Just as an investor buying a house uses some of his own savings (equity) and a loan from a bank (debt) to buy a house, a REIT raises money from investors (equity) and takes a loan from banks (debt) to fund its properties. The ratio of debt to the value of properties is called the “gearing” of the property. If it is high (this is subjective and will vary by REIT), the REIT is said to be highly geared or leveraged.
