![]() For example, if corporate spending is declining, hotel and office REITs struggle with occupancy, leading to lower revenue. In some macroeconomic settings, different REITs are more or less attractive. This is not different than the management of a large public company borrowing too much money or making poor decisions. That’s like asking if stocks are – it depends on the specific REIT, and also on the macroeconomic environment.Īny given REIT might have too much debt, or be mismanaged. they must pay out 90% of their earnings every year to a diverse investor pool.special tax rules that allow corporations to hold real estate favorably, provided they meet a set of conditions.There are REITs that specialize in apartments, industrial buildings, warehouses, retail areas, hotels, shopping malls, luxury apartments, tract housing, hospitals, prisons, public storage, and many other categories. The specifics of who pays maintenance and taxes depends on the lease and specific industry or local customs, but after deducting these and normal business expenses, they pay out all the profits to their investors. They hire managers for these buildings and collect the rents. Imagine a group of investors pool their money (and perhaps borrow more) and buy a bunch of office buildings or apartment complexes. The other kind are equity REITs, which feel like a “mutual fund of real estate”. I won’t be going into those further as they are more of a financial product. One is the mortgage REIT, which handles bundles of mortgages. There are two kinds of Real Estate Investment Trusts. Whether or not that is the best use of your $125.10 is a different discussion, but first… What is a REIT? If you bought said unit (available at any broker), you’d be part owner in a $37bn enterprise that operates over 290 data centers. That’s what it would cost you to buy a single unit of Digital Realty ( NASDAQ:DLR), a data center REIT that as of this writing is going for $125.10. You might think that buying an interest in a global network of data centers would cost you tens or hundreds of millions of dollars.
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