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What Is a REIT?

A REIT is a company that owns, operates, or finances income-producing real estate and must follow IRS rules to keep that status

The basic idea

A REIT (real estate investment trust, usually pronounced "reet") is a company that owns, operates, or finances income-producing real estate. Rather than buying a building yourself, you buy shares in a company that already owns a portfolio of properties — an apartment complex in one city, a warehouse in another, a shopping center somewhere else — and that collects rent, interest, or both from all of them.

The idea is straightforward: pool money from many investors, use it to buy or finance real estate at a scale no individual could manage alone, and pass most of the income back to shareholders as dividends. Shares of a publicly traded REIT can be bought and sold on a stock exchange just like shares of any other company, which is why REITs are often described as a way to gain exposure to real estate without buying and managing property directly. For a closer look at the mechanics, see How REITs Work.

What qualifies a company as a REIT

"REIT" is not just marketing — it is a specific tax status defined in the U.S. tax code. To be treated as a REIT, a company has to meet a set of IRS requirements covering how it is organized, the kind of income it earns, the kind of assets it holds, and how much of its income it pays out to shareholders. These are known collectively as the REIT qualification rules.

The best known of these rules requires a REIT to distribute at least 90% of its taxable income to shareholders every year. In exchange for following the rules, a qualifying REIT generally does not owe federal corporate income tax on the earnings it distributes — one reason REITs tend to pay out a large share of their income as dividends rather than reinvesting all of it.

These requirements are not just bureaucratic box-checking. Because a REIT has to keep meeting them year after year, the label itself signals something concrete about how the company operates and how much of its income actually reaches shareholders.

Equity REITs and mortgage REITs

Most REITs are equity REITs: they own physical buildings and land, lease space to tenants, and collect rent. A smaller group are mortgage REITs: instead of owning buildings, they lend money for real estate or buy mortgage-backed securities, and earn income from the spread between what they borrow at and what they earn. A few hybrid REITs do some of both.

The distinction matters for how a REIT behaves, especially when interest rates move. Both types are required to follow the same distribution and income rules; what differs is the underlying business generating that income. See Equity REITs vs. Mortgage REITs for a full comparison.

What kinds of property REITs own

Real estate covers a lot of ground, and REITs own most of it. Common property types include:

• Apartments and single-family rentals
• Offices
• Shopping centers and malls
• Warehouses and logistics buildings
• Cell towers and data centers
• Hospitals and medical office buildings
• Hotels
• Self-storage facilities
• Timberland
• Casinos

Some REITs specialize in a single property type; others hold a mix across several. You can browse every sector this site tracks, with real companies in each one, on the sectors page. The property type a REIT specializes in shapes almost everything about it, from how leases are structured to how it responds to economic cycles, which is why sector is usually the first thing to understand about any individual REIT.

How REIT investors get paid

Because REITs are required to distribute most of their taxable income, they tend to pay meaningfully higher dividends than the average public company. Shareholders typically receive cash payments on a regular schedule, most often quarterly, though a handful pay monthly. Share prices can also rise or fall over time the way any stock's price can, so an investor's total return includes both the dividend and any change in share price.

Some REITs also offer a dividend reinvestment plan, letting shareholders automatically use their cash dividend to buy additional shares instead of receiving cash — see REIT DRIPs for how that works.

Ways to invest in a REIT

Most individual investors access REITs the way they would access any public company: through a brokerage account, buying shares of a publicly traded REIT listed on an exchange such as the NYSE or Nasdaq. Publicly traded REITs offer daily liquidity and are required to file regular disclosures with the SEC.

There are also non-traded and private REITs, which do not trade on an exchange and are typically far less liquid. The differences matter for anyone comparing options — see Traded vs. Non-Traded vs. Private REITs. Investors who want broad exposure without picking individual companies often use a REIT-focused exchange-traded fund or mutual fund, which holds many REITs in a single security — see REIT ETFs vs. Individual REITs for that comparison. For unfamiliar terms along the way, the glossary is a good reference.

See it in the data: Browse the REIT directory → See REIT sectors →

Research and education only — nothing here is investment advice. Figures such as the 90% distribution rule are general and can change; always confirm against a company's filings.