Structure Real estate investment trust

in united states, reit company owns, , in cases operates, income-producing real estate. reits finance real estate. reit, company must distribute @ least 90 percent of taxable income shareholders annually in form of dividends.

to qualify reit under u.s. tax rules, company must:

be structured corporation, trust, or association
be managed board of directors or trustees
have transferable shares or transferable certificates of interest
otherwise taxable domestic corporation
not financial institution or insurance company
be jointly owned 100 persons or more
have 95 percent of income derived dividends, interest, , property income
pay dividends of @ least 90% of reit s taxable income
have no more 50% of shares held 5 or fewer individuals during last half of each taxable year (5/50 rule)
have @ least 75% of total assets invested in real estate
derive @ least 75% of gross income rents or mortgage interest
have no more 25% of assets invested in taxable reit subsidiaries.

because of access corporate-level debt , equity typical real estate owners cannot access, reits have favorable capital structure. able use capital finance tenant improvement costs , leasing commissions less capitalized owners cannot afford.