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

A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate, making option B the correct choice. REITs enable individual investors to earn a share of the income produced through commercial real estate ownership without directly having to buy or manage properties themselves. By pooling capital from numerous investors, REITs can acquire and manage large portfolios of income-producing properties, such as apartment buildings, office parks, shopping centers, and hotels.

REITs are structured to provide investors with a steady income, typically paying out most of their taxable income as dividends. This investment vehicle allows individuals to have a stake in the real estate market and benefit from the appreciation of property values and rental income, which can provide a stable revenue stream.

The other options describe entities or scenarios that do not align with the definition of a REIT. For instance, a private company that builds residential homes focuses solely on construction, lacking the broader investment aspect embodied by REITs. A governmental body regulating real estate transactions addresses oversight and compliance, rather than investment in real estate itself. Lastly, a real estate broker managing rental properties implies a business operation in property management rather than the collective investment mechanism of a REIT.