Real Estate Investment Trust (REIT)
A company that owns and operates income-generating properties like condos, offices, hospitals, hotels, warehouses, etc.
REIT companies issue REIT shares (like stocks) which are a type of investment that lets you earn from the rental income they generate. Over time as rental income grows, the share price of the REIT may also go up.
HOW REIT's WORK
A real estate company forms a REIT company
For example: Ayala Land forms Ayala REIT or AREIT. AREIT owns and operates three buildings in Makati.
The REIT company issues REIT shares which investors can buy
AREIT lists AREIT shares in the Philippine Stock Exchange through an IPO.
Funds from the sale of the REIT shares are used for the company’s expansion
Proceeds from the AREIT IPO will be used to acquire another building.
Investors get regular income as the REIT company earns
Investors regularly receive cash dividends as long as AREIT continues to earn.