What is a REIT

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Information about What is a REIT
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Published on February 18, 2014

Author: HOSPAUK

Source: slideshare.net

Description

A concise definition of a Real Estate Investment Trust (REIT)

What is a REIT? •A Real Estate Investment Trust. •A company that owns and operates income-producing real estate (land and improvements on it) or real estate-related assets. - Examples of REITs include hotels, apartments and offices. •REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership, without actually having to go out and buy commercial real estate. •REITs may invest in the properties themselves (generating income through the collection of rent) or they may invest in mortgages or mortgage securities tied to the properties (helping to finance the properties and generating interest income). - 90% of listed REITs are Equity REITs and the remaining 10% are Mortgage REITs Originally a U.S. concept, REITs are now global with nearly 30 countries having adopted variations of the U.S. REIT model.

What qualifies as a REIT? • After paying a conversion fee, a REIT escapes corporation tax. It must pay out 90% of its property income to shareholders. To qualify as a REIT a company must: • Invest at least 75% of its total assets in real estate. • Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate. • Pay at least 90 % of its taxable income in the form of shareholder dividends each year. • Be an entity that is taxable as a corporation. • Be managed by a board of directors or trustees. • Have a minimum of 100 shareholders and have no more than 50% of its shares held by five or fewer individuals

References • http://www.reit.com/reit101/whatisareit.aspx • http://www.sec.gov/answers/reits.htm • http://www.bpf.org.uk/en/reita/reits/about_reits.php

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