What does a Mortgage REIT primarily invest in?

A Mortgage Real Estate Investment Trust (REIT) primarily invests in mortgages or mortgage-backed securities rather than directly in physical real estate properties. This type of REIT generates income primarily from the interest earned on the mortgages it holds. By focusing on debt rather than equity, Mortgage REITs can provide investors with a way to earn returns based on lending activities in the real estate market.

In contrast, the other options involve direct investments in real estate assets or companies that operate properties. Commercial real estate assets and residential real estate properties refer to equity investments where the REIT owns and manages properties. Real Estate Operating Companies (REOCs) focus on operating real estate and typically own and manage properties as well. None of these involve the financial mechanisms of lending or investing in mortgages directly, which is the distinctive feature of Mortgage REITs.