What does the real-estate acronym REIT stand for?

REIT stands for real estate investment trust, a company that owns, operates, or finances income-producing real estate.

REITs were created in the United States in 1960, when federal legislation gave ordinary investors a way to pool money into large property portfolios. Their structure was inspired partly by mutual funds, but the assets are real estate rather than securities alone.

Many REITs specialize in property types such as apartments, offices, shopping centers, hotels, warehouses, or data centers. Equity REITs generally own properties, while mortgage REITs invest in real-estate debt. Publicly traded REIT shares can be bought and sold on stock exchanges, although private and non-traded versions also exist.

A common mix-up is treating every property company as a REIT. The term refers to a legal and tax structure with specific requirements, including rules about assets, income, and distributions. In the United States, REITs generally must distribute at least 90% of taxable income to shareholders.