1. TO REIT OR NOT TO REIT
5TH ANNUAL REAL ESTATE CFO FORUM
(EAST)
MARKS PANETH LLP
September 19, 2016
MICHAEL HURWITZ
C: 646.499.0634
O: 212.201.2230

2. Michael W. Hurwitz, is a Partner at Marks Paneth LLP. Mr. Hurwitz brings more than 25 years of experience and a versatile set of skills
acquired through working for both public and private companies in the real estate sector. His industry knowledge spans a vast number of
areas including real estate tax issues, public and private real estate investment trusts (REITs), opportunity funds, portfolio restructurings,
acquisitions and dispositions, partnership taxation and core tax compliance matters. Mr. Hurwitz has been involved in a variety of
negotiations including structuring and implementing strategic transactions, tax due diligence assignments, mergers and acquisitions and
many other special tax and non-tax projects. Prior to joining the firm, Mr. Hurwitz served for more than 4 years as the director of taxation at
a publicly traded REIT where he oversaw the day-to-day operations of the tax department. In this capacity, he researched and resolved tax
issues, made sure that the company operated in a REIT-compliant manner, assisted in capital market transactions and coordinated and
monitored the entire tax compliance process. Mr. Hurwitz also spent over 18 years working in global and regional public accounting firms.
Most recently, he was a senior manager in a Big Four accounting firm's real estate group serving primarily institutional, opportunity funds
and high-net-worth individuals. Mr. Hurwitz is an adjunct professor at New York University’s Schack Institute of Real Estate teaching
partnership taxation and other related real estate tax topics. He holds a Bachelor of Science in Accounting from Syracuse University and
a Master of Science Taxation (MST) from Pace University. He is a member of the American Institute of Certified Public Accountants and
the New York State Society of Certified Public Accountants. He chairs a networking group of tax directors and is an active participant in the
National Association of Real Estate Investment Trusts. Mr. Hurwitz resides in Larchmont, New York.
WHO IS MICHAEL W. HURWITZ, CPA, MST
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3. • Entity choice – determining factors
• REIT structures and subsidiaries
• Advantages and disadvantages of REIT’s
• Challenges involved in electing REIT status
• How big can the REIT sector grow
• Tell us your story
• Q&A – informal discussions
QUESTIONS TO BE ANSWERED - AGENDA
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4. • Formation, ownership and duration
• Management of business
• Operational requirements
• Limited or unlimited liability
• Double taxation or pass through
• Raising capital
• Transferability of investment
• Cost
ENTITY CHOICE - DETERMINING FACTORS
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5. • Office
• Industrial
• Data Centers
• Student Housing
• Manufactured Homes
• Malls / Shopping Centers
• Health Care Facilities
• Self-storage
• Hotels / Casinos
• Cell Towers / Billboards
• Timber / Farm Lands
• Financing / Mortgage
5
TYPES OF BUSINESSES OPERATING AS REIT’S
These real estate operating companies are really fully-integrated
organizations doing business in various sectors!

6. • Stand alone / special purpose blocker REIT’s
• UPREIT’s
• DOWN REIT’s
• Pair-Shared or Stapled REIT’s
• Operating Partnership’s (OP)
• Taxable REIT Subsidiary's and Qualified REIT Subsidiary’s
REIT STRUCTURES
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7. TYPICAL FUND STRUCTURE
Fund or OP
- * -
Fund
Investors
- * -
Investment
# B
Investment
# C
Investment
# A
Local JV
Partners
- # -
Local JV
Partners
- - #

8. TYPICAL REIT STRUCTURE
REIT
OP
Fund II or
SMLLC - *
Fund I or
SMLLC - *
Fund III
or SMLLC
- *
Shareholders:
Money for
Common &
Preferred
Stock
Limited Partners:
Contribute Properties on
a tax deferred basis in
return for OP Units or
Partnership Interests
Taxable REIT
Subsidiary
General Partner
Managing MemberFund
Investors
- * -

9. • Access to capital markets
• Professionally managed – vertically integrated
• Simple tax reporting; 1099-Div.
• Attractive dividend yields
• Liquidity
• Portfolio diversification
• Transparency (SEC Reporting)
ADVANTAGES OF REITS
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10. • Potential slower growth rate
• Potential higher leverage ratio
• Higher tax rate on dividends
• Sensitive to other higher yielding investments
• Need to operate in a REIT compliant manner
DISADVANTAGES OF REITS
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11. • Organizational Tests
• Quarterly Asset Tests
• Annual Income Tests
• Yearly Distribution Tests
• Record Keeping Requirements
OPERATING IN A REIT COMPLIANT MANNER
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“Professional services rendered in connection with educating and
ensuring company operates in a REIT-Compliant manner”
Discuss quarterly and annual REIT test and checklists!

12. • Competition for product (from foreigners and exempts)
• Comparability's (transfer pricing issues)
• Pricing of feasible investments
• Cash available for distribution
• Measuring CapEx returns
• Compliance with Code
• Other
CHALLENGES INVOLVED IN ELECTING REIT STATUS
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13. • Conversion to REIT – holding period to avoid C-level taxes
• Partnership issues – IRC Sections 704, 707, 731 and 752
• Depreciation expense – use of recovery ADS periods
• Thinly capitalized TRS’s – 163j interest expense
• Compensation – issuance of profits interests
• Calculation of earnings and profits (E&P)
• Operating in a REIT compliant manner
• Other
FEDERAL CONSIDERATIONS
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14. • Withholding of State taxes - nonresident partners of OP
• Recognition of Limited Liability Companies by States
• Capital stock, franchise taxes and other fees
• Business Trust REITs vs. Corporate REITs
• Unitary vs. separate filing requirements
• State apportionment factors
• New State Legislation
• Combined Filings
• State Audits
• Other
STATE CONSIDERATIONS
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15. • Recently finalized repair regulations and methodologies
• Debt financed distributions - interest tracing rules
• Deferred exchanges - 1031 Exchange (recycle $)
• Allocation waterfalls, promoted interests, targets
• Long-term incentive plans using profits interests
• Transfer pricing - arm’s length rents, loans etc.
• Unrelated Business Income Tax (UBIT)
• Financial Reporting issues
• Investor types
• Other
TAX TEASERS
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16. Sky’s the limit…
HOW BIG CAN THE REIT SECTOR GROW
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17. Any final thoughts?
Additional comments?
Take-a-ways?
Questions?
Let’s schedule some side-bar discussions!
17
WRAP-UP

18. THANK YOU
MARKS PANETH LLP
September 19, 2016
MICHAEL HURWITZ
C: 646.499.0634
O: 212.201.2230