Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.

Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

In Arkansas, as in other states, Real Estate Investment Trusts (REITs) are governed by both state statutes and federal law. REITs are designed to 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. Arkansas does not have specific statutes that are unique to REITs; instead, they are generally formed under the same laws that govern other types of business entities, such as corporations or limited partnerships. At the federal level, REITs must comply with the Internal Revenue Code requirements to qualify as a REIT, which include primarily investing in real estate, distributing at least 90% of taxable income to shareholders annually, and meeting certain organizational and operational tests. Compliance with these rules allows REITs to avoid paying corporate income tax on distributed income.