What is the benefit of investing in a REIT?
Real Estate Investment Trusts (“REITs”) allow passive shareholders to invest in real estate. Shareholders are permitted to enjoy much of the benefits associated with direct real estate investments while also benefiting from the limited liability and extreme liquidity of public stock. The high liquidity associated with ownership of REIT shares eliminates one of the most serious objections to real estate investments. Shareholders benefit from the REITs’ investments in real estate equities in much the same way as they would from taking a position directly in real estate assets. That is, they receive the annual cash flows, equity growth from the retirement of mortgage debt, as well as potential growth in property value. In addition, REITs are also a reliable and predictable generator of cash dividends. This is because REITs are required to distribute the majority of their income each year. Therefore, REITs are particularly attractive to investors who want substantial cash flows as well as
