Real Estate Investment trust (REIT)

Real Estate Investment Trust or REIT in short is corporation or trust that uses the pooled capital of many investors to purchase and manage income property. REITs can also be a company that buys, develops, manages and sells real estate assets

REITs allow participants or individual to invest in a professionally-managed portfolio of real estate properties.

REITs are granted special tax considerations in certain countries. REITs qualify as pass-through entities, companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level (providing that certain conditions are met). As pass-through entities, whose main function is to pass profits on to investors, a REIT's business activities are generally restricted to generation of property rental income

REITs offer several benefits over actually owning properties. First, REITs are normally traded on major exchanges just like stocks, they are highly liquid, unlike traditional real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other commercial or industrial properties. Third, there's no minimum investment with REITs. REITs do not necessarily increase and decrease in value along with the broader market. However, they pay yields in the form of dividends no matter how the shares perform.

REITs can be valued based upon fundamental measures, similar to the valuation of stocks, but different numbers tend to be important for REITs than for stocks.