Real Estate Investment Trust (REIT)

REITs allow ordinary investors to own a share of large portfolios of property, such as offices, shopping centres, warehouses, apartments, hotels, data centres and healthcare buildings, without buying property directly.

To qualify as a REIT, a company must meet rules on what it owns, where its income comes from and how much it pays out. In the United States, REITs must distribute at least 90% of their taxable income to shareholders as dividends. Similar structures exist in the United Kingdom, Canada, Australia, India, Singapore, Japan and many other countries, with their own rules.

For example, an investor could buy shares in a listed REIT that owns hundreds of logistics warehouses, receiving regular dividends from the rent paid by tenants.

Most REITs are listed on stock exchanges, so they are easy to buy and sell, unlike physical property. Mortgage REITs invest in property loans rather than buildings. REIT share prices can be volatile and sensitive to interest rates, and dividends are usually taxed as ordinary income rather than at lower dividend rates.