A real estate investment trust (REIT) is a security that invests either through property or mortgages directly in real estate. REITs can be publicly or privately held. Publicly held REITs can be traded on the exchanges. Privately held REITs are sold through broker-dealers and cannot be traded on the exchange.
In general, REITs are classified as equity, mortgage, or hybrid.
Equity REITs invest in and own property. The revenue for equity REITs comes from the rent collected on the properties they own. Mortgage REITs invest and own property mortgages. The revenue for Mortgage REITs is earned through the interest that they receive on mortgage loans. Hybrid REITs, as the name suggests is a mix of equity and mortgage REITs and invest in property and mortgages.
Some firms claim that non-traded REITs offer stable returns in the volatile real estate market. These claims are not supported by facts. The market regulators, the Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) have noted that these products may not be as safe and stable as being advertised.
We at South Texas Securities Co. have a comprehensive experience and expertise in handling arbitration on REITs cases. Contact us if you are interested in evaluating your REITs investment and checking if it is considered appropriate for you.