What is a "real estate investment trust" (REIT)?

A real estate investment trust (REIT) is a company that owns or finances income-producing real estate in a range of property sectors. The defining characteristic of a REIT is that it must meet specific regulatory requirements to qualify for a special tax status. This includes distributing at least 90% of its taxable income to shareholders in the form of dividends, making it an attractive investment option for those seeking regular income from real estate without directly owning property.

REITs allow individual investors to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance any properties themselves. They provide a way for investors to pool their resources and invest in large-scale real estate ventures, which can include apartment complexes, office buildings, shopping malls, and more.

The other choices describe different entities or instruments that do not align with the specific nature of a REIT. For example, a company managing residential property rentals primarily focuses on property management, rather than investment and financing. A mortgage for commercial property is a loan secured by real estate, while a collective deposit scheme does not pertain to managing real estate assets but rather to investment pooling among individuals.