India, Sept. 22 -- What exactly is an investor buying when money goes into a REIT?

The obvious answer is real estate. Yet that only tells part of the story. A listed REIT owns income-producing property, pays distributions from the cash those assets generate and trades on an exchange. Its unit price can move every day, and it can borrow money. Its tenants can leave. Its rents can rise. And when interest rates change, both its financing bill and the relative appeal of its distributions can change with them.

That puts REITs in an unusual position when an investor is deciding between the predictability of fixed income and the familiarity of owning property directly. They borrow characteristics from both without behaving exactly like either....