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:
| Name | Symbol | Last price | Currency | AUM | Expense ratio, % | Inception date |
|---|---|---|---|---|---|---|
| Schwab U.S. REIT ETF | ARCX:SCHH | 21.33 | USD | 8,141,386,240 | 0.07 | Jan 13, 2011 |
| iShares Trust iShares Global REIT ETF | ARCX:REET | 24.37 | USD | 3,870,990,500 | 0.14 | Jul 10, 2014 |
| iShares Core U.S. REIT ETF | ARCX:USRT | 58.20 | USD | 2,903,186,304 | 0.08 | May 04, 2007 |
| iShares Cohen & Steers REIT ETF | BATS:ICF | 61.05 | USD | 2,085,778,491 | 0.33 | Feb 02, 2001 |
| SPDR DJ Wilshire REIT ETF | ARCX:RWR | 100.08 | USD | 2,036,970,000 | 0.25 | Apr 23, 2001 |
| JPMorgan BetaBuilders MSCI U.S. REIT ETF | BATS:BBRE | 94.97 | USD | 870,737,000 | 0.11 | Jun 18, 2018 |
| VanEck Mortgage REIT Income ETF | ARCX:MORT | 10.83 | USD | 278,903,595 | 0.43 | Aug 17, 2011 |
| Invesco KBW Premium Yield Equity REIT ETF | XNAS:KBWY | 17.64 | USD | 251,954,780 | 0.35 | Dec 02, 2010 |
| Global X SuperDividend REIT ETF | XNAS:SRET | 20.35 | USD | 212,590,000 | 0.59 | Mar 16, 2015 |
| First Trust S&P REIT Index Fund | ARCX:FRI | 27.79 | USD | 193,578,058 | 0.50 | May 10, 2007 |
| SP Funds S&P Global REIT Sharia ETF | ARCX:SPRE | 20.41 | USD | 132,498,600 | 0.55 | Dec 30, 2020 |
| InfraCap REIT Preferred ETF | ARCX:PFFR | 18.64 | USD | 108,706,076 | 0.45 | Feb 08, 2017 |
| Elevation Series Trust SRH REIT Covered Call ETF | ARCX:SRHR | 57.04 | USD | 53,148,828 | 0.75 | Nov 02, 2023 |
| Nuveen Short-Term REIT ETF | BATS:NURE | 31.12 | USD | 49,586,867 | 0.36 | Dec 20, 2016 |
| BondBloxx ETF Trust BondBloxx USD High Yield Bond Financial & REIT Sector ETF | ARCX:XHYF | 37.85 | USD | 44,559,240 | 0.35 | Feb 17, 2022 |
| ALPS Active REIT ETF | XNAS:REIT | 27.70 | USD | 41,326,278 | 0.68 | Feb 25, 2021 |
| ETRACS Monthly Pay 1.5X Leveraged Mortgage REIT ETN | ARCX:MVRL | 16.30 | USD | 17,376,200 | 0.95 | Jun 08, 2020 |
| ALPS ETF Trust ALPS REIT Dividend Dogs ETF | ARCX:RDOG | 37.76 | USD | 14,275,561 | 0.35 | May 07, 2008 |
| ETF Series Solutions ETFB Green SRI REITs ETF | ARCX:RITA | 19.61 | USD | 6,969,235 | 0.50 | Dec 09, 2021 |
| Tidal Trust II iREIT - MarketVector Quality REIT Index ETF | ARCX:IRET | 20.03 | USD | 3,725,750 | 0.60 | Mar 06, 2024 |
| Tidal ETF Trust Residential REIT ETF | BATS:HAUS | 18.29 | USD | 2,813,040 | 0.60 | Mar 01, 2022 |
| VanEck ETF Trust VanEck Office and Commercial REIT ETF | ARCX:DESK | 42.46 | USD | 1,195,768 | 0.50 |
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.