0110 What is a REIT?

What is a REIT?

 

A REIT, or a real estate investment trust, is a corporation that purchases, owns and manages real estate properties and/or real estate loans. Some REITs also develop properties or originate loans. REITs were established in 1960 and operate under Subchapter M, subject to revisions from RIETSA. This legislation provides REITs with a special tax status that allows them to avoid corporate tax as long as nearly all REIT income is distributed to investors. Although the REIT structure avoids double taxation to shareholders, tax losses cannot be passed through. With over 300 corporations qualifying as REITs, approximately one-third are private with the remainder traded on public stock exchanges. There are three types of REITs; equity, mortgage and hybrid - as defined below.

An Equity REIT (real estate investment trust) is a corporation that purchases, owns and manages real estate properties; it does not own or originate real estate loans. It may also develop properties. (For more information and listings of publicly traded equity REITs by property type groups, please see RealtyStock's Equity REITs).

A Mortgage REIT (real estate investment trust) is a corporation that purchases, owns and manages real estate loans; it does not own real estate properties. It may or may not originate commercial and/or residential loans. (For more information and listings of publicly traded mortgage REITs, please see RealtyStock's Mortgage REITs).

A Hybrid REIT (real estate investment trust) is a corporation that purchases, owns and manages both real estate loans and real estate properties. It has the qualities of both an equity and mortgage REIT which is why it is referred to as a hybrid. (For more information and listings of publicly traded hybrid REITs, please see RealtyStock's Hybrid REITs).