What is REITs (Real Estate Investment Trusts)?
A REIT is a company that owns, operates, or finances income-producing real estate. To qualify as a REIT (in US, India, UK, etc.), it must distribute at least 90% of taxable income to shareholders as dividends โ making REITs high-yield instruments. Categories include: equity REITs (own property), mortgage REITs (own real-estate debt), and hybrid. Sub-sectors: residential, commercial office, retail, industrial, healthcare, data center, hospitality, infrastructure.
Why it matters for investors
REITs offer exposure to real estate without direct property ownership, with the liquidity of public markets. They typically yield 3-6% annually, higher than the broader equity market. REITs are particularly sensitive to interest rates โ rising rates increase their financing costs and make competing yields more attractive, often pressuring REIT prices.