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 Colorado, as in other states, Real Estate Investment Trusts (REITs) are governed by federal tax law, specifically by the Internal Revenue Code (IRC). To qualify as a REIT, a company must comply with certain IRS requirements, such as investing at least 75% of its total assets in real estate, deriving at least 75% of its gross income from rents or mortgage interest, and distributing at least 90% of its taxable income to shareholders annually in the form of dividends. Colorado does not have specific statutes that uniquely regulate REITs; instead, they are subject to the same state laws that govern other types of business entities, such as corporations or partnerships, regarding registration, reporting, and compliance. Additionally, REITs in Colorado must adhere to federal securities laws and regulations when offering their securities to investors.