Real estate investment trusts (REITs) are companies that rely on taxable income from owning, operating or subsidizing real estate projects. In order to qualify as a REIT, the company must invest at least 75% of its assets in different property types, and this percentage must come in the form of rental income or mortgage interest. Therefore, whereas most REITs aim to focus on a particular sector, such as residential buildings or data centres, the majority have diverse properties within their portfolio.
Real estate properties fall into three categories: residential, commercial and industrial. These can include hotels and resorts, rental properties, shopping centres, student housing and many other property types. REIT sectors are more specific and described in more detail in this article. Many real estate stocks are featured on major stock indices, for example the FTSE 100 and S&P 500, which act as a benchmark for the real estate industry.