Do you have clients who own condos and who want a little liquidity but don’t want to pay taxes on the gains? Or want to sell a portion of their condo and continue to live in it?
Compound is excited to announce our UPREIT program. Now, Manhattan condo owners can convert their ownership into an interest Compound’s Manhattan residential real estate fund.
Why would a condo owner consider this?
- Tax deferral for property owners facing significant capital gain tax liabilities on the sale of appreciated property with a low tax basis
- Potential to convert illiquid‚ long-term assets (i.e.‚ real estate) into more liquid securities (i.e., OP Units → REIT Shares → Cash)
- Exchange like for like: take one Manhattan condo and convert it into shares in a diversified portfolio of Manhattan condos
- Diversification of real estate holdings (i.e., OP Unit Holders have an interest in a portfolio of properties instead of just one)
- No property management responsibilities or concerns
- Quarterly income distributions through dividends
- Potential to recognize unrealized gains as earnings
- Professional management and expertise in capital markets
- Estate planning & simplification
- Allows the owner to dispose of its property in a way that maximizes its value
- Improved cash position through potential leveraging of shares
- Long-term lease back options
Real estate brokers will receive commission as they would in a any standard sale transaction.
What’s an UPREIT?: The term UPREIT (short for “Umbrella Partnership Real Estate Investment Trust”) refers to an entity structure that has been used by REITs since 1992 to allow property owners the ability to convert their ownership of one or more of their specific real estate properties into an interest which is‚ immediately‚ or can ultimately be converted into shares of a publicly traded REIT.