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

Which feature distinguishes a REIT unit from a share of a real estate development company?

A REIT unit represents beneficial interest in the trust's income-generating real estate and entitles the holder to a high share of distributed cash flows. It is typically listed and tradable, and gives no guarantee of capital appreciation or sponsor board voting rights.

  1. AREIT units carry voting rights to elect directors of the sponsor
  2. BREIT units represent beneficial interest in the trust's income-generating assets, with a high payout of cash flowsCorrect
  3. CREIT units are always unlisted and cannot be traded
  4. DREIT units guarantee capital appreciation

Explanation

A unit gives a beneficial interest in the trust's rent-yielding assets and a mandated high distribution of cash flows. Units are generally listed and traded, and no appreciation is guaranteed.

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