About Publicly Traded Real Estate Investment Trusts

​A graduate of Miami University and holding an MBA from Northwestern University, John Hofmann is a Wilmette, IL-based real estate finance executive who has established himself in his industry over the past two decades. John Hofmann of Wilmette is a senior vice president of KeyBank Real Estate Capital in Chicago.

People who want to tap into stable passive income from real estate without the burden of property maintenance can purchase publicly traded real estate investment trusts (REITs). Listed on major stock exchanges, REITs may include office buildings, residential properties, and warehouses.

These investment instruments offer stable returns that can constitute long-term passive income, useful after retirement. Other benefits include mitigated risk due to portfolio diversification, access to institutional-quality real estate, and liquidity.

One notable challenge for publicly traded REITs compared to other real estate investments is the value will fluctuate with the market, however with that comes increased liquidity compared to owning private REIT shares or actual real assets. Investors receive 90 percent of REITs' taxable income, which means less than 10 percent of proceeds can be used for redevelopment to augment the value of the assets. Also, dividends from REITs are taxed as ordinary income, which means the tax rate is higher.

John Hofmann, Wilmette

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