to be taxable as a regular C corporation on any net built-in gain of the property transferred to the REIT if such property is sold during the five-year period following the date of transfer. Similar rules may apply to a partnership that transfers property to a REIT if the partnership has direct or indirect corporate partners. Careful tax planning is required to address these concerns. Hotel and Healthcare REITs Rent received from a corporation in which a REIT owns 10% or more of the total voting power or total value of shares is excluded as “rent from property” under the income tests described above. However, hotel REITs and healthcare REITs are exempt from this rule if they use an eligible independent contractor to manage the hotel facilities or healthcare facilities, respectively. Non-Traditional REITs Over the years, REITs have expanded to assets beyond office, retail, apartment, and commercial buildings, such as timber and farmland, cannabis-related, self-storage, data centers, single family homes, cell phone towers, casinos, private correctional facilities, and billboards. This has been particularly true in the wake of the Treasury Department’s 2016 publication of comprehensive regulations regarding what constitutes a “good” REIT real estate asset for purposes of the REIT asset tests. While favorable IPO market windows open and close, and REITs and their advisors may have different views concerning the right moment to commence active and intense preparation for an IPO, it is rarely too early to undertake the advance planning described in this Guide. Because the IPO markets are often unpredictable, companies seeking to go public should complete their preparations as soon as reasonably possible in order to achieve greater flexibility to quickly complete the IPO when market conditions become favorable. And, even if an IPO does not turn out to be the option of choice, this preparatory work should prove valuable in facilitating other funding opportunities, or even an acquisition by another company. A Final Thought 2024 Guide to REIT IPOs and Listing Transactions | 24
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