2.16 UITs & REITs
UITs provide static pooled portfolios, while REITs provide liquid commercial real estate exposure without direct property management.
Key FINRA Exam Takeaways
- Unit Investment Trusts (UITs): Unmanaged, fixed portfolio of stocks or bonds; no board of directors; terminates on a predetermined date; redeemable units.
- Real Estate Investment Trusts (REITs): Companies that own or finance income-producing real estate.
- REIT 75-75-90 Rule: 75% assets in real estate, 75% gross income from real estate, distributes at least 90% of taxable income to shareholders.
- REITs pass through income and capital gains, but NEVER pass through losses.
- Public REITs trade on exchanges like regular common stock.
Knowledge Checkpoint • Section 2.16
Which of the following statements regarding Real Estate Investment Trusts (REITs) is TRUE?