X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Private REIT acquisitions are rising in popularity; however, they come with unique risks compared to a typical real estate transactions. Buyers of a private REIT have a more prudent vetting process than in a typical real estate transaction. In a private REIT deal, buyers need to go through extra steps to ensure that the seller has made followed the correct procedure.

“The buyer of a private REIT specifically needs to make sure that the seller has not made any mistakes in following the detailed technical elements to start and keep its REIT status with the IRS, such as maintaining at least 100 shareholders and satisfying assets, income, and distribution requirements,” Max Brunner, senior counsel at Allen Matkins, tells GlobeSt.com. “Any mistakes before the sale could result in liability to the buyer after closing, so it is very important to make sure that everything was done correctly. Tax due diligence is critical, and we typically see one of the Big Four accounting firms assist in this regard. For additional assurance, it is recommended that the seller’s law firm provides a legal opinion that the REIT complied with all required formalities to be classified as a REIT.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Kelsi Maree Borland

Kelsi Maree Borland is a freelance writer and editor living in Los Angeles whose work has appeared in such publications as Travel + Leisure, Angeleno and Los Angeles Magazine.

More from this author

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.