Most people can’t buy an office tower or a shopping centre. A REIT lets you own a slice of one — and trade it as easily as a stock.
What a REIT is
A REIT (real estate investment trust) is a company that owns (and often operates) income-producing property — apartments, offices, warehouses, shopping centres, data centres, and more. You buy shares in the REIT, and those shares trade on a stock exchange.
So instead of buying one building with a mortgage, you buy a small piece of a large, professionally-managed property portfolio — for the price of a single share.
Why people use them
REITs fix most of direct property’s drawbacks:
- Accessible — invest any amount, no mortgage or deposit required.
- Liquid — buy or sell instantly on the exchange, unlike a physical building.
- Diversified — one REIT (or a REIT fund) spreads you across many properties and tenants.
- Hands-off — professionals handle the buying, leasing, and maintenance.
The trade-offs
- Because they trade on the exchange, REIT prices can be more volatile day-to-day than the underlying property values — they move with the stock market’s mood too.
- You give up the control and the mortgage leverage of owning directly (though REITs use their own borrowing).
- Like any company, a REIT can be poorly run or carry too much debt.
The income angle
REITs have a special tax structure: in exchange for favourable tax treatment, they must pay out most of their taxable income as dividends (often 90%+). That makes them a popular income investment — which the next lesson unpacks.
The takeaway
A REIT owns income-producing property and trades like a share, giving accessible, liquid, diversified, hands-off real-estate exposure. You trade away control and direct leverage for convenience — and REITs are required to pay out most income as dividends. (This is education, not investment advice.)