Shedding some light on REITs
The Financial Executive Column
March 20, 2007
This is something good for a change. As you cut through all the noise and confusion in the world’s equity markets, you’ll be surprised to learn that the best story that has emerged out of the US stockmarket in 2006 is that its real estate mutual funds or REITs have remained mostly unaffected even when the US housing market started showing signs of slow growth. Investors continue to buy REITs because of their steady dividend payments as well as their benefit as a way to diversify the overall investment portfolio of both institutional and individual investors.
REITs ( rhymes with treat) or also known as real estate investment trusts are one form of indirect participation in real estate investing. It’s a security, a capital market instrument that sells like a stock in the stock exchanges. Like mutual funds, REITs sell shares to the public to raise capital. But unlike mutual funds, REITs only invest in real estate and mortgages. REITs can be publicly or privately held. Public REITs are listed in the stock market like common stocks.