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TITLE 26-INTERNAL REVENUE CODE (B) interest; (C) rents from real property; (D) gain from the sale or other disposition of stock, securities, and real property (in- cluding interests in real property and inter- ests in mortgages on real property) which is not property described in section 1221(1); (E) abatements and refunds of taxes on real property; (F) income and gain derived from foreclo- sure property (as defined in subsection (e)); and (G) amounts (other than amounts the de- termination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (I) to make loans secured by mortgages on real property or on interests in real property or (i) to purchase or lease real property (including interests in real property and interests in mortgages on real property); (3) at least 75 percent of its gross income (excluding gross income from prohibited transactions) is derived from- (A) rents from real property; (B) interest on obligations secured by mortgages on real property or on Interests in real property; (C) gain from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) which is not property described in section 1221(1); (D) dividends or other distributions on, and gain from the sale or other disposition of, transferable shares (or transferable cer- tificates of beneficial interest) in other real estate investment trusts which meet the re- quirements of this part; (E) abatements and refunds of taxes on real property; (F) income and gain derived from foreclo- sure property (as defined in subsection (e)); and (G) amounts (other than amounts the de- termination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (i) to make loans secured by mortgages on real property or on interests in real property or (ii) to purchase or lease real property (including interests in real property and interests in mortgages on real property); (4) less than 30 percent of its gross income is derived from the sale or other disposition of- (A) stock or securities held for less than 9 months; (B) section 1221(1) property (other than foreclosure property); and (C) real property (including interests in real property and interests in mortgages on real property) held for less than 4 years other than- (I) property compulsorily or involuntar- ily converted within the meaning of sec- tion 1033, and (ii) property which is foreclosure prop- erty within the definition of section 856(e); and (5) at the close of each quarter of the tax- able year- (A) at least 75 percent of the value of its total assets is represented by real estate assets, cash and cash items (including re- ceivables), and Government securities; tnd (B) not more than 25 percent of the value of its total assets is represented by securi- ties (other than those includible under sub- paragraph (A)) for purposes of this calcula- tion limited in respect of any one issuer to an amount not greater in value than 5 per- cent of the value of the total assets of the trust and to not more than 10 percent of the outstanding voting securities of such issuer. A real estate investment trust which meets the requirements of this paragraph at the close of any quarter shall not lose its status as a real estate investment trust because of a discrepancy during a subsequent quarter be- tween the value of its various investments and such requirements unless such discrepan- cy exists immediately after the acquisition of any security or other property and is wholly or partly the result of such acquisition. A real estate investment trust which does not meet such requirements at the close of any quarter by reason of a discrepancy existing immedi- ately after the acquisition of any security or other property which is wholly or partly the result of such acquisition during such quarter shall not lose its status for such quarter as a real estate investment trust if such discrepan- cy is eliminated within 30 days after the close of such quarter and in such cases it shall be considered to have met such requirements at the close of such quarter for purposes of ap- plying the preceding sentence. (6) For purposes of this part- (A) The term "value" means, with respect to securities for which market quotations are readily available, the market value of such securities; and with respect to other securities and assets, fair value as deter- mined in good faith by the trustees, except that in the case of securities of real estate investment trusts such fair value shall not exceed market value or asset value, which- ever is higher. (B) The term "real estate assets" means real property (including interests in real property and interests In mortgages on real property) and shares (or transferable certi- ficates of beneficial interest) in other real estate investment trusts which meet the re- quirements of this part. (C) The term "interests in real property" includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or im- provements thereon, but does not include mineral, oil, or gas royalty interests. (D) All other terms shall have the same meaning as when used in the Investment Company Act of 1940, as amended (15 U.S.C. 80a-1 and following). (7) A corporation, trust, or association which fails to meet the requirements of para- 856 Page 544