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REITs

ArentFox Schiff advises and represents REITs across all stages of their lifecycle—from formation and capital raising to acquisitions, ongoing compliance, and strategic transactions. Our tax professionals have deep experience navigating the complex regulatory framework governing REITs, including shareholder composition requirements, asset and income tests, and permissible activities. We help clients structure their operations to maintain REIT qualification while maximizing operational flexibility.

REIT Formation and Structuring

We advise on all aspects of REIT formation, including entity selection, governance structures, and initial capitalization. Our experience includes structuring preferred shareholder offerings, OpCo/PropCo arrangements, and operating partnership (UPREIT) structures to meet client objectives while preserving REIT qualification.

  • Taxable REIT subsidiary (TRS) structuring and operations, including appropriate use of TRSs for service businesses, prohibited activities, leasing arrangements, and related-party considerations.
  • OpCo/PropCo (including RIDEA structures for qualified health care properties and qualified lodging facilities) and holding-company structures, including operating partnership contributions, roll-up transactions, and joint venture arrangements.
  • Due diligence on REIT acquisitions, including review of target REIT qualification status, asset and income composition, and potential compliance risks. 
  • Structuring and advising on REIT restructurings and exit transactions.
  • Leasing and investment structuring, including treatment of rents from real property, REIT-eligible assets, and prohibited transaction analysis.
  • Structuring of private REITs (including domestically controlled REITs) for investments by sovereign wealth funds and qualified foreign pension fund investors.

Ongoing Compliance

We advise REITs on all compliance matters necessary to maintain their tax-advantaged status. This includes:

  • Income testing requirements, including the 75% and 95% gross income tests and analysis of qualifying income sources.
  • Asset testing requirements, including the 75% asset test, 5% and 10% securities limitations, and quarterly monitoring protocols.
  • Shareholder requirements, including the 100-shareholder rule, the 5/50 concentration test, and beneficial ownership monitoring.
  • Distribution planning and dividend requirements to satisfy the annual distribution threshold.
  • Restrictions on services and tenant-related activities, including prohibited transaction rules and impermissible tenant service concerns.

Capital Markets and Securities

We represent both issuers and underwriters in capital-raising transactions for REITs. We advise publicly traded REITs with respect to their public offerings and public reporting and compliance requirements with the Securities and Exchange Commission and the national stock exchanges. Our attorneys also represent publicly registered, non-traded REITs in organizing and structuring their public offerings, including compliance with the SEC’s disclosure requirements and FINRA’s rules, as well as state blue sky securities compliance. We also represent private REITs, including those whose principal owners or indirect owners are exempt organizations.

Our Work

  • Advised sovereign wealth funds and private investment fund sponsors on design, structure, and implementation of REIT-based investments in U.S. real property.
  • Advised real estate developers and sponsors on acquisitions involving REIT targets and REIT investors in joint ventures.
  • Advised acquirers in acquisition and subsequent de-REITing transactions for real estate targets held through REITs. 
  • Advised sponsors on design of UPREIT transaction structures.
  • Advised REITs on preferred stock offerings to investors. 

Insights on REITs