General Requirements To Qualify as a REIT

To qualify as a REIT, an organization:

• Must be a corporation, trust, or association.

• Must be managed by one or more trustees or directors.

• Must have beneficial ownership (a) evidenced by transferable shares, or by transferable certificates of beneficial interest; and (b) held by 100 or more persons. (The REIT does not have to meet this requirement until its 2nd tax year.)

• Would otherwise be taxed as a domestic corporation.

• Must be neither a financial institution (referred to in section 582(c)(2)), nor a subchapter L insurance company.

• Cannot be closely held, as defined in section 856(h). (The REIT does not have to meet this requirement until its second tax year.)

If a REIT meets the requirement for ascertaining actual ownership (see Regulations section 1.857-8 for details), and did not know (after exercising reasonable diligence), or have reason to know, that it was closely held, it will be treated as meeting the requirement that it is not closely held.