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 function of a REIT is to generate income for its shareholders through the rental of properties or sale of real estate. This structure 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 are typically publicly traded like stocks, which means that shares can be bought and sold on the stock market, providing liquidity and accessibility for investors. Furthermore, to qualify as a REIT, the company must adhere to specific regulatory requirements, including distributing at least 90% of its taxable income to shareholders in the form of dividends, which makes them an attractive option for income-seeking investors.

The other options do not accurately describe what a REIT is, as they relate to different aspects of real estate or finance. For instance, a government organization managing public lands does not fit the definition of a REIT, nor does a specialized insurer focusing exclusively on property, or a loan product aimed specifically at real estate investors. Each of these alternatives lacks the core components and operational structure that define a real estate investment