What is a real estate investment trust (REIT)?

A real estate investment trust (REIT) is defined as a company that owns, operates, or finances income-producing real estate. This type of investment vehicle allows individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.

REITs provide a way for individuals to invest in large-scale, income-producing real estate, such as shopping malls, office buildings, apartments, and hotels, which they would otherwise be unable to afford. By pooling their resources, investors can benefit from the income generated by the properties owned by the REIT, as well as potentially profit from any increases in property values over time.

This structure is especially appealing because REITs are required by law to distribute a significant portion of their taxable income to shareholders in the form of dividends, making them a popular option for those seeking regular income from their investments. Additionally, REITs are traded on major stock exchanges, providing liquidity to investors similar to stocks.

The other options do not accurately reflect the comprehensive role of a REIT. Property management companies focus solely on managing properties, appraisal firms specialize in assessing property values, and cooperatives pertain to specific developments rather than encompassing the broader investment strategy of