Real Estate Investment Trust

1
Real Estate Investment Trust

• Lindsay DeRosia
• State of Michigan

2
These views are my own views and not necessarily
those of NASAA or the State of Michigan
3
REIT

• Real Estate Investment Trust
• Entities that invest in different kinds of real
  estate or real estate related assets
• Created by Congress in 1960 to give smaller
  investors the ability to invest in real estate

4
REIT

• A company that qualifies as a REIT is able to
  deduct dividends paid to shareholders from its
  corporate taxable income
• IRS sets qualification requirements for REITs,
  including
• Required to annually distribute 90 of its
  taxable income to shareholders in the form of
  dividends
• Must invest at least 75 of its total assets in
  real estate and generate 75 or more of its gross
  income from investments in or mortgages on real
  property

5
REITs

• Three Types
• Equity REITs
• Own and operate income producing property
• Mortgage REITs
• Lend money directly to real estate owners and
  operators, or indirectly through the acquisition
  of loans or mortgage baked securities
• Hybrid REITs
• Both own properties and make loans to owners and
  operators

6
REITs

• Registration Requirements
• Publicly Traded REITs
• File with the SEC and trade on a national
  exchange
• Public, Non-Listed REIT
• File with SEC (and state regulators), but whose
  shares do not trade on a national exchange
• Private REITs
• Not registered with SEC or state and does not
  trade on an exchange
• Must comply with appropriate registration
  exemption

7
REITs - Liquidity

• Publicly Traded REIT
• Liquidity and pricing provided by the market
  throughout the trading day
• Public, Non Listed REIT
• Limited Liquidity
• Sold through brokers ( commission)
• Typically investor gets out when it goes listed
  or liquidates assets
• Alternative is issuers redemption mechanism
  (limited)
• Private REIT
• Limited Liquidity
• Existence of and terms of any redemption programs
  vary by company and are generally limited in
  nature

8
(No Transcript)
9
(No Transcript)
10
(No Transcript)
11
REITs For more information

• http//www.sec.gov/answers/reits.htm
• National Association of Real Estate Investment
  Trusts www.nareit.org
• NASAA (Statements of Policy)
• FINRA Notice to Members

12
Thank you!

• Have a nice day J