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REITs are required to pay at least 90% of their taxable income as dividends to shareholders, resulting in high dividend yields. This policy makes them attractive to income-focused investors.

Common valuation metrics for REITs include funds from operations (FFO), adjusted funds from operations (AFFO), and net asset value (NAV). These metrics provide a more accurate representation of a REIT's performance and value than traditional metrics like earnings per share (EPS).

Publicly traded REITs provide investors with a more liquid stake in real estate compared to traditional real estate ownership. Shares of public REITs can be quickly bought or sold on the stock market.

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.

REITs are mainly classified into three types: Equity REITs (own and operate income-generating real estate), Mortgage REITs (provide financing for real estate by purchasing or originating mortgages and mortgage-backed securities), and Hybrid REITs (combine the investment strategies of equity REITs and mortgage REITs).

REITs are sensitive to changes in interest rates. Rising interest rates can increase borrowing costs and affect profit margins, but may also indicate a strengthening economy that could enhance property demand and rents.

REITs must meet certain Internal Revenue Service (IRS) requirements to qualify as a REIT, which includes investing at least 75% of the total assets in real estate, deriving at least 75% of gross income from rents or mortgage interest, and paying a minimum of 90% of taxable income in the form of shareholder dividends each year.

The global REIT market allows for international investment diversification. Investors can gain exposure to real estate markets in different countries and regions, spreading risk and capitalizing on global economic trends.

Investing in REITs offers various benefits including regular income streams, liquidity, inflation hedging, and diversification. Due to the requirement to distribute most of their taxable income, REITs are often sought after for their dividend yields.

Investing in REITs carries risks such as interest rate sensitivity, market risk, and liquidity risk. Economic downturns can affect property values and rental incomes, directly impacting REIT performance.

REITs can play a critical role in retirement portfolios due to their potential for generating stable and reliable income streams through dividends. This characteristic can be especially appealing to retirees looking for regular cash flow.

REITs can provide diversification to an investment portfolio. Since real estate often has a low correlation with other asset classes, including REITs can reduce overall portfolio risk and volatility.

Investors can adopt various strategies when investing in REITs, such as focusing on growth or income, sector-specific investing (e.g., healthcare, residential, retail) or targeting geographically diverse investments to capitalize on different real estate market dynamics.

Public REITs are listed on national securities exchanges and are regulated by the SEC. They offer liquidity and transparency. Private REITs are not listed on exchanges and are not required to follow the same level of disclosure, resulting in less liquidity but potentially higher yields.