UPREIT Operating Partnership Unit Loans

Why Sell Your UPREIT Operating Partner Units?

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A. B. Nicholas is pleased to announce a new loan program for UPREIT Operating Partnership Unit (OPU) owners we call OpLine. This new program provides credit line financing using tax-deferred Umbrella Partnership Real Estate Trust (UPREIT) OPUs as collateral.

Below is an explanation of UPREITs contrasted with DownREITs, courtesy of TaxTV:

Many investors, particularly those in the field of commercial real estate, are paid in these UPREIT OPUs for tax reasons.  But obtaining cash from them means converting to a taxable format first.

A. B. Nicholas, in partnership with a major U. S. brokerage and banking giant, now offers the only formal credit line program on the market we know of for owners of UPREITs featuring high Loan-to-Value (LTV) and very low interest-only-required interest rates.

Eligibility

To be eligible for our OpLine program, you must be an Accredited Investor (see below) with at least $10M in UPREIT securities. Borrowers may team together so that the sum of all of their assets together comes to the required $10M minimum, and there is no limit to the number of partners that can group together for this purpose.

We also require that the equivalent, publicly traded REIT have solid trading volume averaging at least $5 million in value on average per day (e.g., a $5 REIT with an average of 1 million shares per day). There are no other requirements.

Accredited Investor Definition

An Accredited Investor:

  • Has an individual annual income in excess of $200‚000 after taxes;
    OR
  • Has a joint annual income (spouse included) in excess of $300‚000 for each of the last two years; OR
  • Has a net worth in excess of $1 million (individually or jointly with spouse, including home);
    OR
  • Own a Trust or approved Trust-like entity having assets in excess of $5‚000‚000.


Who Can Use OpLine’s UPREIT OPU Credit Line?

Our program was created to solve the dilemma of those who want or accept being paid in tax-deferred UPREIT Operating Partnership Unit securities when they sell their properties, but who need cash and don’t want to trigger the capital gains taxes that come from converting and selling them as marketable, free-trading REITs. OpLine gives you the option of keeping your UPREITs without the need to sell to do so. The result is a simple lien on the asset, producing a line of credit at up to 70% of the UPREIT OPU portfolio’s value in an interest-only-repayment required package.

If you are a buyer of a commercial property, now you can inform sellers that they can get a credit line against their UPREIT OPUs to help close your deal. If you are a seller of a commercial property, open the doors to payment in UPREITs OPUs and increase your likelihood of a quick sale.

 

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