Real
Estate Investment Trust. A
corporation or
trust that
uses the pooled
capital of many
investors to
purchase and manage
income property (
equity REIT) and/or
mortgage loans (
mortgage REIT). REITs are traded on major
exchanges just like
stocks. They are also granted special
tax considerations. REITs
offer several
benefits over actually owning
properties. First, they are highly
liquid, unlike traditional
real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other
commercial or
industrial properties. Third, there's no minimum
investment with REITs. REITs do not necessarily increase and decrease in
value along with the broader
market. However, they
pay yields in the
form of
dividends no matter how the
shares perform. REITs can be valued based upon fundamental
measures, similar to the
valuation of stocks, but different numbers tend to be important for REITs than for stocks.
