Home > REITs > Types of REITS: A Simple Guide for Nigerian Investors

If you’re just getting into REITs (Real Estate Investment Trusts), the different types can be confusing at first. But don’t worry — once you understand how each type works, it becomes much easier to choose the one that fits your goals.

This guide breaks them down in a friendly, Nigerian-focused way.

What are the types of REITs to invest in?

Here are the 3 main types of REITs to consider investing in:

• Equity REITs

• Mortgage REITs (mREITs), and

• Hybrid REITs.

1. Equity REITs

Equity REITs are very common.

These REITs invest in and own physical income-generating properties, such as malls, offices, warehouses, hotels, or residential buildings.

They make money mainly from rent.

Example:

Consider a REIT that owns a large shopping mall. The REIT collects rent from the various retail stores operating in the mall (the “physical income-generating properties”) and then distributes that income to its investors.

Globally, 80% of the REIT market focuses on equity REITs. In Nigeria, most REITs on the exchange market are equity REITs. For instance, UPDC REIT owns a mix of residential and commercial properties and generates income from tenants.

Why choose equity REITs?

• They bring steady passive rent income.

• They give you long-term property value growth.

• They’re generally more stable for beginner investors.

See: Equity REITs in Nigeria to invest in.

2. Mortgage REITs (mREITs)

Unlike equity REITs, mortgage REITs don’t invest in and own physical properties. Instead, they provide mortgages that finance real estate developments or invest in mortgage-backed securities (MBS).

They make money from interest payments, not rent.

Think of mREITs as giving someone a loan to build a house and getting paid interest every month on the loan. The only exception here is that you give the loan and collect the interest through a professional trust rather than personally.

Mortgage REITs are less common in Nigeria but widely used in the United States. They can pay higher dividends but also carry higher risks, since interest rates affect their returns.

Why choose mREITs?

• They’re a solid source of passive income.

• They offer a chance for really high dividends.

• They're a great way to diversify your portfolio and access a professional management team for handling real estate financing and the complexities of interest rates.

Note: Remember that mREITs use leverage, so just keep an eye on interest rate changes.

See: Mortgage REITs (mREITs) in Nigeria to invest in.

Subscribe to our newsletter

Subscribe to our newsletter for exclusive insights and the latest content.

3. Hybrid REITs

Hybrid REITs combine both strategies:

• They own properties (like equity REITs)

• They lend money or provide mortgage loans (like mortgage REITs)

This means they earn from both rent and interest.

Example:

Imagine investing in a REIT that owns blocks of apartments and also finances a developer in Lagos. You’ll earn when tenants pay rent, and the developer pays interest on the loan.

Why choose hybrid REITs?

• Steady income: You get rents from properties plus interest from mortgages, with potentially higher yields.​

• Diversification: They spread your money across properties (like apartments or offices) and loans, so if rental income drops, interest income may balance things out.

See: What are the best REITS to invest in?

Bottom line

REITs come in different types, but they all make real estate investing easier and more affordable. Whether you prefer rental income, interest income, or a mix of both, there’s a REIT structure that fits your goals. Start simple, learn as you go, and choose the type that matches your risk appetite.

Types of REITs FAQs

1. Which types of REITs exist in Nigeria today?

While Nigeria doesn’t yet have the wide variety seen in more developed markets, the existing REITs are mostly equity REITs. They usually focus on properties like residential estates, commercial buildings, or mixed-use projects.

2. What is the largest REIT in Nigeria?

UPDC REIT is currently Nigeria’s largest publicly listed REIT by assets and scale. It holds diversified commercial and residential properties across major cities in Nigeria.

3. Which type of REITs are illiquid investments?

Non-traded REITs are generally illiquid because they’re not listed on any exchange. This means you can’t easily sell your units quickly compared to publicly traded REITs.

Non-traded REITs are usually private, and Nigeria currently has no widely available non-traded REITs.

Related articles