Personal Finance by Friedberg Barbara; Friedberg Barbara;

Author:Friedberg, Barbara; Friedberg, Barbara;
Language: eng
Format: epub, pdf
ISBN: 1991015
Publisher: ABC-CLIO

Real Estate Investment Trust (REIT)

Real estate investment trust (REIT) is a type of mutual fund. A pool of capital is collected from investors and invested directly in real estate or mortgages. REITs acquire, develop, lease, and manage real estate properties with the purpose of generating revenues from rents. They are traded on an exchange like stocks or grouped together in mutual funds or exchange-traded funds. For example, Simon Property Group Inc. (NYSE: SPG), the largest U.S. shopping mall owner, owning Simon Malls across the country, is a REIT that buys or builds a shopping mall and generates revenues from the rents collected from leasing out the property to various stores.

In order for a fund (pool of capital) to be qualified as a REIT, it must distribute 90 percent of its income back to the investors in the form of a dividend (also referred to as distributions). Given the periodic distributions, REITs are sought after by investors looking for securities with an ability to generate income along with capital appreciation.

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