Real estate investment trusts (REITs) are companies that manage a portfolio of real estate assets for the benefit of their shareholders. There are two main types of REITs: mortgage REITs, which invest in mortgages, are reported in this table; and equity REITs, which invest in and own properties, are included in the nonfinancial corporate business sector (tables F.103, L.103, B.103, and R.103). To qualify as a REIT, a company must distribute at least 90 percent of its taxable income to shareholders each year. Shares of public REITs trade like stocks on the major exchanges. REITs were established as pass-through entities by federal legislation in 1960, which eliminated double taxation. REIT data in the financial accounts begin in 1968. REITs invest in several diverse types of real estate, including residential, retail, office, industrial, health care, hotel properties, and self-storage facilities. With the 2007 revision of the North American Industry Classification System, or NAICS, equity REITs were reclassified from a financial category to a nonfinancial category (sector 53, Real Estate subsector). Mortgage REITs remained in a financial category (sector 52, Other Financial Vehicles subsector). Additionally, the System of National Accounts 2008 (SNA) classifies equity REITs as nonfinancial. In the December 7, 2023 release of the Z.1 Financial Accounts, equity REITs were moved into the nonfinancial corporate business sector to better align with the SNA guidelines, while mortgage REITs remain within the domestic financial sectors. In 2013:Q2 the mortgage REIT assets and liabilities increased due to the acquisition of a large special servicer and the consolidation of off-balance sheet holdings on the balance sheet of the purchaser. Assets and liabilities reported at fair value are converted to book value based on information provided in investor presentation materials.
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