A Real Estate Investment Trust (REIT) is a specialized corporate entity that owns, operates, or finances income-producing real estate across diverse sectors (e.g., residential apartments, industrial warehouses, data centers, medical facilities, or office towers). To retain its pass-through tax status, a REIT must satisfy strict statutory requirements under IRC §856, including distributing at least 90% of its annual taxable income to shareholders as dividends.
By avoiding double taxation at the corporate level, REITs distribute higher yields than standard C-corporations. Publicly traded REITs trade on national exchanges, providing liquid, institutional access to real estate without the high transaction fees, management friction, and illiquidity of physical property ownership.