What is a Real Estate Investment Trust (REIT) required to have in terms of investors?

A Real Estate Investment Trust (REIT) must have a minimum of 100 investors to qualify for tax benefits. This requirement is in place to ensure that the REIT maintains a level of diversification and is not overly concentrated in the hands of a few individuals. By having at least 100 investors, REITs can demonstrate that they are publicly held entities which adhere to regulations aimed at protecting small investors. This structure allows for a widespread ownership and decreases the risks associated with substantial single-investor influence or control. Additionally, this requirement is part of what allows REITs to pass through most of their taxable income to shareholders, avoiding corporate tax levels. Hence, this structure encourages broader participation and investment in real estate markets among the general public.