Why Spring a Tax Event by Selling Your UPREIT?
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A. B. Nicholas is pleased to announce a new loan program for UPREIT owners called OpLine. This new program provides credit line financing using tax-deferred Umbrella Partnership Real Estate Trust (UPREIT) units. UPREITs are the non-publicly traded security equivalent of its publicly traded “sister” REIT. It enjoys tax deferral until it is converted to its marketable REIT equivalent, whence it can be sold like any common stock or REIT.
Many investors, particularly those in the field of commercial real estate, are paid in these UPREIT units for tax purposes so as to defer their capital gains taxes. But what do you do if you need cash but don’t want a big tax hit?
A. B. Nicholas, in partnership with a major U. S. brokerage and banking giant, now offers the only formal credit line program for owners of UPREITs, featuring up to 60% LTV and very low rates.
To be eligible for our OpLine program, the client(s) must be Accredited Investors (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.
We also require that the equivalent, publicly trading “sister” REIT have solid trading volume of 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.
Opline clients must be “accredited investors” to partake in this loan program, meaning they:
- Have an individual annual income in excess of $200‚000;
- Have a joint annual income (spouse included) in excess of $300‚000 for each of the last two years; OR
- Have a net worth in excess of $1 million (individually or jointly with spouse);
- Own a Trust or approved Trust-like entity having assets in excess of $5‚000‚000.
Who Can Benefit from OpLine’s UPREIT Credit Line?
Our program was created to solve the dilemma of those who want or accept being paid in UPREIT securities when they sell their properties, but who need cash and don’t want to trigger the capital gains taxes that come from converting them to marketable REIT securities – typically the only way to get cash from UPREIT shares. Opline gives you another option: Keeping your UPREITs without selling or converting them to obtain cash, with a simple lien on the asset producing a lien of credit at up to 60% of the UPREIT portfolio’s value in an interest-only-owed package.
If you are a buyer of a commercial property, feel free to inform reluctant sellers that they can get a credit line against the UPREITs by coming to A. B. Nicholas. If you are a seller of a commercial property, open the doors to payment in UPREITs and increase your likelihood of a quick sale. Whatever the case, here at last is a resource that the commercial real estate industry will surely welcome.