Real Estate Investment Trust

A real estate investment trust (REIT) (pronounced "reet") is a form of business which owns (and often also operates) income-producing real estate.

Many apartment complexes, office buildings, commercial shopping centers, and warehouses (including self-storage units) are owned and operated by REITs.

A REIT can qualify for special treatment under the US Internal Revenue Code, whereby it doesn't pay corporate income tax, provided that it meets the following criteria (only the most notable ones are shown):

• It must be legally structured as a corporation, association, or trust, and managed by a board of directors/trustees
• It must be owned by at least 100 persons, of which no fewer than five individuals can own 50% or more of the REIT
• It must invest at least 75% of its assets in real estate, and cannot invest more than 25% in taxable REIT subsidiaries (these companies often provide services to the REIT, such as concierge, landscaping, and/or cleaning)
• It must derive at least 75% of its gross income from rental income or mortgage interest, and at least 95% of its net income from property income, dividends, and interest
• It must pay dividends of at least 90% of its taxable income to shareholders