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CS Professional · Strategic Management and Corporate Finance · Real Estate Investment Trusts

Consider these statements about the structure and types of REITs. (I) A REIT registered with SEBI is set up as a trust. (II) REIT units, once issued, are typically listed on a recognised stock exchange. (III) A mortgage REIT earns its income mainly from rent on properties it owns. Which is correct?

Statements I and II are correct while III is incorrect. A SEBI-registered REIT is a trust and its units are listed on a recognised stock exchange. A mortgage REIT earns mainly interest from real estate debt, not rent, which is the main income of equity REITs.

  1. AI and II are correct; III is incorrectCorrect
  2. BI, II and III are all correct
  3. CII and III are correct; I is incorrect
  4. DOnly III is correct

Explanation

A REIT is constituted as a trust and its units are listed on a stock exchange, so I and II are correct. Statement III is wrong because mortgage REITs earn mainly interest on real estate loans or mortgages, while rent is the main income of equity REITs. Hence option 1 is correct.

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