Reits are funds, and reits are also called real estate investment trusts. The fund's funds mainly invest in real estate, including highways, real estate, property and so on. For example, if a fund invests in a highway, then the fund collects tolls through professional operation, and then distributes the proceeds to investors according to the share held by investors.
The income of REITs mainly consists of two parts: the first is a high proportion of dividends. REITs have a compulsory dividend system, and these infrastructure public offerings of REITs are no exception. They also adopt a compulsory dividend policy, and the income distribution ratio is not less than 90% of the annual distributable amount of the merged fund, which is similar to the interest of bonds, but higher than bonds.
The second is the transaction price difference. These infrastructure public offerings of REITs are closed and will be listed on the exchange in the future. Investors can invest in it like buying and selling stocks and earn the trading price difference.
REITs first appeared in the United States in the early 1960s, and have three characteristics, including that the income mainly comes from rental income and real estate appreciation; Most of the proceeds will be used to pay dividends (at least 90%); Real estate investment trusts have high long-term returns. Because REITs invest in commercial real estate, it is difficult to get more income in a short time, and ordinary investors need to hold it for a long time, usually for several years or even decades. However, REITs funds have good liquidity and can be sold or bought at any time.
However, investing in REITs needs to face different risks, including exchange rate risk, management risk and debt risk. Among them, management risk refers to a team with weak professional ability, which may borrow money to buy a property when it plummets. Usually, buying REITs should consider the acquisition history, financing ability and financial situation.