To talk about Hybrid REITs, we first need to know a little about Equity REITs and Mortgage REITs. We explained Mortgage REITs in last week’s glossary article, so you already know that they invest in mortgages and loan obligations. But if you missed it, you can read it here.
Equity REITs are what typically come to mind when you think of REITs. Equity REITs own properties and generate revenue by renting them out. They tend to specialize in a particular sector such as office buildings, hotels, apartments, or healthcare facilities, to name a few.
As you might have guessed, a Hybrid REIT is a cross between an Equity REIT and a Mortgage REIT. Hybrid REITs invest in a combination of hard real estate assets as well as in the debt of such assets. They generate income both from rents and from interest on mortgages and loans.
Hybrid REITs are used as a way to diversify. Some potential benefits include their multiple revenue sources and flexibility.
To learn about other types of REITs, as well as other terms, visit our glossary.