(855) Marcum1 | FOLLOW US           
Marcum LLP
  • EVENTS
  • OFFICES
  • CAREERS
  • SUBSCRIBE  
  • 中文
Marcum LLP
News

As Seen In

 

In This Edition

Real Estate Weekly

Article by Kurt Koegl, Tax & Business Services Senior Manager, "The REIT Roll-Up: Unlocking Potential of Real Estate Assets," Featured in Real Estate Weekly

:

Share:

Excerpt:

2013 saw 19 REIT IPOs raising $5.7 billion in capital, including the high-publicity Empire State Building IPO, which raised $930 million.

How did the Empire State Building REIT (Empire State Realty Trust; NYSE Ticker: ESRT) get to market?

It did so through the use of a "roll-up" including the landmark namesake building and a portfolio of New York properties owned by the Malkin family.

A REIT rollup gives real estate owners liquidity, preserves the tax basis of existing investors that do not want to cash out of their current investment and provides the opportunity for the REIT to obtain funds from the capital market.

It will create a perpetual platform, provide diversification, the ability to cross collateralize properties for better access to debt at lower rates and the opportunity to access the capital markets directly in a tax efficient manner.

A REIT rollup ends with a typical UP-REIT structure wherein a public REIT owns the majority interest in an operating partnership ("OP") which, in turn, owns real estate investments.

The REIT acquires ownership in the partnership through the roll up process.

The starting point for a rollup is one or more partnerships owning real estate. Partnership shares are inherently illiquid. They are hard to buy and sell.

Additionally, partners can have negative tax capital accounts as a result of receiving depreciation deductions and cash distributions over the years. A sale of these negative capital account interests or of the underlying property itself can trigger significant tax gains to the partners.

In a rollup, the partners in each of the property owning partnerships contribute or merger their partnership interests into the OP in exchange for shares in the OP.

Their tax basis is preserved as a partnership contribution is a tax free exchange.

Click here to read the full article on www.rew-online.com >>

 
 
 
HAVE A QUESTION? ASK MARCUM
 
STAY IN TOUCH.

SIGN UP TODAY FOR MARCUM'S NEWSLETTERS.

ABOUT MARCUM

Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation, with offices in major business markets throughout the U.S., Grand Cayman and China.

Learn More

CONNECT WITH US
               
OFFICES

Headquarters
750 3rd Avenue, 11th Floor
New York, NY 10017

Find an Office

(855) MARCUM1
info@marcumllp.com

FOUNDATION

Marcum Foundation

AFFILIATION

Leading Edge Alliance

DOWNLOAD THE MARCUM ON THE GO APP

© 2016 Marcum LLP. All Rights Reserved.
Privacy | Legal | Sitemap