What is a Real Estate Investment Trust (REIT)?
A REIT is a corporation that combines capital from many investors to buy and operate income-producing real estate. It gives investors a low cost opportunity to include commercial real estate in an investment portfolio. Also, REITs avoid the “double taxation” treatment of income that would result from an investment in a corporation, because REITs do not pay taxes if certain standards are met, including the distribution of at least 90% of income that would otherwise be taxable. Hence, REITs are focused on generating and distributing income in the form of dividends to their shareholders.