REITs

prospie

?

7y

Correct

If ALL you do is development though it's probably not worth the bullshit of qualifying as a REIT. Every time you successfully exit a deal you have to pay a massive distribution of profits.

And I guess above all I would venture that the reason to qualify as a REIT would be the boost to your multiple... But if all you do is develop and sell, your multiple will be penalized anyway due to risk.

Rent Roll

TinMan1

RE

7y

Would a separate development arm be feasible? For example, develop under ABC Developers and spin/refi out into ABC REIT for the hold period? As a Developer, you still collect your fees and the bulk of the profits(outside of equity partners etc.). This could also allow you to pick and choose what projects you like to hold or simply sell.

"Never let success get to your head and never let failure get to your heart"

prospie

?

7y

TinMan1:

Would a separate development arm be feasible? For example, develop under ABC Developers and spin/refi out into ABC REIT for the hold period? As a Developer, you still collect your fees and the bulk of the profits(outside of equity partners etc.). This could also allow you to pick and choose what projects you like to hold or simply sell.

i think it would have to be a taxable arm, so the effect might still be the same.

don't get me wrong, there are REITs out there doing development, but it can't be the majority of their balance sheet or their multiple gets punished.

ThatGuyBalls

RE

7y

Best Response

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