You may not know it, but Real Estate Investment Trusts (REITs) impact your life every day. From where you live, work and play to data centers and cell phone towers to your retirement savings, the impact of REITs is all around you.
Most people don’t have the time or resources to buy and manage large-scale, income-producing real estate. But the good news is that REITs enable all Americans to own a share of the kind of real estate that would otherwise be financially out of reach. How? The same way mutual funds work, allowing people to buy and sell REITs on public stock exchanges.
Congress created REITs in 1960 to give all Americans the opportunity to invest in valuable, income-producing real estate. And REITs have helped an estimated 70 million Americans own apartment buildings, data centers, hotels, office buildings, student housing, timberland, shopping malls and more.
REITs have also played a critical role for both investors and communities across America. For investors, the chance to own a share of valuable real estate has meant income as well as diversification for their investment portfolios.
Maybe that’s why so many retirement plans—like those for teachers, firefighters, and more—use REITs as part of their investment strategy. In fact, you may be invested in REITs right now through your retirement plan and not even know it.
For America, REITs have helped revitalize both large and small downtowns and redeveloped old and new suburbs across the country, and helped foster innovation in communications, health care and more.
When Congress created the first rules for REITs, it understood that real estate is used in a variety of ways in the economy, and that those paths would likely change and evolve as the country did. So Congress established a broad definition of real estate: “land or improvements thereon.” This flexibility has given REITs the ability to change and grow with the economic needs of the country.
You are reading this because cellphone towers are transmitting electronic data to your phone or PC thru data centers—which are owned by REITs. Cellphone towers are permanent structures on land that REITs rent to mobile service providers. And cloud technology actually resides in buildings that REITs lease to the businesses that operate over the web. Remember, in 1960 there were no data centers or cell phone towers, so the flexibility that Congress gave to REITs has helped to make them a continuously important part of our economy and our lives.
REITs help support more than 1.8 million jobs annually and hundreds of thousands of construction jobs, totaling over $107.5 billion in labor income. One example—Bethesda Row—is in metropolitan Washington, D.C. Bethesda Row has transformed from an underdeveloped area into a thriving, mixed-use community that has been recognized nationally as a model of smart growth. Maybe that’s why 35 countries and counting have adopted the U.S. model of REITs.
And that’s why there are a variety of REITs across all 50 states and the District of Columbia. Businesses need real estate like office buildings to conduct operations. E-commerce needs distribution facilities. An aging population needs health care and assisted-living facilities. A mobile workforce needs facilities to store belongings and businesses need buildings to store their documents and records. Both executives and vacationers need a range of lodging facilities to transact business and relax. These different parts of the economy, with their varying needs, require different kinds of real estate, and REITs help provide that opportunity and flexibility.
So the next time you visit a friend living in an apartment community, go shopping at a local mall, stay at a hotel or resort for a vacation or even make a cell phone call, remember that a REIT could very well have helped make that happen.
Learn more about REITS at http://theREITWay.com/.
Content supplied by Nareit