Types of REITs Explained: Equity, Mortgage, and Sector REITs

REITs come in three types based on what they hold: equity REITs own and operate property and collect rent, mortgage REITs hold real estate loans and mortgage-backed securities and collect interest, and hybrid REITs do both. Equity REITs are nearly all of the listed market: at the end of September 2026, the REITs in the FTSE Nareit All Equity REITs index were worth $1.46 trillion, against $53 billion for the FTSE Nareit Mortgage REITs index, according to Nareit, the REIT industry's trade association. Equity REITs are then sorted into 13 property sectors, led by health care, retail, data centers, industrial, and residential, and the sectors differ in what they rent out, how long their leases run, and what most often cuts their income.

How do mortgage REITs make money?

AGNC Investment shows how the model works. It buys mainly mortgage-backed securities (bonds backed by pools of home loans) whose payments are guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, and pays for them mostly with repurchase agreements, which are short-term loans secured by the securities. It earns the gap between the interest on those securities and the cost of its borrowing and interest rate hedges (contracts such as swaps that limit the effect of rate changes). At the end of 2025, its securities yielded 4.93% on average, and AGNC reported leverage of 7.2 times its tangible equity (its net worth not counting goodwill), so borrowed money paid for most of its holdings.

That high leverage brings two risks AGNC names in its annual report. When the gap between mortgage-backed securities' yields and the rates on its hedges widens, its book value per share (roughly, the net worth behind each share) typically falls. And when the securities lose value, lenders can make margin calls that require it to post more collateral.

How do the property sectors compare?

All 13 property sectors are made up of equity REITs, and Nareit's tables do not list hybrid REITs as a separate group. The lease terms and risks in each row come from one large REIT's 2025 annual report (Form 10-K), and the market values are Nareit's figures for September 30, 2026. Two lease terms come up often. A net lease has the tenant pay some or all of the property's costs, such as taxes, insurance, and maintenance, on top of rent, and a triple-net lease covers all three. A master lease puts several properties under one lease with one tenant.

The smaller sectors were lodging and resorts ($42 billion), office ($41 billion), gaming ($36 billion), specialty ($27 billion), diversified ($26 billion), and timberland ($19 billion). One sector can move far from the rest. In 2025, when the All Equity REITs index returned 2.3%, office REITs returned -14.0% and data centers -14.2%; in 2026 through September, data centers gained 28.0% while timberland lost 15.9%.

Health care, data center, and retail REITs up close

Health care REITs

Health care REITs own senior housing, outpatient medical buildings, and post-acute care facilities such as skilled nursing homes, which care for patients after a hospital stay. At Welltower, senior housing communities run by outside managers produced 78% of 2025 revenue, so its income moves with occupancy and resident fees rather than a fixed rent. At post-acute care facilities, most of the operators' revenue comes from Medicare and Medicaid, so a cut in those payments can weaken an operator's ability to pay rent. Health care REITs yielded 2.60% at the end of September 2026, the second-lowest of any sector after data centers.

Data center REITs

Data center REITs rent space and power to companies that run their own servers, a setup called colocation. Equinix says access to power can limit where it expands, especially as it designs centers for power-intensive AI equipment, and that it must commit to buying power before a new center is fully running, which raises fixed costs it may not be able to pass on to customers. The sector yielded 2.46% at the end of September 2026, the lowest of any sector.

Retail REITs

Nareit splits retail REITs into shopping centers (14 REITs, yielding 4.32% at the end of September 2026), regional malls (3 REITs, 4.36%), and free-standing properties (10 REITs, 5.73%). Free-standing REITs own single-tenant buildings on net leases. Realty Income owned 15,511 properties at the end of 2025, 97.8% of them single-tenant, and its leases raise rent by fixed amounts, by an amount tied to inflation (usually up to a cap), or with the tenant's sales. Because tenants pay the property expenses, the company says net leases reduce its exposure to rising costs from inflation, though inflation can still strain tenants' ability to pay rent.

Listed, non-traded, and private REITs

Any of these types can be listed on a stock exchange or not. Publicly traded REITs trade on national exchanges, and FINRA notes they are easier to sell than non-traded REITs but more prone to price swings. Public non-traded REITs are regulated by the SEC but not listed. Private REITs are not registered with the SEC or listed on an exchange, and are sold mainly to institutions and accredited investors (people who meet SEC income or net worth tests). Publicly traded vs non-traded REITs compares their costs and how you get your money back out.

Which REIT type fits what you want?

• Highest current income. Mortgage REITs yielded 15.68% at the end of September 2026, against 3.93% for equity REITs, yet the mortgage REIT index lost 12.4% in 2026 through September with dividends included. REIT dividend yields explained covers how to compare yields.
• Rent that resets quickly. Apartment and self-storage REITs can reprice at each renewal, within about a year or a month, which Mid-America Apartment Communities says reduces its exposure to inflation.
• Rent fixed in advance. Long leases with set increases make income more predictable: American Tower reported over $54 billion of revenue still due under its non-cancellable tenant leases.
• Several sectors in one purchase. A REIT fund holds a basket of REITs, which FINRA notes gives broader exposure than a single REIT. Check which sectors and REIT types a fund's index includes before you buy; REIT ETFs and mutual funds compares what the main funds hold.

For what can go wrong in each type, see REIT risks every investor should understand. For how a company qualifies as a REIT and how its dividends are taxed, see what REITs are and how they work.