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 North Carolina, 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. To qualify as a REIT under federal law, a company must comply with certain Internal Revenue Code requirements. These include primarily investing in real estate, distributing at least 90% of the taxable income to shareholders annually in the form of dividends, and meeting certain organizational and operational tests. North Carolina does not have specific statutes that uniquely regulate REITs; they are subject to the same state laws that govern other types of business entities, such as corporations or partnerships, depending on how the REIT is structured. Additionally, REITs must adhere to the regulations set forth by the Securities and Exchange Commission (SEC) if their securities are publicly traded.