What is a real estate investment trust (REIT)?

A real estate investment trust (REIT) is defined as a company that invests in and manages income-generating real estate. This structure allows for the pooling of capital from multiple investors to acquire, develop, and operate real estate properties, which can include shopping malls, office buildings, apartments, hotels, and more. The primary purpose of a REIT is to provide investors with a way to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance any properties themselves.

REITs typically operate under a special tax structure, requiring them to distribute at least 90% of their taxable income to shareholders in the form of dividends. This makes investing in REITs an attractive option for those looking to generate income as well as diversify their investment portfolio without the complexities involved with direct real estate ownership.

The other options reflect misunderstandings of what constitutes a REIT. A private investment fund for residential real estate would not encompass a broader market of income-generating properties and often lacks the structure and regulatory framework of a REIT. A company that handles property management exclusively mainly focuses on operational aspects and does not inherently have ownership interests or investments in real estate. A type of mortgage specifically for investment properties is unrelated to the