REIT Indexes As Businesses
We continue our examination on stock indexes as businesses. This time, we look at Real Estate Investment Trusts (REIT) indexes.
Background of REITs
Real Estate Investments Trusts (REITs) are a special type of property owners and managers. They basically possess real estates or other hard assets that are similar to real estates (note: strictly speaking, REITs also include Mortgage REITs that specializes mortgages for real estates, they don’t possess hard physical assets. In this newsletter, we focus on the other type of REITs: equity REITs that owns equity of physical real estates). They engage in renting these hard assets in order to derive regular income. They are thus more or less landlords of the hard assets.
Based on NAREIT, the following are the common types of the equity REITs:
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