A more thorough explanation:

A Real Estate Investment Trust (REIT) is a company that invests in real estate properties that generate income. Shareholders of a REIT receive dividends from the various real estate investments that the company makes. REITs are a popular investment option for smaller investors who cannot make diversified real estate investments on their own.

For example, if an investor wants to invest in real estate but cannot afford to buy multiple properties, they can invest in a REIT. The REIT has a diversified portfolio of real estate assets, which means that the investor does not have to purchase all the real estate assets that the REIT holds.

Another advantage of investing in a REIT is that they are not subject to double taxation like corporations. Normally, shareholders’ ownership interest in their owned corporation are taxed twice. However, if a company satisfies Internal Revenue Code (IRC) § 856, then, IRC § 857 excludes the company’s dividend distributions from the company’s taxable income.

For example, if a company qualifies as a REIT, it is not taxed on the dividends it distributes to its shareholders. This means that the shareholders receive more of the profits from the real estate investments.

REITs can be issued through a public offering or a private placement. Publicly issued REITs comply with the Securities Act of 1933, while privately issued REITs are usually done through SEC Regulation D and Rule 144A, which is generally limited to accredited investors.

For example, a private REIT may be offered to a group of accredited investors who meet certain financial requirements. This allows the REIT to raise capital without having to go through the process of a public offering.