Real estate and construction
REIT (real estate investment trust)
A company that owns income-producing property and pays out most of its income to investors.
Last reviewedWhat does REIT (real estate investment trust) mean?
A REIT owns and usually runs income-producing property, such as offices, malls, warehouses or data centers, and passes most of its income to investors, often with tax benefits. In the United States a REIT must distribute at least 90 percent of its taxable income as dividends, and in India the securities regulator SEBI requires REITs to distribute at least 90 percent of their net distributable cash flows. Listed REITs let ordinary investors own a share of large properties. Example: a REIT with 100 million of distributable cash must pay out at least 90 million. Because they pay out most of their cash, REITs raise new money to grow and are sensitive to interest rates.
Where does it come up in case interview prep?
- How construction and real estate work: who builds, who owns, who paysLesson in Construction, real estate and infrastructure
- Real estate economics and project delivery: margins, cap rates, overruns and PPPsLesson in Construction, real estate and infrastructure
- Construction and real estate players, trends 2024 to 2026, and how to crack the casesLesson in Construction, real estate and infrastructure
Related terms
- Cap rate (capitalization rate)A property's net operating income divided by its value: its yield at today's price.
- NOI (net operating income)A property's income after operating costs, before debt payments, depreciation and income tax.
- Loan-to-value (LTV)A loan as a share of the value of the property securing it.
- EPC contract (engineering, procurement and construction)A contract where one contractor designs, buys and builds a project and hands it over ready to run.
- Critical pathThe longest chain of dependent tasks in a project, which sets how fast it can finish.