How are REITs Structured?
REITs are typically structured in one of three ways: Traditional, UPREIT and DownREIT. A traditional REIT is one that owns its assets directly rather than through an operating partnership.In the typical UPREIT, the partners of an Existing Partnership and a REIT become partners in a new partnership termed the Operating Partnership. For their respective interests in the Operating Partnership (“Units”), the partners contribute the properties from the Existing Partnership and the REIT contributes the cash. The REIT typically is the general partner and the majority owner of the Operating Partnership Units.After a period of time (often one year), the partners may enjoy the same liquidity of the REIT shareholders by tendering their Units for either cash or REIT shares (at the option of the REIT or Operating Partnership). This conversion may result in the partners incurring the tax deferred at the UPREIT’s formation. The Unitholders may tender their Units over a period of time, thereby spreadi
REITs are typically structured in one of three ways: Traditional, UPREIT and DownREIT. A traditional REIT is one that owns its assets directly rather than through an operating partnership. In the typical UPREIT, the partners of an Existing Partnership and a REIT become partners in a new partnership termed the Operating Partnership. For their respective interests in the Operating Partnership (“Units”), the partners contribute the properties from the Existing Partnership and the REIT contributes the cash. The REIT typically is the general partner and the majority owner of the Operating Partnership Units. After a period of time (often one year), the partners may enjoy the same liquidity of the REIT shareholders by tendering their Units for either cash or REIT shares (at the option of the REIT or Operating Partnership). This conversion may result in the partners incurring the tax deferred at the UPREIT’s formation. The Unitholders may tender their Units over a period of time, thereby sprea
