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
