What is a REIT? -

A REIT refers to a “real estate investment trust,” which is an entity entitled to beneficial federal income tax treatment if it satisfies various requirements relating to its organization, its ownership, its distributions and the nature of its assets and income.

What types of REITs are there? -

Most broadly, there are equity REITs and mortgage REITs. Equity REITs primarily own interests in income-producing real property that is leased to tenants. Equity REITs typically concentrate on one or more asset classes (for instance, industrial, office, healthcare, lodging, residential, retail or self-storage properties). In contrast, mortgage REITs primarily own loans and other real estate-related debt instruments secured by interests in real property. Mortgage REITs typically focus on originating or acquiring loans made to certain types of real estate borrowers (for instance, loans made to developers or distressed borrowers) or on particular loan types (for instance, first mortgages, distressed debt or mezzanine financings). Although it is not unusual for equity REITs to invest in multiple property types, there are relatively few hybrid REITs that, in the ordinary course of executing their investment strategy, focus on owning and acquiring both operating real property and debt instruments secured by interests in real property. However, many equity REITs maintain a small portfolio of acquired or originated debt instruments, primarily secured by the same type of real property held in their operating property portfolio.