Real Estate Investment Trust (REIT)
What is Real Estate Investment Trust (REIT)
It is a form of security that sells like stocks through major exchanges and directly invested in real estate, either through the help of mortgages or through the properties. They get tax-relief and other tax considerations that offer investors high yields including liquid methods and ways of buying out properties and real estate.
Types of REIT
There are 3 kinds of REIT. Equity REIT, mortgage REIT, and hybrid REIT. Through the equity REIT once can invest in owning properties. The revenue is generated through rental properties. The mortgage rate deals with investing on ownership and property mortgage. The REIT loan money for mortgages to the real estate owners. The revenue generated is through interest earned on mortgage loans. Hybrid REIT is the combination of the mortgage and equity REIT through both properties or mortgages.
How Investment is done by REIT
People can buy shares directly or invest in them through open exchange. They can also invest in a mutual fund that has specialization in real estate. REITs have DRIPs or dividend reinvestment plans too. REITs invest in office buildings, shopping malls, warehouses, hotels and apartments. They will invest in one specific area including the region, state or country. REIT is a liquid, dividend paying means through participation if real-estate.
History of REIT
REITs were born in the United States through the signing of the REIT act as Congress cleared it. This provides the investors to invest in a large scale and diverse portfolios including that of real-estate and other asset. They also do it through the buying and selling of liquid securities. More than 20 countries follow the REIT policy if required. That includes countries like the India, Japan, a few African countries, UAE, Asia, Australia, Hong Kong, Pakistan, Philippines, Singapore, and European countries like Bulgaria, Finland, France, Germany, United Kingdom and even North America and South America.
Qualifying for REIT in the US
It has to be a corporation, has a board of directors, has transferable share and certificates, jointly owned by at least 100 or more people, be taxable as a domestic corporation, and have at least 95% of income from dividends.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
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Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Solvency Ratio
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
- Debt Service Coverage Ratio
- Accounts Payable Turnover Ratio
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