Reit Financial Model

Description
Properties in a REIT portfolio may include apartment complexes, data centers, healthcare facilities, hotels, infrastructure—in the form of fiber cables, cell towers, and energy pipelines—office buildings, retail centers, self-storage, timberland, and warehouses.
In general, REITs specialize in a specific real estate sector. However, diversified and specialty REITs may hold different types of properties in their portfolios, such as a REIT that consists of both office and retail properties.
Many REITs are publicly traded on major securities exchanges, and investors can buy and sell them like stocks throughout the trading session.
These REITs typically trade under substantial volume and are considered very liquid instruments.
What Qualifies as a REIT?
Most REITs have a straightforward business model: The REIT leases space and collects rents on the properties, then distributes that income as dividends to shareholders. Mortgage REITs don't own real estate, but finance real estate, instead. These REITs earn income from the interest on their investments.
To qualify as a REIT, a company must comply with certain provisions in the Internal Revenue Code (IRC). These requirements include primarily owning income-generating real estate for the long term and distributing income to shareholders.
Specifically, a company must meet the following requirements to qualify as a REIT:
Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
Derive at least 75% of gross income from rents, interest on mortgages that finance the real property, or real estate sales
Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
Be an entity that's taxable as a corporation
Be managed by a board of directors or trustees
Have at least 100 shareholders after its first year of existence
Have no more than 50% of its shares held by five or fewer individuals