A real estate investment trust or REIT is a company that owns and usually manages commercial properties such as office buildings, apartments, shopping centers, hotels and warehouses. Many REITS are public companies whose shares trade on a stock exchange. REITs give investors a way to invest in commercial real estate without the hassle of being a landlord.

REITs must distribute at least 90 percent of their taxable income to shareholders each year as dividends. They appeal to many investors who are looking for steady income, with some potential for capital appreciation.

Unlike other companies that pay dividends, REITs do not pay federal income tax on the dividends they distribute to investors.

However, the dividends that shareholders receive from REITs are not eligible for the preferential tax rate (10 or 15 percent) that applies to most U.S. corporate stock dividends.

The trade association for REITs can be found at http://www.nareit.com/