Real Estate Investment Trusts (REIT)

A real estate investment trust (REIT) is a security that invests in real estate directly either through properties or mortgages. Generally, REITs can be publicly or privately held. Publicly held REITs can be sold on an exchange and publicly traded. Non-traded REITs are sold through broker-dealers and are private. REITs are generally classified as equity, mortgage, or hybrid.

The most common REITs are equity and mortgage REITs. Equity REITs invest in and own property. The revenue for equity REITs come principally from the rent roll from the properties they own. Mortgage REITs invest and own property mortgages. Mortgage REITs loan money for mortgages to real estate owners, purchase existing mortgages, or mortgage-backed securities (MBS). The revenues for Mortgage REITs are earned through the interest that they earn on mortgage loans. Hybrid REITs combine investment strategies from equity REITs and mortgage REITs and invest in property and mortgages.

REITs have traditionally been sold to customers for their high dividend yield. However, many factors impact the ability of the REIT to maintain dividend and share price stability, including the fluctuation in interest rates, the amount and cost of leverage used by the REIT and collectability of the rents or mortgage payments that comprise the underlying assets within the REIT.

The Wolper Law Firm has extensive experience handling cases involving REITs. If you have lost money investing in REITs, please contact the Wolper Law Firm for a free consultation and case evaluation.