This is a Corporation or Trust that uses the pooled capital of many investors to purchase and manage income property and/or mortgage loans. REITs are traded on The Nigerian Stock Exchange just like stocks. They are also granted special tax considerations. REITs offer several benefits over actually owning properties. First, they are highly liquid, unlike traditional real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other commercial or industrial properties. Third, there's no minimum investment with REITs. REITs do not necessarily increase and decrease in value along with the broader market. However, they pay yields in the form of dividends no matter how the shares perform. REITs can be valued based upon fundamental measures, similar to the valuation of stocks, but different numbers tend to be important for REITs than for stocks.
There are three principal types of REITs:
- Equity REITs—Invest in and own properties (thus responsible for the equity or value of their
- Mortgage REITs—Deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.
- Hybrid REITs—combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.
The two (2) Real Estate Investments Trusts currently listed on the Daily Official List of The Nigerian Stock Exchange are:
- Union Homes REITS; and
- Skye Shelter Fund