Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.

Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

In Hawaii, Real Estate Investment Trusts (REITs) are governed by both state statutes and federal law. REITs are designed to provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves. Federally, REITs must comply with the Internal Revenue Code requirements, which include primarily investing in real estate, distributing at least 90% of taxable income to shareholders, and meeting certain organizational and operational tests. Hawaii conforms to federal REIT regulations but does not offer the same state tax advantages that REITs receive at the federal level. In 2019, Hawaii passed legislation which effectively eliminated the state income tax deduction for dividends paid by REITs, meaning that REITs are subject to Hawaii state income tax. This change was aimed at ensuring that REITs contribute to the state's tax revenues, similar to other businesses operating within Hawaii.