What is a real estate investment trust (REIT)?

A real estate investment trust (REIT) is defined as a company that owns, operates, or finances income-producing real estate and is mandated to distribute the majority of its taxable income to its shareholders as dividends. This structure allows individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves.

REITs are designed to provide a way for investors to benefit from the income generated by real estate investments and to enjoy the liquidity of a publicly traded stock. By law, a REIT must distribute at least 90% of its taxable income to shareholders, ensuring that much of the income generated is returned to the investors rather than being kept by the company for growth or retention. This makes investing in REITs a popular choice for those looking for dividend income, as well as exposure to real estate markets without the complexities involved in direct property ownership.

In contrast, other options like a personal investment strategy or a government entity do not accurately reflect the nature and purpose of a REIT, while a partnership between multiple real estate investors does not encompass the legal and operational requirements that define REITs. Thus, option C clearly captures the essence of what a real estate investment trust is and