Glossary

Equity REIT

A real estate investment trust that owns and operates income-producing physical properties directly, generating revenue primarily from rental income, as distinguished from a mortgage REIT, which holds real estate debt instruments.

Equity REITs represent the vast majority of publicly traded REIT market capitalization and are typically organized by property sector (multifamily, industrial, office, retail, healthcare, data center, self-storage, and others), giving public equity investors liquid, fractional exposure to institutional-quality commercial real estate portfolios without direct property ownership. Because equity REITs must distribute at least 90% of taxable income to shareholders to maintain REIT tax status, their valuation and performance analysis rely heavily on cash-flow-based metrics like FFO and AFFO rather than GAAP net income, which is distorted by large non-cash depreciation charges on real property. Equity REIT share prices trade on public exchanges and are influenced by both underlying real estate fundamentals and broader equity and interest rate market dynamics, giving them a distinct volatility and liquidity profile compared to direct, privately held CRE ownership.