

Equity REITs consist of eight different sub-industries:
The benefits of investing in equity REITs include a more diversified investment portfolio and, in some cases, excellent tax savings opportunities. For instance, if a REIT distributes 90 percent or more of its taxable income as dividends, it isn’t taxed at the corporate level.
While the majority of income paid back to investors is certainly good for investment purposes, it comes with the disadvantage of reinvesting fewer profits into the company, which has the potential to impact future returns negatively.
The second type of REIT is real estate management and development. This category is separated into four sub-industries:
This type of REIT offers investors several key benefits. For starters, these investments tend to produce high dividend payouts. Investors also gain direct exposure to real estate developers and, in many cases, are the first to take advantage of future investment opportunities with them.
There are, however, some disadvantages to investing in these REITs. For instance, they don’t offer the same level of diversification as most equity REITs. Plus, not all of the sub-industries offer direct exposure to real estate developers.
While there are two categories of REITs with their associated sub-industries, all operate within a limited number of sectors. Each of these sectors focuses on a distinct property type, which include:
Why should you invest in REITs? Because REITs are historically reliable investments that are well regarded for competitive returns and long-term capital appreciation.
REITs also tend to have a low correlation with other assets, making them an ideal option to build a more diverse investment portfolio.
In the end, reliability makes REITs an attractive investment opportunity to reduce risks and improve returns.
Learn more about real estate investment trust investing, the investment process, and the different types of REITs in this guide from Prologis.
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