What are the three types of REITs?

The correct answer identifies the three primary types of Real Estate Investment Trusts (REITs) as Equity, Mortgage, and Hybrid.

Equity REITs are primarily involved in owning and managing income-producing real estate properties. They generate revenue mainly through leasing space and collecting rents on the properties they own, making them a popular choice for investors seeking steady income.

Mortgage REITs, on the other hand, focus on financing real estate by investing in mortgages or mortgage-backed securities. They earn income from the interest on these financial instruments, which can lead to a different risk profile and return compared to Equity REITs.

Hybrid REITs combine characteristics of both Equity and Mortgage REITs. They invest in physical properties and also engage in mortgage financing, providing a diversified approach that can appeal to various investor strategies depending on market conditions.

This classification helps investors understand how their investment will be managed and the types of returns and risks they might expect. It is essential for anyone engaging with REITs to be aware of these categories to make informed investment decisions.