Real estate investment trusts (REITs) are not universally mortgage-backed, as the asset class is broadly divided into equity REITs that own physical properties and mortgage REITs that invest in mortgages or mortgage-backed securities. Equity REITs generate revenue by collecting rental income from physical commercial, residential, or industrial buildings. In contrast, mortgage REITs function as specialized lenders that finance real estate through debt instruments, holding mortgage-backed assets on their balance sheets.