With REIT shares once again trading at a discount to net asset value they are attractive to investors capable of extracting value by taking the group private. Robust pre-acquisition tax due diligence is required on any corporate transaction but a more nuanced exercise is required when the target is a REIT. As well as a review of ongoing compliance with the various REIT conditions sellers should expect pre-conversion restructuring which was undertaken to comply with REIT criteria to be examined as part of a pre-acquisition due diligence exercise. Details of a REIT’s investor base (and how it has changed) may also be requested. There are further due diligence considerations for a prospective buyer intending to take the target out of the REIT regime post-acquisition. In practice it is often difficult to obtain the requisite information and the complexity of the REIT conditions requires a considered...
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With REIT shares once again trading at a discount to net asset value they are attractive to investors capable of extracting value by taking the group private. Robust pre-acquisition tax due diligence is required on any corporate transaction but a more nuanced exercise is required when the target is a REIT. As well as a review of ongoing compliance with the various REIT conditions sellers should expect pre-conversion restructuring which was undertaken to comply with REIT criteria to be examined as part of a pre-acquisition due diligence exercise. Details of a REIT’s investor base (and how it has changed) may also be requested. There are further due diligence considerations for a prospective buyer intending to take the target out of the REIT regime post-acquisition. In practice it is often difficult to obtain the requisite information and the complexity of the REIT conditions requires a considered...
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