What is a REIT (Real Estate Investment Trust)? Does it differ from unlisted property trusts?

Looking for a set-and-forget commercial property investment? Two popular choices are a Real Estate Investment Trust (REIT, or A-REIT for a trust in Australia) and unlisted property trusts (also known as unlisted property funds or commercial property syndicates).

To some, a REIT and unlisted property fund might seem like pretty much the same thing.

They’re professionally managed, and a way for time-poor and inexperienced investors to invest in big league property. Both also distribute regular income and provide an opportunity for serious capital gains.

But look closer and you’ll see REITs and unlisted property trusts differ in some important ways that can significantly shape your investment experience:

1. Structure
2. Liquidity
3. Volatility
4. Minimum investment
5. Volume of investors

Here we’ll show how a REIT and unlisted property trust differ more than you think.

What is a REIT?

A REIT is an organised property investment trust. A REIT will issue securities to its investors, just like shares, and for that reason seems like a simple way to invest in real estate. But it does have many differences to unlisted property trusts which make many investors reconsider their investment.

Let’s take a look at how a REIT differs to an unlisted property trust.

5 ways an unlisted property trust and a REIT differ

1. Structure

If you invest in a REIT, you’ll be issued securities. These act like shares, because they are publicly traded on the ASX through a stockbroker and they pay a regular dividend (although not actually classed as a “dividend” but more accurately as distribution).

Meanwhile, the investment in an unlisted property trust is privately held. The trust will offer a limited number of units for purchase.

2. Liquidity

One of the major advantages of a REIT is liquidity. Because securities are publicly traded on the ASX, investors can usually sell their holdings quickly, just as they would with shares. This flexibility is attractive if you think you may need to access your capital or rebalance your portfolio.

By contrast, units in an unlisted property trust are typically locked in for the duration of the trust. That makes them much less liquid — investors usually can’t exit on short notice. Some syndicators offer limited secondary sales or transfer options, but these are the exception rather than the rule.

In saying that, there are usually ways out if you really need to liquidate your holdings (in our experience, this is a rarity). If you consider an unlisted property trust, check the syndicator’s policy or FAQs on exiting the investment. Units may can sometimes be sold to other investors.

3. Volatility

With liquidity comes volatility. REIT prices fluctuate daily with market sentiment, interest rate changes, and investor demand — just like other listed securities. This can create opportunities but also short-term uncertainty, even if the underlying property portfolio remains stable.

But because units in an unlisted property trust are secured for the entire period of the trust, there is far less volatility than you’ll see in a REIT investment.

(The investment itself, in direct property, is far less volatile than the ASX. For the property market to have the same volatility as the stock market, each property would need to be bought and sold every day.)

So, if you like a passive investment, where buying and holding is your strategy, you might prefer an unlisted property trust.

4. Minimum investment

Some unlisted REITs allow investment as little as $500. This opens the doors to new investors and those wanting to ‘play’ in a new investment avenue.

Unlisted property funds usually target investors with more capital, often requiring minimum commitments between $25,000 and $100,000, though some large syndicates may set higher entry points. These higher thresholds mean the investor pool is smaller and often more experienced.

A REIT might be a good way to go if you don’t have much capital to play with. But a larger minimum investment, like in an unlisted property fund, isn’t necessarily a bad thing. You’ll invest alongside more sophisticated investors and have access to exclusive privileges.

5. Volume of investors

In a REIT, you might be treated as just a number. You’ll have no idea how many other investors are partaking in the fund (but with a minimum investment of $500, there’s likely to be many).

Unlisted property trusts have a certain number of units on offer. And with the larger price tag, you’ll be one of a smaller pool of investors with a share in the syndicate. You’re not just a number, but a member of an exclusive investment opportunity.

How can I invest in a REIT or unlisted property trust?

If you plan to dive into a set and forget commercial property investment, you’ll find benefits in either a REIT or unlisted property trust.

Despite the differences between both investment avenues, you should first dig up answers to a few questions before you invest:

• Where is your money going? (Retail? Industrial? Office? All three?)
• Do you have access to the Trust Deed and know your rights as an investor?
• Have you done your due diligence on the management team?
• Does the fund have a history of performance?
• Does the trust manager have skin in the game?
• Can you speak with past or current investors?
• Are distributions paid regularly? (Ideally, distributions will be paid monthly.)
• Have you talked to your accountant or financial planner?

Every investment carries risk, and both REITs and unlisted property trusts come with trade-offs. Your choice should depend on your financial goals, liquidity needs, and tolerance for market volatility. Always seek independent financial advice before making a decision.

For more information on investing in unlisted commercial property, contact Properties & Pathways today. To stay informed with the latest market insights, trends, and opportunities, subscribe to our monthly newsletter.

Updated: 26 August 2025