Reits

Real Estate Investment Trusts (REITs) ## What Is a REIT? A Real Estate Investment Trust (REIT) is a corporation or trust that owns, operates, or finances income-producing real estate. REITs allow individual investors to buy shares of large commercial real estate portfolios — apartment complexes, office buildings, shopping malls, data centers, hospitals, warehouses — the same way they'd buy stock in any company. Before REITs were created by Congress in 1960, investing in commercial real estate required enormous capital. A $200 million office tower was inaccessible to most investors. REITs democratized real estate investment by pooling capital from thousands of shareholders. Real-world analogy: Owning shares of a publicly traded REIT is like owning a slice of an entire apartment complex portfolio without being a landlord — you collect rent income as dividends without dealing with tenants, maintenance, or property management. --- ## Structure: How REITs Work A REIT is structured as a corporation, trust, or association that: 1. Owns and operates income-producing real estate (equity REIT), OR 2. Makes loans secured by real estate (mortgage REIT), OR 3. Does both (hybrid REIT) To qualify as a REIT under the IRS tax code, the entity must meet several requirements: - Be structured as a corporation, trust, or association - Have at least 100 shareholders - No more than 50% of shares held by 5 or fewer individuals (the "5/50 rule") - Invest at least 75% of total assets in real estate, cash, or U.S. government securities - Derive at least 75% of gross income from real estate sources (rents, mortgage interest, gains from property sales) - Distribute at least 90% of taxable income to shareholders annually --- ## The 90%…