Posted by JHyre in Ohio on October 17, 2000 at 12:00:26:
I’ve seen $5m REITs, but I think that an inefficient means of structuring a $5m RE company…admin on REITs is higher than that of LLCs/MLPs and at $5m, REITs primary benefit (public money) isn’t very significant. Lemmie know if you hear otherwise.
Regards,
John Hyre
REIT’s… - Posted by David Alexander
Posted by David Alexander on October 17, 2000 at 24:34:14:
I need a detailed explanation of a Real Estate Investment Trust?
How are they usually formed. How are they usually structured? I mean are the folks investing in them generally given an X amount of return on their money and that’s it or is it generally like a partnership type thing where the profits are split?
Any help would be great.
Thanks,
David Alexander
Re: REIT’s… - Posted by Eduardo (OR)
Posted by Eduardo (OR) on October 17, 2000 at 15:49:07:
David–
Ralph Block, Investing in REITS, Amazon.com --Eduardo
Re: REIT’s… - Posted by Eric C
Posted by Eric C on October 17, 2000 at 01:08:19:
Good morning David!
In order for a corporation to qualify as a REIT and gain the advantages of being a pass-through entity free from taxation at the corporate level, it must comply with the following Internal Revenue Code provisions:
Structured as Corporation, business trust, or similar association
Managed by a board of directors or trustees
Shares need to be fully transferable
Minimum of 100 shareholders
Pays dividends of at least 95% of REIT’s taxable income
No more than 50% of the shares can be held by five or fewer individuals during the last half of each taxable year
At least 75% of total investment assets in real estate
No more than 30% of gross income can come from the sale of real property held for less than four years
So, you could say that overall, it’s kinda complicated. Every time I think that I’d like to get back into REITs (other than as an investor), I remember all the paperwork and fees to keep yourself constantly in compliance with the Feds (and everyone else) and I quickly develop a headache.
Maybe, for the right deal, or the right circumstances. But I don’t think (for me) that the time is right yet.
See you later,
Eric C
Re: REIT’s… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on October 17, 2000 at 06:50:56:
David:
I’ve done a fair amount of work for REITs. To make formation and ongoing admin worthwhile (it’s expensive, I know, cause I’ve been part of the overhead!), the REIT should have at least $25 mil in assets, most have quite a bit more. The bene’s of a REIT are with one exception, similar to but somewhat less than an LLC or MLP. The one bene that a REIT can provide that the other entities cannot- public money, i.e.- listing on a public exchange like NYSE while retaining pass-through status (actually MLP’s can do this under certain circumstances). Check out www.nareit.com for some useful info.
Hope all is well,
John Hyre
Re: REIT’s… - Posted by David Alexander
Posted by David Alexander on October 17, 2000 at 10:19:29:
Wow, that big… I’ve been meeting with some financial planners and everytime it keeeps coming up that maybe we would need to form a REIT in order to utilize them to get private money… ie there Investors.
They already have securities license so in tis case it may have it’s advantages as well as it’s disadvantages. I was thinking it would work with something small up to say 5 mil or so. We are trying to figure out a way where they refer people my way for private money in RE that is win/win.
Sounds like back to the drawing board.
David Alexander