Invest in Real Estate and Diversify Your Portfolio

CityVest invests in highly selective real estate private equity investment funds.

Get Started View Investments

Question IDs
Object Type Map


Visibility Map
Active Map
Validator Map
Children Map


Parent Map


Question Options Map


Question Options


Question Option Activate Map


First Name
Last Name
Phone Number
Email
 

Real Estate Investment Trusts (REITs)

What is a Real Estate Investment Trust (REIT)?

A real estate investment trust (REIT) is a company that has ownership in income-producing real estate. REITs offer investment opportunity through their real estate stock portfolio. A REIT typically combines the money of multiple investors to acquire a collection of real estate. The goal of a REIT is to eventually sell the collection for a profit. A collection of real estate is usually sold after cash flow is established via dividend pay-outs and after the property has had ample time to appreciate with some value-add projects. A REIT is usually composed of a team of experienced real estate and finance professionals who oversee the entire investment process. To be considered a REIT the following requirements must be met:

  • A REIT must have at least 100 shareholders.
  • No five shareholders in a REIT can make up more than 50% of the shares.
  • At a minimum, 75% of the assets in a REIT must be invested in real estate, cash, or treasuries.
  • 75% of the gross income in a REIT must come from real estate.
  • REITs must pay out at least 90% of their taxable income to investors.

Real Estate Investment Trust (REIT) Example:

An ideal example of a REIT is a company that owns a new development of luxury apartments in a growing city. This company allows people to invest in a REIT to gather the necessary capital needed to operate the the properties. Over time, the city grows and young professionals move in and out of the apartments. Dividends can then be paid out to investors from consistent tenant rental payments. Over a ten-year period let’s say that the economy has boomed, and now the REIT is in a very good position to be sold for a profit. The two major types of REITs people tend to gravitate towards are equity and mortgage REITs.

Equity REIT

The example above is an equity REIT. Equity REITs, for the most part, own and manage real estate. Typically, you will see equity REITs buy real estate and lease portions of it to tenants. By leasing or renting portions of the property to tenants, a stream of cash flow is created, which provides dividends to investors. In an environment where property values appreciate, the value of each investment included in the REIT grows. Between a steady cash flow, and increased property value, an equity REIT can produce a substantial return on investment for its investors.

Mortgage REIT

Mortgage REITs are different. Mortgage REITs borrow money with low short-term interest rates and purchase mortgages to pay high long-term interest rates. So, the difference or spread between the two rates is the available profit for a mortgage REIT. Let’s say a mortgage REIT raises 5 million from investors and borrows an additional $30 million at 2% interest to buy up mortgages paying 4% interest. The difference between the interest income and the interest expense is the profit that could represent anywhere between a 12-16% annual return on investment.

Equity REITS are known for being stable long-term investments. Mortgage REITs tend to be volatile. By nature, mortgage REITS are much riskier and unpredictable compared to equity REITs. In a mortgage REIT, the opportunity to create a return on investment is contingent upon the cost to borrow. So, if the cost to borrow increases after the venture has commenced, the profit margin can disappear.

There are other types of non-traditional REITs such as a Public Non-listed REITs and Private REITs. These other non-traditional REITs have specific conditions and methods by which they operate.

In Summary

REITs are unique. Given the tax structure of a REIT, smaller investors are encouraged to invest in large real estate projects. These smaller investors, without REITs, would not have access to large real estate deals because they simply would not be able to afford it. For instance, some of these large real estate properties include large apartment complexes, shopping malls, or hotels. Most REITs have a straightforward process and offer the investor a less hands approach to investing in real estate.

Copyrights © 2018 All Rights Reserved by CityVest Capital Inc
Privacy / Terms of Service

Please read the important disclosures below.

CityVest.com is a website owned by CityVest Marketplace LLC, a subsidiary of CityVest Capital Inc. (together with its affiliates, “CityVest”). By accessing this website, you agree to be bound by its Privacy Policy and Terms of Service.

The information on this website does not constitute an offer to sell, a solicitation of an offer to purchase or a recommendation of any interest in any investment or security described herein. Any such offer or solicitation shall be made only pursuant to the final confidential offering documents of any entity described on this website, which will contain information about each entity’s investment objectives and terms and conditions of an investment and may also describe certain risks and tax information related to an investment therein and which qualifies in its entirety the information set forth herein. The information contained herein does not constitute part of the offering documents of any entity. An investment in any investment included on this website, entails a high degree of risk (including the possible loss of a substantial part, or even the entire amount, of an investment) and no assurance can be given that any entity’s investment objectives will be achieved or that investors will receive a return of their capital. Past returns are not indicative of future performance.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. Any investment information contained herein has been secured from sources we believes are reliable, but we make no representations or warranties as to the completeness, adequacy or accuracy of any information provided. Investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed on this website, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity.

Prospective investors should read the confidential offering materials of any privately offered investment product, including all risk and conflict disclosures included therein, before investing. Please read detailed information about such calculations in the investment manager’s detailed financial and information material. The information contained herein should be treated in a confidential manner and may not be reproduced or used in whole or in part for any other purpose.

CityVest does not make investment recommendations, and no communication through this website or in any other medium should be construed as such. Private placements on CityVest.com are intended for accredited investors (for persons residing in the U.S.), and for persons residing abroad in jurisdictions where securities registration exemptions apply. Private placements of securities are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by CityVest, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

© 2018 CityVest Marketplace LLC. All rights reserved.