

Investing in REITs can offer diversification benefits, as they allow individuals to invest in a portfolio of real estate assets while gaining access to the liquidity of publicly traded securities.