What is a "real estate investment trust" (REIT)?

A "real estate investment trust" (REIT) is best defined as a company that owns, operates, or finances income-producing real estate and allows investors to buy shares in this real estate portfolio. The structure of a REIT enables 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 typically generate revenue through leasing space and collecting rents on the properties they own, which they then distribute as dividends to their shareholders.

This investment vehicle provides individuals with an accessible opportunity to participate in the real estate market, as well as the potential for liquidity due to shares being traded on major stock exchanges. Therefore, option B accurately captures the essence and function of REITs, showing their role in facilitating the investment in income-producing real estate through a corporate structure that appeals to a broader range of investors.