What is a real estate investment trust (REIT)?

A real estate investment trust (REIT) is essentially a company that allows individuals to invest in large-scale, income-producing real estate without having to buy or manage properties directly. By pooling capital from many investors, REITs can acquire and manage a diversified portfolio of real estate assets, such as apartment buildings, office spaces, hotels, and shopping centers.

This investment vehicle plays a critical role in real estate by providing a way for regular investors to gain exposure to the real estate market, typically earning returns through dividends paid on the income generated by the properties, as well as potential appreciation in the value of the shares in the REIT.

Investing in a REIT can be attractive due to its liquidity (as many REITs are publicly traded) and the diversification it offers. This structure makes real estate investment accessible to a broader audience, including those who may not have the capital to invest in properties on their own.