Publicly Traded REITs Explained: Real Estate Without Buying a Building

A real estate investment trust, or REIT, is a company that owns and typically operates income-producing real estate or related assets. Buying its shares is different from buying a building yourself. It is also important to distinguish a listed REIT from a non-traded or private one.

What does publicly traded mean here?

Investor.gov explains that publicly traded REITs file regular reports with the SEC and have securities listed on an exchange. Market prices are publicly available, and shares trade in a manner similar to other listed stocks.

Non-traded REITs do not have the same exchange-trading route. Private REITs also have different disclosure and access characteristics. Do not use a listed product's liquidity description to judge a different REIT simply because both have real estate in the name.

What kind of real estate does it hold?

A REIT may focus on apartments, offices, industrial properties, healthcare facilities or another area. Some invest in mortgages or other real-estate-related debt rather than primarily owning buildings.

Those differences affect what drives the business. The SEC notes that office and industrial properties can be tied to business spending, while residential and retail properties are connected differently to consumer activity. Read the actual strategy rather than assuming one REIT represents the entire property market.

Which risks and costs deserve review?

Interest-rate changes can affect REITs in different ways. Financing costs, investment alternatives and the types of assets held all matter. The SEC also identifies potential conflicts where external managers receive fees that may not align with shareholders' interests.

Review reports, offering documents and management arrangements. A dividend or familiar property type is not a principal guarantee. Ask a tax professional about distributions if their treatment is unclear. REIT shares can lose value, including the amount originally invested.

Frequently asked questions

Are all REITs traded on exchanges? No. Publicly traded, non-traded and private REITs have different structures and access features.

Does a REIT necessarily own apartment buildings? No. It can specialize in other property categories or hold real-estate-related debt.

Sources and further reading: Investor.gov, Publicly Traded REITs (https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-65).