REIT is the name of the Real Estate Investment Trusts in the United States. It is a real estate investment vehicle based on the figure of the trust with a public offering. It is considered as the ABC of these particular investment funds that move billions of US $ in real estate options.
On the other hand, “according to the latest jobs report from the U.S. Department of Labor’s Bureau of Labor Statistics, the country added 8,100 jobs in the real estate sector in December 2018.”
Interested in entering the world of Real Estate Investment Trusts? Here we give you the main information you should know to get started.
How Many REITs are There in The United States?
There are currently more than 200 REITs in the US. In terms of capitalization, they represent almost a billion dollars in equity, arising from a phenomenal growth process that accelerated punctually from1992.
They are essentially public investment vehicles, i. e., they are listed on the Stock Exchange. They currently have great liquidity, unlike traditional real estate investments. Indeed, the investor can buy and sell these assets with great simplicity and at low cost in the capital market. They are generally listed on the New York Stock Exchange and the American Stock Exchange, as well as on the NASDAQ. As the demand is sustained, today liquidity is assured.
How are REITs Classified?
REITs can be classified according to the destination of their investments. 16% is dedicated to offices, 13% to industrial buildings and warehouses, 15% to residential, 25% to retail, 6% to hotels, 5% to health, 8% to mortgages, and 12% to other destinations, among which those with diversified portfolios and those that specialize in other very specific types of assets are included.
Specific Features
A REIT is simply a vehicle through which a group of investors comes together to make real estate scale investments, which they would not normally access alone.
It happens that scale and critical mass are unavoidable keys to achieving success in real estate because they give rise to professionalized portfolio management and allow for the proper asset diversification to be integrated into a portfolio. In this way, a REIT gives the small investor the possibility of participating in good volume real estate deals.
The Basic REITs Features
• It must be a trust administered by a trustee.
• It must have at least 100 beneficiaries and the 5 most important ones must not have more than 50% of the total.
• It must issue publicly transferable and negotiable certificates.
• The most important assets must be real estate.
• 75% of the income must come from real estate (rentals, mortgages, profit from the sale of real estate, etc.).
• The investments must be mainly long-term, although in certain proportions it is accepted that they have American treasury bonds and cash.
• 90% of the net income must be distributed annually among the beneficiaries.
To the extent that a REIT complies with these premises, and especially with the latter, it will be able to avoid paying income tax at the level of the REIT itself for the sum of distributed net profits.
REITs have grown in size in the US and have managed to capitalize a good part of domestic savings, channeling it to the real estate and construction sectors. It is increasingly necessary for the market to mature, to become more complex and sophisticated, but at the same time more consistent with world trends.
Therefore, we believe that over the years, jobs related to Real Estate Investment Trusts will increase.
