Understanding REIT Distribution Requirements

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-producing real estate across a range of property sectors. They provide investors with an opportunity to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves. One important aspect of REITs is their requirement to distribute a significant portion of their taxable income to shareholders.

Which of the following statements about REITs is true?