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Investment
REITs
Real Estate Investment Trusts — companies that own income-producing properties and are required to distribute at least 90% of taxable income to shareholders as dividends.
REITs come in several varieties: equity REITs (own physical properties — most common), mortgage REITs (lend money to property owners, earning interest — higher yield, higher risk), and hybrid REITs (both). By sector: residential (apartment buildings), commercial (offices — struggling post-COVID), retail (shopping centres — under pressure from e-commerce), industrial/logistics (warehouses — booming), healthcare (hospitals, care homes), data centres (Equinix, Digital Realty — the fastest growing REIT category), and self-storage (Big Yellow, Safestore).
The mandatory 90% dividend distribution makes REITs high-yield investments — typical dividend yields of 3-6% depending on the sector and market conditions. The trade-off: because they must pay out most earnings, REITs can't retain much capital for growth — they fund expansion through debt and new share issuance. This makes them sensitive to interest rate rises (higher rates increase borrowing costs and make REIT dividends less attractive compared to bonds). REITs are accessible through any standard brokerage account, making them the most practical way for ordinary investors to gain diversified real estate exposure without the capital, expertise, or hassle of direct property ownership.