What is a Real Estate Investment Trust (REIT)?A real estate investment trust (REIT) is an investment fund or security that invests in income-generating real estate properties. The fund is operated and owned by a company of shareholders who contribute money to invest in commercial properties, such as office and apartment buildings, warehouses, hospitals, shopping centres, student housing, hotels, and timberlands. A real estate investment trust receives special tax considerations, offers high returns for investors, and is publicly traded on a stock exchange.What are the Requisites for Managing a REIT?Like mutual funds, real estate investment trusts allow both small and big investors to acquire ownership in real estate ventures. It is governed by a law that intends to provide investment opportunities and strong income vehicles. In other words, it is similar to stocks traded in the market.REITs have the following requirements:
- All REITs should at least have 100 shareholders or investors, and none of them can hold more than 50% of the shares
- Must have at least 75% of its assets invested in real estate, cash, or treasuries
- 75% of its gross income must be obtained from real estate investments
- Must pay dividends equaling at least 90% of their taxable income to shareholders
- Must be managed by a Board of Directors or Trustees
Evita Veigas
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