Shopping center developer CBL & Associates announced a 5 percent hike Friday in its quarterly dividend. Chattanooga-based CBL is a member of a special class of pass-through investment vehicles known as real estate investment trusts, or REITs. These securities are often favored as income plays, and represent an excellent way for investors to gain broad exposure to real estate assets without the hassle of being a landlord.

Congress enacted legislation in 1960 that created REITs as a means of enhancing real estate investment opportunities for the general public. Recognizing the capital intensity and long-term nature inherent in large real estate ventures, Congress established a special class of ownership aimed at expanding the breadth of participation and spreading the risk of property investing.

Most large real estate trusts in the U.S. are publicly traded on the major exchanges just like other stocks and are therefore quite accessible to most investors.

Many smaller REITs are not publicly traded and hence unsuitable for all but the most sophisticated investors, owing to their inherent lack of liquidity and transparency.

To qualify as a REIT, a company must distribute at least 90 percent of its taxable income each year in the form of dividends to shareholders. In return, the company is not required to pay corporate income tax, since the profits are passed through to shareholders.

This is a considerably higher payout fraction than most companies maintain, hence dividend yields tend to be greater on average than for most common stocks.

REIT investments generally fall into one of two specific categories. Equity REITs own and often operate physical properties like shopping malls, warehouses, and industrial buildings. CBL, which owns Hamilton Place and Northgate malls, is an example of such an equity REIT.

Mortgage REITs are involved in the financing of properties through ownership of mortgages or direct lending to real estate owners.

REITs have gained wide acceptance as an essential asset class within a well diversified portfolio. Returns have demonstrated a relatively low correlation with traditional equity classes, contributing important diversification.

And historical performance has been impressive, although no guarantee of future results. Over the past three decades, the total return for equity REITs has outpaced the S&P 500 by over one percentage point per year.

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Personal Finance: REITs such as CBL offer investor benefits