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Thanks to recent legislation regarding the structure of real
estate investment trust (REIT) ownership of health care
facilities, restrictions on REIT ownership have been modified
to the benefit of REITs.
United StatesFood, Drugs, Healthcare, Life Sciences
Thanks to recent legislation regarding the structure of real
estate investment trust (REIT) ownership of health care
facilities, restrictions on REIT ownership have been modified
to the benefit of REITs.
A taxable REIT subsidiary may now lease a health care
facility directly from its parent REIT, hold the licenses
applicable to operating such a facility, and then use an
independent contractor to operate the facility.
Formerly, REITs had to lease a health care facility through
a third-party tenant, who would then utilize an independent
contractor to manage the facility. This new legislation allows
REITs to stop using third-party tenants as accommodation
parties and thus enjoy the cost savings associated with
eliminating what in some cases is an unnecessary party from the
health care facility ownership structure.
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