Real Estate Investment Trusts (REITs)

A Real Estate Investment Trust is a company that owns, operates, or finances income-producing real estate. REITs must distribute at least 90 percent of taxable income as dividends, creating high-yield investments with average yields of 4-6 percent. Equity REITs own physical properties—apartment buildings, shopping centers, data centers, cell towers, warehouses. Mortgage REITs (mREITs) invest in mortgages and mortgage-backed securities, earning the spread between borrowing costs and mortgage yields. Publicly traded REITs can be bought and sold on stock exchanges like any stock, providing liquidity that direct real estate ownership lacks.