Real Estate Investment Trust (REIT)

a Real Estate Investment Trust (REIT) allows investors to buy shares in real estate portfolios that receive income through various properties.

What is a REIT?

Introduced after mutual funds, a Real Estate Investment Trust (REIT) allows investors to buy shares in real estate portfolios that receive income through various properties. A REIT is a company or trust that owns, and in most cases, operates real estate properties. A REIT has varieties of properties in their portfolio such as healthcare facilities, apartments, hotels, office buildings, and so on. REITs let investors own shares in large income-producing properties without the burden of owning and managing those properties.

How a REIT works.

The majority of REITs generally lease out spaces to tenants and receive rent on those properties, which is then divided among its shareholders or investors as dividends. However, this isn’t the only way a REIT operates. Some REITs lend money to real estate developers and investors and earn interest on the mortgages and mortgage-backed securities. Most of the REITs are listed with the Securities and Exchange Commission (SEC) and trade on the National Stock Exchange. As per their functioning, REITs are divided into different categories.

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Types of REITS

It is important to get an understanding of the the different types of REITS available. Remember, you can always request a consultation from one of our experienced advisors if you want to learn more.


Equity REITs own and operate real estate properties. They lease out spaces to tenants and receive rent on those properties. The majority of REITs are Equity REITs.



Mortgage REITs lend money to real estate developers and earn interest on mortgages and mortgage-backed securities. These REITs buy mortgages that are likely to pay high interests. 


As the name implies, A hybrid REITs does both. They lease spaces to tenants and collect rents, as well as they also fund mortgage loans to real estate investors.



These REITs are listed with the Securities and Exchange Commission and trade on the National Stock Exchange.



These REITs are also listed with Securities and Exchange Commission. However, they don’t trade on the National Stock Exchange. 


These REITs are held privately. Neither they are listed with the Securities and Exchange Commission nor do they trade on the National Stock Exchange.

For Forming a REIT

The following is a list of requirements one needs to forma Real Estate Investment Trust
  • In order to qualify as a REIT, a company must be taxable as a corporation.
  • A company must invest 75% of its assets in real estate, cash, or treasuries.
  • 75% of a company’s net income must come from rents or through selling real estate properties.
  • A company must distribute 90% of its income as dividends among its shareholders.
  • A company must be regulated by the Board of Directors or Trustees.
  • Not more than 50% of a company’s shares should be held by its five or fewer shareholders.

Consulting with an advisor is important.

As REIT investments are subject to market risks, it’s important that you consult an advisor or expert before investing. Deep knowledge of the market is required when comparing different REITs. This is where an advisor can prove to be helpful. We, at, can match you with up to three highly qualified advisors. In addition, we also ensure that one of our advisors stays with every investor throughout the transaction.
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Perch Financial LLC and Arkadios Capital LLC do not provide legal or tax advice. Securities offered through Arkadios Capital LLC Member FINRA/SIPC and MSRB registered. Arkadios Capital LLC is unaffiliated with any entity herein.

1031 Risk Disclosure:

  • There is no guarantee that any strategy will be successful or achieve investment objectives;
  • Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
  • Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
  • Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;
  • Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
  • Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits

No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood, and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward-looking statements are never an assurance of future results.

Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read, and understand all the risks associated with buying private placement securities. Investments are not guaranteed or FDIC insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur.

Risk Disclosure: Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss.

NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by Perch Financial LLC, Emerson Equity LLC, or any affiliate, or partner thereof. Perch Financial LLC does not warrant the accuracy or completeness of the information contained herein.

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