Which type of Real Estate Investment Trust (REIT) generates income by using short-term debt to acquire longer-term mortgage securities?

Mortgage REITs focus specifically on earning income by financing income-producing real estate through mortgage loans or by acquiring mortgage-backed securities. They engage in borrowing short-term debt to fund the acquisition of longer-term mortgage securities, allowing them to leverage the income generated from the interest spread between the short-term borrowing costs and the yields from the mortgage securities.

This strategy enables Mortgage REITs to capitalize on fluctuations in interest rates and to generate income from the mortgages they hold. By utilizing short-term financing to invest in longer-term assets, they can manage their portfolio effectively and enhance their returns, which is a distinct characteristic of this type of REIT.

The other types of REITs, such as Equity REITs, primarily focus on owning and operating income-generating real estate properties, while Hybrid REITs combine features of both Equity and Mortgage REITs. Publicly-traded REITs refer to those that are traded on major stock exchanges and may belong to any of the aforementioned categories. Thus, they do not provide the same specific focus on leveraging short-term debt for acquiring mortgage securities that Mortgage REITs do.