What is a "Real Estate Investment Trust (REIT)"?

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate across a range of property sectors. The primary purpose of a REIT is to provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance any properties themselves. By pooling their capital, investors can gain access to a diversified portfolio of real estate assets, which can provide a steady income stream and potential for appreciation over time.

REITs are typically structured to operate under specific regulations that require them to pay out a large percentage of their income in dividends to shareholders. This structure allows investors to benefit from the cash flows generated by real estate investments while also enjoying the liquidity of publicly traded stocks, if the REIT is listed. This vital role in the market connects various real estate properties with investors, creating a more dynamic real estate financing environment.