Common question is what is a
real estate investment trust or

a REIT? And how does it differ
exactly from a real estate fund

or a real estate syndication?
Let's talk about those

differences.

Let's start talking about REITs.
Real estate investment trusts.

So what exactly are they? And
how do they work? Well, a real

estate investment trust is a
fund of sorts, it is a kind of

real estate fund, what it is as
it accumulates real estate, and

it pays out based on the income
of that real estate. So all

REITs are required to pay out
90% of their income, that's

derived from rents as dividends
to their investors. Now, a REIT

really is it's a sub
classification of the tax code.

It's not a different kind of
security, as far as the SEC is

concerned, what that means is
there are REITs that are

structured as Regulation D
offerings, there are REITs that

are structured as Regulation A
offerings, and there are REITs,

that are public that have,
they've gone public. And they do

that they meet the minimum
requirements, which primarily is

a certain amount of ownership
needs to be in people other than

those managing, and that they
pay out that 90% of their

income. And that 75% or more of
their holdings is in real estate

specifically, not necessarily
not not bonds or anything like

that, but in the real estate
itself, and that they also have

more than 100 investors that are
not part of the management team

itself. That's the basic
structure of a REIT. The

benefits of a read are that they
are very liquid, especially a

public REIT, public REITs, you
can trade on the stock market,

you can log into your brokerage
account and make a trade and

then sell it the very next hour.
So they're very, very liquid.

Whereas with a real estate fund,
the private fund, it may be less

liquid. Now, private REITs are
also going to be less liquid,

but they're going to have
specific mechanisms in place in

order to get people make it
easier to liquefy their

positions, so they can sell it
at regular intervals. When a

REIT is put together, what is
oftentimes needs to happen is

that figuring out the greatest
challenge of net asset value.

Now net asset value only comes
into play as it relates to

private REITs. So private REITs
have to figure out net asset

value on a regular basis. Most
of the ones that I know and have

talked to and follow and have
consulted with those breeds,

they that are private, they do
it on a monthly basis. Now

monthly is a lot of time, it's a
lot of work in order to adjust

your net asset value. But that's
their regular schedule. Public

REITs. However, doesn't matter.
The net asset value is computed

by itself just naturally by
being on the public market. It's

how the public perceives the net
asset value and how it changes

stock price. So there you might
get valuations of you know, 30

$30 based on income or something
like that, but basically, the

bottom line is that that net
asset value is very critical for

private REITs and for public
REITs not a factor at all,

necessarily not a factor as it
relates at least as it relates

to share price because the share
price is determined by the

market itself. So let's go
through the main takeaways and

key points of REITs and real
estate funds. Number one REITs

are companies that buy and
manage property and generate

income from rents primarily,
they're not in the business of

selling bit properties for their
own sake or counting on

appreciation. They distribute
90% of their profits as

dividends to shareholders and
their main benefit is this

massive amount of liquidity.
Number two real estate funds and

syndications they gather funds
from multiple investors for

buying, managing, developing
selling properties. Generally

they have less liquidity, larger
minimum investment, but they

offer a much wider range of
options of things that you can

do. This is where the mat the
majority of our clients are. We

have a very small number of
REITs that we help and then we

generally Help you're all the
way from your very, very large

private equity funds, all the
way down to first time,

syndicators. Number three
investment in real estate funds.

It offers those benefits of
diversification and true

professional management but it's
subject to that market.

volatility. Generally these are
smaller, so they have a little

bit less holdings than a REIT,
which can oftentimes be quite

large. As property values
decline high fees lock in

periods, they also track
slightly different than then

reads on value. Number four
REITs. In real estate funds have

different tax implications.
REITs dividends are subject to

income tax, whereas real estate
funds and syndications in

general are much more likely to
target going being taxed at the

capital gains rate. Number five,
as a syndicator, or a real

estate fund manager yourself,
your job is to really consider

what's in it for your investors.
And what are you putting this

together for? What is your
founders investment theory, use

that in determining whether
going down the road and to the

expense and complication of
putting together a huge business

like a read, make sense? A lot
of my players very, very, very

large investors who have assets
under management of well over a

billion dollars are not REITs
and will never be REITs and do

not want to play that game. They
don't even put together funds.

They put together just straight
syndications. So your success is

not tied to well whether you are
a publicly traded REIT or not.

It's put to your success is tied
with doing the kinds of deals

and the kinds of funds that you
want to do and working with the

investors that you want to work
with. My name is Tilden

Moschetti. I am a real estate
syndication attorney with the

Moschetti Syndication Law Group.
I hope this video helped explain

that difference between REITs
and private equity funds and

syndications. If we can help you
on your journey, whether it's to

become a read or a private
equity fund or a syndicator

yourself, give us a call. We can
help you stay compliant with

Regulation D Rule 506b and 506c
and also offering the exit

expert guidance to make sure
that you get on the path that

you're going and get to the goal
that you want to get to