Real Estate Investment Trusts (REITs)

REITs are companies which aim to generate a return from property, either by buying and selling real estate, operating locations or by offering financing as a means to generate income. Their structure allows for investors to enjoy gains as dividends and generating income in different formats can confer various tax benefits. Tax mitigation is a key pillar of maximising your wealth.

REITs are a good way to tap the property market without the hassle of having to own a portfolio or be a landlord yourself and, because they pool capital from a large number of investors, it is possible for funds to diversify and keep a tighter rein on risk. REITs invest in real estate ranging from residential units and warehouses to hotels and hospitals, and everything in between.

Another big advantage is that REITs trade almost like stocks and so offer a solution to that age-old problem with property: a lack of liquidity, meaning the speed with which one can make an investment liquid and turn it back to cash.

There may be useful role to be played by REITs in the property element of your portfolio. However, it is vital to check that any new structures will mesh well with those already in your portfolio; that they align well with your risk-profile and time horizon; and that your asset allocation strategy will be uncompromised.