In what manner does a REIT typically operate in terms of share purchasing?

A Real Estate Investment Trust (REIT) often operates as a closed-end investment company, meaning that once the initial public offering (IPO) is completed, its shares are traded on an exchange. This trading occurs at market prices determined by supply and demand, rather than through direct purchases from the company.

In this structure, shares are not available for constant purchase directly from the REIT itself; instead, investors buy and sell shares among each other on the stock exchange. This allows for liquidity and enables investors to enter or exit their investment positions based on market conditions.

While there are also open-end REITs that can issue and redeem shares at net asset value (NAV), the closed-end structure specifically relates to how these shares are traded post-IPO, highlighting the essential nature of their operations in financial markets. This distinction is critical in understanding how liquidity and market pricing mechanisms apply in the context of REITs.