What Is a Real Estate Investment Trust?

First authorized by Congress in the 1960s, REITs bring together capital from many individuals specifically to invest in a diversified portfolio of income real estate, or in real-estate related debt (mortgages). A real estate investment trust can take the form of a trust, association or corporation. Individuals invest in a REIT by purchasing shares. The shares of many REITs are publicly traded on major stock exchanges and over-the-counter markets. The day-to-day operations of a REIT are conducted by full-time managers. If a real estate investment trust is successful, shareholders can receive dividend income (from rental income and mortgage interest), and capital gain from the profitable sale of real estate assets. Some REITs specialize in a single type of commercial property or region of the country. Other real estate investment trusts diversify their investments over various types of property or in different geographical areas.  more