Publicly-Traded REITs
Real estate investment trusts (REIT) that are publicly-traded are the predominant investment vehicle in this investment category for institutional, high net worth and retail investors. Publicly-traded REITs provide investors with professional property management, diversification and liquidity. Liquidity is an investment characteristic that non-traded REITs do not provide investors which expose them to significant risks. For any investment that does not provide significant liquidity, limiting the amount invested is the only risk management tool to utilize. This factor contributes to the greater amount of investor funds allocated to publicly-traded REITs relative to non-traded REITs.
REITs are required to distribute at least 90% of their taxable income to shareholders each year as dividends; the REIT is permitted to deduct dividends paid to shareholders from its taxable income. For tax treatment purposes, REIT dividend distributions are allocated as; ordinary income, capital gains and return of capital, each of which may be taxed at a different rate. Investors can receive nontaxable income sheltered by deductions.
Academic research concerning publicly-traded REITs support the contention that they offer strong long-term total returns that are not correlated with the overall securities markets. According to modern portfolio theory, investors can lower overall portfolio risks with investments allocated to the real estate assets class through publicly-traded REITs.
It is important to determine what percentage of your investment portfolio should be invested in Publicly-traded Real Estate Investment Trusts based on your investment objectives, risk tolerances and investment time horizon.
Investors are advised to seek competent financial, tax and legal advice concerning the decisions they make with their investments. Klayman & Toskes, P.A. can provide you with a free consultation concerning any securities industry violations related to the handling of your investments accounts by a full-service brokerage firm or registered investment advisor.
Information contained on this webpage is for educational purposes only
and should not be considered legal advice.
No Information contained on this website creates an attorney-client relationship.
