Real Estate Investment Trust (REIT)
A company that owns income-producing real estate and trades like a stock.
What is REIT?
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate assets, providing investors with a way to invest in real estate without directly buying property. To qualify as a REIT under US tax law, a company must distribute at least 90% of its taxable income to shareholders as dividends, have at least 75% of assets in real estate, and derive at least 75% of revenue from real estate. REITs trade on major stock exchanges like regular stocks, offering liquidity unavailable in direct real estate ownership. Common REIT types include equity REITs (own properties), mortgage REITs (hold loans), and hybrid REITs.
Example
American Tower Corporation (AMT), a cell tower REIT, owned over 220,000 tower sites globally as of 2024, collecting rent from telecom tenants. Its REIT structure requires it to pay high dividends, making it attractive to income investors.
Source: NAREIT — REIT Basics