Stock market what is a REIT?
The acronym for a real estate
investment trust is a REIT. According to the National
Institute of Real Estate Investment Trusts 190 Re Its are
currently registered with the SEC and trade on one or
more of the New York Stock Exchanges. There are over 900
REITS that are privately held companies.
The advantage to the investor in the REIT is the source of
income it provides. Specifically, due to the structure of
the REIT it does not accrue corporate tax, instead it returns
all of the taxable income to investors. The investor receives a
1099 form for tax purposes and it is therefore taxed like
The REIT can be designed to fit almost any scenario
available in the real property world. It can play the upside
and the downside and provide hybrid type coverage.
Primarily the REIT is composed of commercial property including
shopping malls, apartment complexes and income producing
property. It also is packaged with residential real estate of a
The influence of the REIT has seen increased interests to
investors for providing income and a compliment to their
portfolio of stocks and bonds. Because of the intricacies of
the real estate market and commercial property in particular
the investor should consult with a qualified REIT broker or
investment advisor. Lists of REITs are available through
Morningstar or may be reviewed on-line at the National
Institute of Real Estate Investment Trusts.
Troubled waters can be avoided:
The current Summer and Fall 2007 concerns about real estate
mortgages and a slow down in some United States real estate
markets does not mean the REIT investment is in jeopardy.There
are certain REITS in the United States that are hybrids that
afford the investor with security in good times and troubling
areas of the market.
It should also be remembered that REITs are available for
nearly all of the world real estate markets. In many parts of
the world, China, Asia, Europe and Dubai the real estate market
in both commercial and residential income property is sizzling.
There is stability in these parts of the world for some hefty
returns for investors.
The overall purpose of the REIT envisioned by the U.S.
Congress was to provide a means for investors and in turn the
developers of real estate to mutually benefit from
growth. It places the average investor in a position of
being a big player with the benefit of a share of the profits.
A small investment in a REIT can enhance a portfolio of stocks
and bonds. Each investment dollar goes into enhancing or
creating the availability of funds for building realty.
Due to the nature of the REIT, it must be organized and
structured according to strict guidelines. The SEC guidelines
apply to those REITS public traded on the New York Stock
Exchange and governs those REITS listed with the exchange.
Privately held REITS must comply with IRS standards and other
state and federal laws pertaining to trusts.
The REIT is an investment that any investor should consider
and review the merits with a trusted financial planner with the
expertise in the REIT market world wide.
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