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 Illinois, 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. To qualify as a REIT, a company must comply with certain Internal Revenue Code requirements. For instance, it must primarily own income-generating real estate for the long term and distribute at least 90% of its taxable income to shareholders annually in the form of dividends. Illinois does not have specific statutes that uniquely regulate REITs; instead, they are largely governed by federal tax law, specifically by the Internal Revenue Service (IRS) under the Internal Revenue Code (IRC). Additionally, REITs must adhere to the regulations of the Securities and Exchange Commission (SEC) if their securities are publicly traded. The Illinois Securities Law of 1953 also plays a role in regulating the offering and sale of securities, including those of REITs, within the state.