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What is a Real Estate Investment Trust, or REIT?

Introduction

A Real Estate Investment Trust, or "REIT", is a company that owns or finances income-producing real estate. What makes them unique is that they are pass-through structures for tax purposes - they don't pay tax at a corporate level. To maintain their REIT status and avoid taxation at the corporate level, they must distribute at least 90% of their earnings every year to stockholders.

To become a REIT, a company makes an election with the Internal Revenue Service. To qualify as a REIT, a company must:

  • Invest at least 75 percent of its total assets in real estate
  • Derive at least 75 percent of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate
  • Be an entity that is taxable as a corporation

Our database currently contains 213 REITs that are traded on U.S. stock exchanges. See our list of REITs.

Because they are pass-through structures, REITs have higher dividend rates than most common stocks. That makes REITs attractive to many investors, especially since REITs are real estate related.

There are two types of REITs: REITs that own real estate, or "REITs", and REITs that buy mortgages, or "mortgage REITs". We classify the REITs in our database into one of these two categories because there is a substantial difference between a REIT and a mortgage REIT. A mortgage REIT typically attempts to make money by borrowing money at short-term interest rates and investing it in mortgages, thus making money on the normal spread between short-term and long-term interest rates. See our article what is a mortgage REIT?

ETFs that buy REITs

There are now 22 ETFs and ETNs that either buy REITs or track an index of REITs:

NameSymbolLast priceCurrencyAUMExpense ratio, %Inception date
Schwab U.S. REIT ETFARCX:SCHH21.13USD8,141,386,2400.07Jan 13, 2011
iShares Trust iShares Global REIT ETFARCX:REET24.05USD3,870,990,5000.14Jul 10, 2014
iShares Core U.S. REIT ETFARCX:USRT57.29USD2,903,186,3040.08May 04, 2007
iShares Cohen & Steers REIT ETFBATS:ICF60.51USD2,085,778,4910.33Feb 02, 2001
SPDR DJ Wilshire REIT ETFARCX:RWR98.76USD2,036,970,0000.25Apr 23, 2001
JPMorgan BetaBuilders MSCI U.S. REIT ETF BATS:BBRE93.22USD870,737,0000.11Jun 18, 2018
VanEck Mortgage REIT Income ETFARCX:MORT10.82USD278,903,5950.43Aug 17, 2011
Invesco KBW Premium Yield Equity REIT ETFXNAS:KBWY17.77USD251,954,7800.35Dec 02, 2010
Global X SuperDividend REIT ETFXNAS:SRET20.20USD212,590,0000.59Mar 16, 2015
First Trust S&P REIT Index FundARCX:FRI27.40USD193,578,0580.50May 10, 2007
SP Funds S&P Global REIT Sharia ETFARCX:SPRE20.10USD132,498,6000.55Dec 30, 2020
InfraCap REIT Preferred ETFARCX:PFFR18.78USD108,706,0760.45Feb 08, 2017
Elevation Series Trust SRH REIT Covered Call ETFARCX:SRHR56.54USD53,148,8280.75Nov 02, 2023
Nuveen Short-Term REIT ETFBATS:NURE31.28USD49,586,8670.36Dec 20, 2016
BondBloxx ETF Trust BondBloxx USD High Yield Bond Financial & REIT Sector ETFARCX:XHYF37.48USD44,559,2400.35Feb 17, 2022
ALPS Active REIT ETFXNAS:REIT27.35USD41,326,2780.68Feb 25, 2021
ETRACS Monthly Pay 1.5X Leveraged Mortgage REIT ETNARCX:MVRL16.20USD17,376,2000.95Jun 08, 2020
ALPS ETF Trust ALPS REIT Dividend Dogs ETFARCX:RDOG37.65USD14,275,5610.35May 07, 2008
ETF Series Solutions ETFB Green SRI REITs ETFARCX:RITA19.12USD6,969,2350.50Dec 09, 2021
Tidal Trust II iREIT - MarketVector Quality REIT Index ETFARCX:IRET19.95USD3,725,7500.60Mar 06, 2024
Tidal ETF Trust Residential REIT ETFBATS:HAUS18.45USD2,813,0400.60Mar 01, 2022
VanEck ETF Trust VanEck Office and Commercial REIT ETFARCX:DESK41.74USD1,195,7680.50

Investors have to decide whether to include in their portfolio an ETF that is focused on REITs, as most investors probably already have exposure to REITs via their ownership of an ETF that tracks the S&P 500 Index. But because of their high dividend rate and focus on real estate, many investors will over-weight their holdings in REITs by purchasing one of these ETFs that is focused on REITs.