REIT Frequently Asked Questions
- What is a REIT?
- A Real Estate Investment Trust, or REIT, is a company that owns, and sometimes operates income-producing real estate, such as healthcare facilities, office buildings, apartments, shopping centers and hotels. Some REITS finance real estate. To qualify as a REIT, a company must meet several requirements, but one of the most important is that it must distribute at least 90% of its taxable income to shareholders annually in the form of dividends. REITs generally pay little or no corporate income tax because they are able to deduct dividends from their taxable earnings (1).
- How did REITs come into existence?
- The United States Congress created REITs in 1960 to make investments in large-scale income-producing real estate accessible to smaller investors.
- What types of REITs are there?
-
REITs have been formed in many different industries and include healthcare REITs, office building REITs, residential REITs, shopping mall REITs, lodging REITS, industrial REITs, self-storage REITs and other types.
REITs may be publicly registered companies traded on major stock exchanges, publicly registered but non-exchange traded, or privately owned.
REITs are classified in the following categories:
- Equity REITs own and operate income producing real estate.
- Mortgage REITs lend money directly to real estate owners and their operators, or indirectly through acquisitions of loans or mortgage-backed securities.
- Hybrid REITs are companies that both own properties and make loans to owners and operators.
- What is a Healthcare REIT?
- A healthcare REIT invests in healthcare properties such as medical office buildings, skilled nursing facilities, senior housing facilities, hospitals and outpatient centers. Healthcare REITs do not provide healthcare services.
