What is a real estate investment trust (REIT)?

A real estate investment trust (REIT) is a company that owns and manages income-producing real estate, enabling investors to buy shares and participate in the ownership of these properties. This structure allows individuals to invest in large-scale, income-generating real estate without having to buy the properties themselves. By pooling funds from many investors, REITs can purchase, manage, and operate a diversified portfolio of real estate assets, such as apartment buildings, shopping centers, and office buildings.

REITs are designed to provide investors with a way to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties directly. Additionally, they often must distribute a significant portion of their income to shareholders in the form of dividends, making them attractive for income-seeking investors. This model promotes liquidity and accessibility in the real estate market.

Other options do not accurately describe a REIT: a nonprofit organization focused on providing housing does not typically operate like a REIT, as it lacks the profit motive and structure for public trading. A cooperative of real estate agents refers to a group of agents who may collaborate but doesn't align with the investment aspect of a REIT. Lastly, a government entity that regulates housing does not represent