A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate and is required to distribute at least 90% of its taxable income to shareholders as dividends. REITs trade on public exchanges like stocks, providing liquidity that direct real estate ownership cannot match. There are also private and non-traded REITs that may offer higher yields but with less liquidity. For investors, REITs provide diversified real estate exposure without the responsibilities of property management. However, they lack the tax benefits of direct ownership (depreciation, 1031 exchanges) and the returns are subject to market volatility.