A REIT – or Real Estate Investment Trust – is an entity that owns or finances income-producing real property. REITs facilitate investment in portfolios of large-scale properties by individuals through the purchase of stock. Similar to the way individuals benefit by owning stock in an underlying corporation, individuals owning shares in a REIT earn a share of any income produced through real estate investments without actually buying or financing the underlying real property assets. Additionally, under subchapter M of chapter 1 of the Internal Revenue Code of 1986, an entity that qualifies as a REIT is entitled to preferential tax treatment. To qualify for the tax benefits available to a REIT, an entity must meet a number of initial qualifications and then satisfy a number of additional elements to maintain its REIT status.

Maryland law plays a prominent role in the REIT marketplace. With a statute facilitating the formation of REITs (Title 8 of the Corporations and Associations Article of the Maryland Code) and a judiciary that has developed a level of REIT specific expertise, most publicly-traded REITs are formed as trusts under the Maryland REIT Law or as Maryland corporations. At present, Maryland REITs accounts for nearly 80% of all publicly-traded REITs and approximately 150 Maryland REITs are listed on the New York Stock Exchange. In this blog, when we address “Maryland REITs,” we intend to reference both Maryland corporations and Title 8 real estate investment trusts.

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