A Real Estate Investment Trust (REIT) is a company that owns or finances income-generating real estate. In this current day, investors can choose from a variety of REITs whose underlying real assets are properties housing commercial, retail, hospitality, and even industrial businesses. Recently, medical facilities and data centres have been added to the mix. A particular REIT does not have to specialise in one area and could also own properties tenanted by businesses from other sectors.
REITs are set up in a way which allows investors to access real property assets. A prime benefit would be income. REITs around the world have been given favourable tax conditions by resident governments and hence are able to distribute to shareholders a large amount of their rent collected from tenants. This amounts to Global REIT dividend yields dwarfing global equity yields and global government bond yields (chart 1).
