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 Maryland, Real Estate Investment Trusts (REITs) are governed by both state and federal regulations. Federally, REITs must comply with the Internal Revenue Code, which requires them to invest at least 75% of their total assets in real estate, cash, or U.S. Treasuries; earn at least 75% of their gross income from rents, mortgage interest, or real estate sales; and pay a minimum of 90% of their taxable income in the form of shareholder dividends each year. Maryland law does not impose additional specific requirements on REITs beyond what is mandated federally, but REITs operating in Maryland must comply with general state corporate laws and securities regulations. This includes registering with the Maryland Securities Division if offering securities to Maryland residents and adhering to state laws regarding the formation, operation, and taxation of corporations. Maryland's favorable legal framework for REITs, including no state income tax for REITs that qualify as federally taxed REITs, makes it an attractive location for these entities.