REITs

Own a diversified, professionally managed real estate portfolio through a Real Estate Investment Trust — from daily-liquid public REITs to non-traded REITs used in 721 UPREIT roll-ups.

Overview

A Real Estate Investment Trust (REIT) owns a portfolio of income-producing real estate and is required to distribute at least 90% of its taxable income to shareholders — giving investors diversified property exposure without owning buildings directly. Created by the REIT Act of 1960, REITs democratized real estate by letting investors buy shares in large, professionally managed portfolios. To maintain their pass-through tax status, REITs must distribute at least 90% of taxable income as dividends, which is why they are valued for income. REITs span every property type — apartments, industrial, retail, data centers, healthcare and more. For the 1031 and DST investor, REITs matter in two ways. Non-traded REITs are the destination of many 721 UPREIT roll-ups, where DST interests are contributed for operating-partnership units. And the full liquidity spectrum — from direct property to DSTs to non-traded REITs to daily-traded public REITs — frames the central trade-off between control, diversification, and liquidity.

How it works

01 A REIT assembles a portfolio The REIT acquires and manages income-producing properties across sectors and markets. 02 It distributes 90%+ of income To keep its tax status, the REIT pays out most taxable income as dividends to shareholders. 03 You hold shares or OP units Investors buy public shares for liquidity, non-traded shares for stability, or receive OP units via a 721 UPREIT contribution. 04 Liquidity by structure Public REITs trade daily; non-traded REITs offer periodic, limited redemptions; OP units convert to shares after a holding period.

By the numbers

The real estate liquidity spectrum Control and 1031 eligibility decrease as liquidity increases Direct property Most control · illiquid · 1031-eligible DST interest Passive · illiquid (~5–10 yr) · 1031-eligible Non-traded REIT Diversified · periodic liquidity · 721 intake Public REIT Diversified · daily liquidity · a security

Benefits

Diversification One holding spans many properties, sectors, and geographies, smoothing single-asset risk. Income The 90% distribution rule makes REITs a dependable source of real estate income. Liquidity options Public REITs offer daily liquidity; non-traded REITs trade some liquidity for lower price volatility. 721 UPREIT destination Non-traded REITs can accept DST interests via a 721 exchange, extending tax deferral with diversification.

Considerations & risks

Not 1031-eligible REIT shares are securities, not like-kind real property — you cannot 1031 exchange into or out of REIT shares. Market volatility (public) Public REIT prices move with equity markets and interest rates, sometimes apart from property values. Limited liquidity (non-traded) Non-traded REIT redemptions are periodic and can be gated, especially in stressed markets. Rate sensitivity REIT valuations and dividends are sensitive to interest-rate cycles.

Compare

Public REITs vs. non-traded REITs Public REITs vs. non-traded REITs

Feature Public REIT Non-traded REIT

Liquidity Daily on an exchange Periodic, limited redemptions Price volatility Higher (market-driven) Lower (NAV-based) Minimums One share Typically $1K–$25K+ 721 UPREIT intake Rare Common Valuation Live market price Periodic NAV Best for Liquidity & trading Income & 721 roll-ups

General comparison; specific REITs vary. Not investment advice.