What defines a real estate investment trust (REIT)?

A real estate investment trust (REIT) is primarily defined as a company that owns, operates, or finances income-generating real estate. REITs provide a way for 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. They often focus on various types of real estate sectors such as residential, commercial, industrial, or healthcare-related properties.

The structure of a REIT allows investors to benefit from real estate investments similar to how mutual funds work for stocks. Investors buy shares of the REIT, and in return, they receive a portion of the income generated from the properties owned by the REIT, typically in the form of dividends. This investment vehicle is regulated under specific guidelines to ensure transparency and protect investors.

In contrast, other choices outline scenarios that do not represent the core definition of a REIT. For instance, the first choice refers to a non-profit organization, which does not fit the revenue-generating purpose of a REIT. The third choice suggests an investment fund that focuses solely on stocks and bonds, which eliminates the real estate aspect central to a REIT. The fourth choice describes a government entity, which again is unrelated to the private