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Real Estate Investment Trust

An investment company that invests exclusively in real estate and mortgages. The REIT issues a fixed number of shares at its establishment, and afterward neither increases nor decreases the number of shares. An REIT is actively managed, meaning that the real estate underlying the trust change from time to time in accordance with the fund's investment goals. A shareholder may trade shares in the REIT as if they were stocks. The value of shares in a real estate investment trust is determined by supply, demand, and the trust's net asset value. Importantly, the REIT itself is not taxed; rather taxes are passed on to shareholders.


Real estate investment trust (REIT).

REITs are publicly traded companies that pool investors' capital to invest in a variety of real estate ventures, such as apartment and office buildings, shopping centers, medical facilities, industrial buildings, and hotels.

After an REIT has raised its investment capital, it trades on a stock market just as a closed-end mutual fund does.

There are three types of REITs: Equity REITs buy properties that produce income. Mortgage REITs invest in real estate loans. Hybrid REITs usually make both types of investments.

All three are income-producing investments, and by law 90% of a REIT's taxable income must be distributed to investors. That means the yields on REITs may be higher than on other equity investments.


See real estate investment trust.

References in periodicals archive ?
Generally speaking, an Islamic REIT is a collective investment scheme in real estate in which the tenants operate permissible activities according to the Sharia," explains Dr Aznan Hasan, member of the Sharia Advisory Council of Malaysia's Central Bank and member of the Sharia Advisory Council of the Securities Commission of Malaysia.
The completion of the mergers is subject to the satisfaction of customary closing conditions, and the REIT Merger is subject to the approval of REIT I's stockholders.
If the property has retail tenants, the REIT will also be concerned about rent based on the tenants' income: a percentage of gross income is acceptable, but a percentage of income net of certain expenses is not.
857(b)(5), the fraction's numerator is REIT taxable income computed without regard to (1) the dividends-paid deduction (DPD); (2) the deduction for the Sec.
The health care REITs see assisted living as one part of the continuum of health care to be provided to the elderly -and a natural business opportunity for nursing home operators.
Lately, the biggest block of REITs, 22% of the total now trading, is in apartment complexes.
A REIT may not derive more than 30% of its gross income from the sale or other disposition of stock or securities held for less than six months, property in prohibited transactions or most real property held for less than four years.
Thus, implicit in the premium over current asset value that people are now paying for REITs is the anticipation of an upward movement in rental rates some time in the next three to four years.
What hasn't been talked about is the amount of REIT IPOs that have happened that have essentially replaced all the REITs that have gone private," Case said.
The analysis indicates that the best investor in REIT shares is an individual in a high tax bracket who desires a high after-tax cashflow yield.
Further, REITs such as Meditrust are able to offer operators the sales/leaseback financing alternative.
In that situation the REIT will not be disqualified if treating the trust's REIT stock as if it were held by the trust's beneficiaries consequently would result in the 5/50 rule not being violated.