PUBLICALLY TRADED REIT’S

A real estate investment trust or REIT is a tax designation for a corporate entity investing in real estate. The purpose of this designation is to reduce or eliminate corporate tax. In return, REIT’s are required to distribute 90% of their taxable income into the hands of investors. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

REIT’s can be publicly or privately held. Public REIT’s may be listed on public stock exchanges.

REIT’s can be classified as equity, mortgage, or a hybrid.

The key statistics to examine in a REIT are net asset value (NAV), funds from operations (FFO), adjusted funds from operations (AFFO) and cash available for distribution (CAD). In the period from 2008 to this writing (2011), REIT’s face challenges from both a slowing United States economy and the late-2000’s financial crisis, which depressed share values by 40 to 70 percent in some cases.

*Stocks involve a high degree of risk and are not appropriate for all investors.