Real Estate Investment Trusts (REITs)
Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the rents received from the properties and receive capital gains as properties are sold at a profit. REITs have been formed by a number of large financial institutions such as banks and insurance companies. The stocks of many of them are traded on security exchanges, thereby providing investors with a marketable interest in real estate investment portfolio. By law, REITs have to distribute 95 percent of their income to shareholders, and in turn they are exempt from corporate taxes on income or gains. In exchange for this special tax treatment, REITs are subject to numerous qualifications and limitations including:
- Qualified asset and income tests. REITs are required to have at least 75% of their value represented by qualified real estate assets and to earn at least 75% of their income from real estate investments.
- Shareholder qualifications. Generally, REITs are not permitted to be closely held and must have a minimum of 100 shareholders.
Popular Real Estate Terms
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In appraisal jargon, property currently being appraised. ...
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A delay in making a principal payment on a mortgage that a bank allows a debtor for current financial difficulties. The extension of a loan at maturity at the 'going' market interest ...
Danger, hazard, risk, or peril. For example, jeopardizing a piece of property by pledging it as collateral for a loan. ...
Approach to valuing property based on its replacement cost. The cost of each major element of the property per square foot is added together and multiplied by the total space to estimate ...
A public officer given the right to authenticate a document, accept a person's oath, administer depositions, and to conduct other activities in commercial business. An official seal is used ...
List of records kept of what is owned by an individual such as the deed to a house and the title to land. ...
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