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A real estate investment trust (REIT) is an entity that receives revenue through owing or financing income producing property. Similar to other industries, REITs can be private organizations or they can be public traded on a stock exchange. By being public, REITs are accessible to investors of all types, who can benefit from receiving real estate income without purchasing, managing or financing property directly.
Publicly traded RETs can be bought or sold like the stock of any other public company. Unique to RIETs, however, is their tax status. The Real Estate Investment Trust Act of 1960 legislation that created the REIT structure exempts companies that qualify as REITs from paying corporate income tax, provided they distribute their taxable income as dividend. To qualify as a REIT in the eyes of the Internal Revenue Service (IRS), a company must meet many specific criteria. The most widely known provision is that a REIT must pay shareholders a dividend equal to at least 90 percent of its otherwise taxable income.
The National Association of Real Estate Investment Trust (NAREIT) is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in US real estate and capital markets. NAREITs website, www.reit, provides investors with educational resources, research and date and index information as well as news and information abut the industry.
