What is a Real Estate Investment Trust (REIT)?

What is a Real Estate Investment Trust (REIT)?

A REIT is a corporate structure pooling investor funds to acquire or manage income-yielding properties. Regulatory conditions often demand that REITs distribute a large portion of earnings as dividends. This approach grants investors fractional stakes in big developments—like office buildings or shopping centers—without directly owning or operating them.

Key Points:

• Diversification: Investors hold multiple assets through one trust.
• Liquidity: Traded REIT shares can be sold quickly on stock exchanges.
• Dividend Focus: Regular payouts mimic stable revenue flows from occupant payments.
• Tax Efficiency: REITs might receive tax benefits if distribution thresholds are met.

By consolidating ownership into a single entity, REITs democratize large-scale property investments, offering smaller participants a share in stable, professionally managed holdings.