For a significant number of REITs investors, the primary draw of REITs lies in its ability to produce attractive Yield. Financially speaking, Yield refers to the amount of cash that is distributed to the owners of a particular security. This includes the dividends paid out by stocks and the coupons paid out by bonds.
However in the context of REIT investments, Yield could refer to either Property Yield or Distribution Yield.
Property Yield is largely a measure of the earning power of a REIT's portfolio of properties and does not correctly indicate the amount of yield that a REIT investor enjoys from his holdings. The amount of Yield that the REIT investor obtains is referred to as the Distribution Yield and is calculated taking into account the price at which units in the REIT were bought, amongst others.
In investment parlance, Yield can be presented as a ratio, percentage or as a figure to denote total returns. But Property Yield and Distribution Yield in the context of REIT investments will in all certainty be presented as a percentage.
Contrary to popular belief, REITs with attractive yields do not necessarily signify good investment oppurtunities. It may signal that a REIT may have limited ability to grow the value of its properties, hence giving a higher yield to compensate for its inability to provide capital appreciation.