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 Kentucky, as in other states, Real Estate Investment Trusts (REITs) are governed by federal tax law, specifically by the Internal Revenue Code (IRC). REITs must comply with certain IRS requirements to qualify as a REIT, such as investing at least 75% of total assets in real estate and paying at least 90% of taxable income in the form of shareholder dividends each year. Kentucky does not have specific statutes that uniquely regulate REITs; instead, they are treated like other corporations for state tax purposes. However, they must comply with general corporate laws and securities regulations of Kentucky when it comes to formation, operation, and reporting. This includes registering with the Kentucky Secretary of State, adhering to Kentucky corporate governance requirements, and complying with the Kentucky Securities Act if offering securities to the public.