Real Estate Investment Trusts (REITs) are a popular way for investors to gain exposure to the real estate market without having to buy physical properties. REITs own, operate, or finance income-producing real estate across a range of property sectors. But how exactly are these investment vehicles sold to investors?
Public Offerings
One common way that REITs are sold to investors is through public offerings. In a public offering, a REIT registers with the Securities and Exchange Commission (SEC) and offers shares to the public for purchase. Investors can buy shares of the REIT through a brokerage account, just like they would with any other publicly traded company.
Private Placements
Another way that REITs are sold is through private placements. In a private placement, the REIT sells shares directly to a small group of investors, such as institutional investors or high-net-worth individuals. These offerings are not registered with the SEC and are typically subject to fewer regulations than public offerings.
Direct Investment
Some REITs are sold through direct investment, where investors purchase shares directly from the REIT itself. This can be done through the REIT’s website, through a financial advisor, or through a direct stock purchase plan. Direct investment can be a convenient way for investors to buy shares of a REIT without going through a brokerage account.
Secondary Market
Once shares of a REIT have been sold through a public offering, private placement, or direct investment, they can be bought and sold on the secondary market. Investors can trade shares of the REIT with other investors through a stock exchange, such as the New York Stock Exchange or NASDAQ. The price of the shares is determined by supply and demand in the market.
Online Platforms
With the rise of online investing platforms, it has become easier than ever for individual investors to buy shares of REITs. Online brokerages offer easy access to a wide range of REITs, allowing investors to research and purchase shares with just a few clicks. This convenience has made REIT investing more accessible to a larger number of investors.
Real Estate Investment Trusts are sold to investors through a variety of channels, including public offerings, private placements, direct investment, the secondary market, and online platforms. Each method has its own advantages and considerations, so investors should carefully evaluate their options before investing in a REIT.
