Go BackREITs, or real estate investment trusts, are real estate companies that own, operate or finance income-producing real estate across a range of property sectors, including infrastructure such as cell towers, data centers, warehouses, offices, residential, retail centers, medical facilities, , lodging, and specialty sectors, including timberlands.
Most REITs focus on a particular property type, but some hold multiple types of properties in their portfolios.
Everyday Americans have the opportunity to invest in real estate and real estate related projects through REITs.
REITs are modeled after mutual funds, and empower millions of people to invest in America’s future by buying into real estate and real estate-related projects that would otherwise be dominated by Wall Street, banks or hedge funds.
Today, 150 million Americans live in households invested in real estate through REITs – which are typically accessed through mutual funds and ETFs in their 401(k)s, IRAs, the Thrift Savings Plan, and pension plans.
Real estate returns are different from stock and bond returns, so having REIT investments, typically between 5%-15% of a portfolio, helps investors diversify into commercial real estate without having to take on property management responsibilities.
REITs continue to be an effective way to raise the capital needed to help finance projects that revitalize neighborhoods, enable the digital economy, power community essential services, and build the infrastructure of tomorrow, while creating American jobs and economic activity along the way.Today, REITs of all types collectively own more than $4 trillion in gross assets across the U.S., with public REITs owning more than $2.5 trillion in assets, representing more than 575,000 properties across the country.
There are two kinds of REITs that make up the majority of the REIT industry – both of which are operated with straightforward and easily understandable business models.
Equity REITs: By leasing space and collecting rent on its real estate, the company (or REIT) generates income which is then paid out to shareholders in the form of dividends.
Mortgage REITs (mREITS): They provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities and earning income from the interest on these investments.
Most equity REITs trade on major stock exchanges (NYSE and Nasdaq), and they have historically offered investors a number of benefits, including competitive long-term performance; substantial, stable dividend yields; liquidity; transparency; and portfolio diversification.
