Real Estate Investment Trusts (REITs)
We assist clients in every stage of forming and managing real estate investment trusts (REITs). Our services include:
- Initial structuring and start-up advice
- Capital structure
- REIT tax considerations
- Continuing REIT tax compliance
- Real estate acquisition and disposition issues unique to REITs
- REIT mergers
- Sale of REITs
We also provide REIT clients with public and private securities law, proxy solicitation, corporate governance and management compensation counsel and advice to Boards of Directors of REITs with respect to fiduciary and other duties.
Many of our REIT clients are organized using an umbrella partnership, or UPREIT, structure, both to facilitate the initial acquisition of properties (and the tax planning for the existing owners of such properties) and to provide a tax-favored currency for future acquisitions. We advise clients contemplating the REIT structure who ultimately elect C corporation or partnership status after considering the REIT structure alternative, including the corporations with an operation partnership (Up C corporations).
We are experienced in structuring transactions using both UPREIT and DownREIT structures to facilitate s REITs’ acquisition of properties and tax planning for sellers of properties. A REIT’s property acquisitions, particularly from broadly held partnerships, can trigger unexpected registration, disclosure and fiduciary duty issues under complex regulatory “roll-up” rules.
A number of REITs and other real estate owners access the capital markets through long-term, securitized mortgage financing. Mortgage securitization allows a property owner to obtain favorable financing rates while retaining 100 percent equity ownership of its properties. For this reason, securitization can be an attractive source of debt financing for real estate owners.
Structuring and closing a public or private REIT equity or debt financing involves a series of complex tax, securities, partnership, and real estate law issues. The preparation of a registration statement and the underlying documents for a publicly offered REIT financing transaction can be extremely time consuming, and the coordination of the financing activity with real estate work can present difficult timing issues.