Legal Definitions - real estate investment trust

A Real EstateInvestment Trust (REIT) is an organization that invests in real estate. It finds investors and buys properties, then gives each investor a share of the property or an interest in a loan secured by a mortgage or deed of trust on the property. The loan is usually used to develop the property and build upon it, and then there is a division of profits upon sale-if there is a profit.

• ABC REIT buys a shopping mall and gives investors a percentage interest in the mall. The investors receive a share of the rental income and a share of the profits when the mall is sold.
• XYZ REIT invests in a hotel and gives investors an interest in a loan secured by a mortgage on the hotel. The investors receive interest payments on the loan and a share of the profits when the hotel is sold.

These examples illustrate how a REIT works. Investors pool their money together to buy real estate, and then they receive a share of the income and profits from that real estate. This allows investors to invest in real estate without having to buy and manage properties themselves.