Real Estate Transactions With REITs: Selling, Leasing or Lending Deals With REITs

Description

As the number of REIT entities proliferates, real estate counsel must increasingly deal with a REIT on the other side of the transaction whether leasing, selling or lending to a REIT. Counsel must understand the unique organizational, operating and tax REIT rules that may impact the structure and terms of the transaction.

In the leasing context, REITs will be concerned with impermissible tenant services that will not qualify as passive rental income. Selling property to a REIT provides the seller opportunities for tax-deferred income if the REIT holds its assets in an UPREIT that owns the LLC holding title to the property. Seller’s counsel must understand how and when the tax deferral will end and take steps to protect the seller’s tax deferral advantage.

Lending to a REIT will require some modifications to the loan documents to allow the REIT borrower to pay dividends. REIT borrowers will also be concerned with financial reporting obligations and the flexibility to transfer REIT property, issue new ownership interests, and engage in mergers and consolidations.

Listen as our authoritative panel of REIT practitioners discusses the unique issues counsel will face in leasing, sale and lending transactions with REIT entities. The panel will provide strategies for dealing with the issues that may impact the structure and terms of the deal.