This REIT Glossary is designed to accompany articles that appear on this website only. For a complete REIT glossary, I recommend visiting NAREIT’s Glossary.
Industrial REITs own, manage and rent out space in industrial facilities. These REITs might have a wide range of industrial property types, but some specialize in warehouses, distribution centers, and pharmaceutical and scientific facilities.
Liquidity: the ease with which a financial instrument or asset can be quickly converted to cash without suffering a loss in value. Assets that are liquid or “marketable” have many buyers and sellers and/or trading activity is high, while illiquid assets either take a long time to sell and/or suffer a higher loss in value. Liquidity may also describe the degree to which the collective assets of a market, company or investor’s portfolio can be sold quickly without significant loss of value.
Lodging/resort (L/R) REITs are a type of equity REIT involved with the ownership and management of hotels, resorts and other accommodations that rent space to tenants. Hotels can be classified by their amenities and level of service, and different REITs may specialize in one or more hotel classes.
NAREIT®: the National Association of Real Estate Investment Trusts is the world’s leading organization dedicated to the promotion of REITs and publicly traded real estate companies. While NAREIT is an American organization, it includes members from around the globe and is influential in setting best practices and public policy regarding REIT-related accounting, governance, insurance, regulations, and taxation.
Real Estate Investment Trust (REIT): a company that owns and manages commercial properties that produce rental income and is contractually obligated to return the majority of its income (usually 90% or more) to its investors. In exchange for this guarantee, governments grant REITs a trust status which allows investors to avoid the double taxation of dividend income (i.e., in both the hands of the corporation and individual investors). While REITs were historically dominated by property categories such as Residential (e.g., apartments), Offices and Retail space, additional REIT categories include Mortgages, Data Storage, Entertainment complexes, Healthcare, Hospitality, and Timber. REITs can either be sold privately or publicly through securities exchanges. REITs are typically total-return investments, offering investors a combination of modest capital long-term capital appreciation with high dividend yields. Variations on REIT corporate structure include UPREITs and DownREITs.
Retail REITs: Portfolios in the retail REIT sector contain freestanding stores, shopping centers and regional malls. These are equity industrial real estate investment trusts that own and manage retail properties. Net lease REITs specialize in freestanding retail real estate with leases that have been structured such that tenants pay most of the operating expenses (i.e., maintenance, utilities, taxes) in addition to rent.
Securities and Exchange Board of India (SEBI): the primary regulator of securities for India including for REITs, for which regulations have been proposed, but not yet adopted.
Total Return Investment: an investment whose appeal to investors lies in its combination of dividend income and capital appreciation of the underlying assets.