Hybrid REITs are known for investing in which of the following?

Hybrid Real Estate Investment Trusts (REITs) are unique in that they combine elements of both equity REITs and mortgage REITs. This means that hybrid REITs invest in both physical properties (equity) and mortgage loans (debt). By doing so, they can diversify their investment strategies and potentially benefit from the income generated by both rental properties and mortgage interest.

Equity REITs primarily focus on owning and operating income-generating real estate, while mortgage REITs invest in mortgages or mortgage-backed securities. By investing in both segments, hybrid REITs can take advantage of varying market conditions; they may profit from rental income when property values are high while also earning interest from mortgage investments. This dual approach allows hybrid REITs to balance risks and returns in a way that single-focus REITs cannot.

In contrast, the other options are more restrictive, focusing either solely on mortgages, solely on equity, or just on commercial properties. Therefore, the correct choice illustrates the comprehensive investment approach that hybrid REITs employ.