REITs: owning property without buying a building
Property exposure at share-sized amounts, with none of the tenants and none of the title risk.
What a REIT is
A real estate investment trust is a listed company whose business is owning income-producing property — malls, warehouses, offices, hotels, apartment blocks. You buy shares in it the same way you buy shares in a bank.
In exchange for favourable tax treatment, REITs are generally required to distribute most of their income to shareholders, which is why they are known for regular payouts.
Where you can buy them
Nigeria has a small listed REIT market on the NGX. South Africa's JSE has one of the deepest REIT sectors in the world. The US and Canada list hundreds, covering everything from data centres to student housing.
Diaspora investors often find REITs the simplest way to hold property back home without managing anything from abroad.
What to look at
What kind of property it owns and where. How much debt it carries. How full the buildings are. Whether the distribution has been maintained through a downturn. Who manages it and what they are paid.
A REIT with heavy debt and falling occupancy can cut its payout and its price at the same time.
The trade-offs
You get liquidity, small entry amounts and professional management. You give up control, and you take on stock-market price swings that a house you live in never shows you.
Distributions are usually taxed differently from other dividends, so check your own jurisdiction's treatment.
The one thing to remember
A REIT turns property into something you can buy in share-sized pieces. Judge it on the buildings, the debt and the occupancy — not the yield alone.
