--- title: "Publicly Traded REITs" description: "A publicly traded REIT is a real estate investment trust whose shares are listed on a stock exchange, registered with the SEC, and priced continuously by..." canonical: https://www.getswoopr.com/investments/publicly-traded-reits/ source: "Swoopr Investment: https://www.getswoopr.com" --- ## Direct Answer > A publicly traded REIT is a real estate investment trust whose shares are listed on a stock exchange, registered with the SEC, and priced continuously by the market, so that investors get daily liquidity, audited disclosure and a price that reflects both the properties and the equity market's mood. Listed REITs are the dominant form by assets, the components of the REIT indexes and ETFs, and the benchmark against which non-traded and private REITs are judged. The REIT lists its shares, raises capital through offerings, and reports like any public company, with the industry's supplemental measure, funds from operations, adding back depreciation to net income because property depreciation rarely reflects economic decline. # Publicly Traded REITs: Complete Investor Guide ## What Is Publicly Traded REITs? A publicly traded REIT is a real estate investment trust whose shares are listed on a stock exchange, registered with the SEC, and priced continuously by the market, so that investors get daily liquidity, audited disclosure and a price that reflects both the properties and the equity market's mood. Listed REITs are the dominant form by assets, the components of the REIT indexes and ETFs, and the benchmark against which non-traded and private REITs are judged. | Item | Detail | | --- | --- | | Listing | NYSE and Nasdaq; included in the S&P 500 and sector indexes | | Disclosure | SEC filings (10-K, 10-Q, proxy), with funds from operations (FFO) as the standard earnings measure | | Liquidity | Daily trading at market prices, often at a premium or discount to net asset value | | Fees | None to buy beyond commissions; management is internal for most large REITs | | Market | About 200 listed U.S. REITs with over $1 trillion of equity market capitalization | | Tax | Dividends mostly ordinary income with the 20% deduction; reported on Form 1099-DIV | ## How Does Publicly Traded REITs Work? The REIT lists its shares, raises capital through offerings, and reports like any public company, with the industry's supplemental measure, funds from operations, adding back depreciation to net income because property depreciation rarely reflects economic decline. The share price moves with the properties' prospects, interest rates and the stock market, and often diverges from the estimated value of the properties: REITs trade at discounts to net asset value when rates rise or sentiment sours, and at premiums when capital is cheap, and management can buy or sell property or shares to exploit the gap. Investor.gov's REIT page and the SEC's bulletin describe the listed form as the most liquid and transparent; the Fed's Z.1 financial accounts track the sector's balance sheet. Listed REITs are internally managed for the most part, which aligns management with shareholders better than the external advisors of non-traded REITs, and their dividends are set by boards against the 90% distribution requirement. **Worked example.** A listed apartment REIT's analysts estimate its net asset value at $40 a share, but after a rate rise the shares trade at $32, a 20% discount. An investor buying 1,000 shares at $32 holds property valued at $40,000 for $32,000, a gap of $8,000, and collects $1,800 a year in dividends, a 5.6% yield on cost. If the discount closes as rates fall, the shares rise toward $40; if it persists, the REIT may sell buildings and buy back shares, or a private buyer may bid for the whole company at closer to NAV, which is how listed REIT discounts have usually ended. The inputs are illustrative numbers, not market data. ## What Does Publicly Traded REITs Cost? Commissions and spreads, small for large REITs; expense ratios for REIT index funds and ETFs of 0.1% to 0.5%; the REIT's own general and administrative costs, visible in its filings and typically under 1% of assets for large internally managed REITs. ## How Is Publicly Traded REITs Taxed? Dividends are split on Form 1099-DIV into ordinary income (eligible for the 20% section 199A deduction), capital gain distributions and return of capital; not qualified dividends. Sales are capital gains or losses. IRS Topic 404 and Publication 550 cover the reporting. ## What Are the Risks of Publicly Traded REITs? - Equity volatility: listed REITs move with the stock market and fell more than it in 2008. - Interest rate sensitivity through both capitalization rates and discount rates. - Sector risk: office, regional malls and hotels have each had multi-year drawdowns. - NAV discounts that persist for years, so the price can stay below the value of the properties. **Common misconception.** A listed REIT's price is not the value of its buildings. It is the market's price for a leveraged, perpetually distributing property company, and it swings around net asset value by 20% or more in either direction with rates and sentiment; the discount is the opportunity and the risk of the listed form, and the non-traded form's stable reported value hides the same swings rather than avoiding them. ## Where Does Publicly Traded REITs Fit? **Liquidity.** Excellent; daily trading, with the largest REITs among the most liquid stocks. **Who uses it.** Any investor who wants real estate exposure with liquidity and disclosure; most are better served by a REIT index fund than by picking individual REITs, and by holding either in a tax-advantaged account. **Portfolio role.** The default form of a portfolio's real estate allocation: liquid, transparent and index-eligible; a 5% to 15% equity-sleeve position for most diversified investors. ## Frequently Asked Questions What is Publicly Traded REITs? A publicly traded REIT is a real estate investment trust whose shares are listed on a stock exchange, registered with the SEC, and priced continuously by the market, so that investors get daily liquidity, audited disclosure and a price that reflects both the properties and the equity market's mood. Listed REITs are the dominant form by assets, the components of the REIT indexes and ETFs, and the benchmark against which non-traded and private REITs are judged. The REIT lists its shares, raises capital through offerings, and reports like any public company, with the industry's supplemental measure, funds from operations, adding back depreciation to net income because property depreciation rarely reflects economic decline. What are the risks of Publicly Traded REITs? Equity volatility: listed REITs move with the stock market and fell more than it in 2008. Interest rate sensitivity through both capitalization rates and discount rates. A listed REIT's price is not the value of its buildings. How liquid is Publicly Traded REITs? Excellent; daily trading, with the largest REITs among the most liquid stocks. Who typically invests in Publicly Traded REITs? Any investor who wants real estate exposure with liquidity and disclosure; most are better served by a REIT index fund than by picking individual REITs, and by holding either in a tax-advantaged account. What role does Publicly Traded REITs play in a portfolio? The default form of a portfolio's real estate allocation: liquid, transparent and index-eligible; a 5% to 15% equity-sleeve position for most diversified investors. ## References - [Investor.gov: Real Estate Investment Trusts (REITs)](https://www.investor.gov/introduction-investing/investing-basics/investment-products/real-estate-investment-trusts-reits) - [SEC: Investor Bulletin: Real Estate Investment Trusts (REITs)](https://www.sec.gov/files/reits.pdf) - [Federal Reserve: Financial Accounts of the United States, Z.1](https://www.federalreserve.gov/releases/z1/) - [IRS: Topic No. 404, Dividends and Other Corporate Distributions](https://www.irs.gov/taxtopics/tc404) - [IRS: Publication 550, Investment Income and Expenses](https://www.irs.gov/publications/p550) S Swoopr Editorial Team The Swoopr Editorial Team produces independent investment education, research, and tools for understanding markets, evaluating opportunities, and managing risk. All content is educational only and does not constitute personalized investment advice. See our [editorial policy](https://www.getswoopr.com/legal/editorial-policy/) and [corrections policy](https://www.getswoopr.com/legal/corrections-policy/).