Business, Legal & Accounting Glossary
A REIT which takes an ownership position in its real estate investments, as opposed to a mortgage REIT.
An equity REIT is a company that owns a portfolio of income-producing real estate. REIT is an abbreviation of Real Estate Investment Trust. An equity REIT is one type of REIT; there are also mortgage REITs that own mortgages secured by properties. Congress passed legislation in the 1960s that helped create the modern equity REIT. Their goal was to enable retail investors to participate in the benefits of owning income-producing real estate.
An equity REIT is required to distribute 90% of its taxable income to shareholders as cash dividends. However, an equity REIT is not required to pay corporate income tax. Compared to other investments, equity REIT stocks generally offer higher dividend yields. Studies by research firm Ibbotson & Associates show that equity REIT stocks have a relatively low correlation with other stocks and bonds. As a result, adding equity REIT stocks to a portfolio is an effective tool for improving portfolio diversification.
hybrid REIT
Real Estate Investment Trust
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This glossary post was last updated: 30th October, 2021 | 0 Views.