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

Which statement best describes the nature of the right of a REIT unitholder in the underlying real estate assets?

A REIT unitholder holds units giving a beneficial interest in the trust's assets, which the trustee holds on behalf of unitholders. The unitholder does not directly own particular properties, is not a secured creditor, and does not hold shares in the sponsor.

  1. AUnitholders directly own specific properties held by the REIT
  2. BUnitholders have a beneficial interest in the trust's assets through their units, and the trustee holds the assets on their behalfCorrect
  3. CUnitholders are creditors of the REIT with a fixed charge on its assets
  4. DUnitholders hold voting shares in the sponsor company

Explanation

A REIT is set up as a trust. The trustee holds the assets for the benefit of unitholders, who hold units representing an undivided beneficial interest. They are not direct owners of particular properties, not secured creditors, and units are not shares of the sponsor.

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