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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 ?
As the law now stands, REITs are legally bound to limit their business to real estate, their core business.
Meanwhile, Emirates REIT has been building up a portfolio in Abu Dhabi.
REIT I holds a portfolio of 14 assets comprised of 12 hotels and two notes receivable secured by real property.
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)(3)(F) and 897(h)(1), as amended by AJCA Section 418(a) and (b), treat capital gain distributions on REIT stock owned by foreign investors as dividends, if the foreign investor owns a sufficiently low percentage of the stock (5% or less).
Financing for assisted living facilities is undergoing a major change as REITs (real estate investment trusts) enter the market in a substantial way.
It's a good way for small investors to get into real estate, just because it is more liquid than buying an office building," says Bedford Lydon, a REIT analyst with Salomon Brothers in New York.
The subsidiary must be structured so the REIT owns less than 10% of the subsidiary's voting stock, either through nonvoting common stock or a combination of nonvoting preferred stock and debt.
It follows that local expertise and substantial experience in developing and managing the type of properties the REIT is acquiring are a big plus.
The gap in REIT pricing between the public and private markets is expected to shrink in 2007, but not vanish.
Example: B, an investor in REIT R, invested $10,000 for stock with a $10,000 current fair market value and a 10% dividend yield (i.
Nursing home operators looking at REITs as potential sources of financing need to consider carefully what the REIT is likely to be looking for.