Annet Thomas, managing director at PwC, sat down for a video interview during Nareit’s REITwise: 2025 Law, Accounting & Finance Conference in San Antonio on March 25-27.
Thomas shed light on how public REITs manage their involvement in joint ventures, ensuring compliance with tax rules and income qualifications. She explained that when a public REIT holds an interest in a partnership, it calculates its income and assets proportionately based on its capital interest in the joint venture.
“The income and assets would have the same character in terms of the asset type and the income type,” she said, emphasizing that these classifications remain consistent when included in the REIT’s reporting.
To maintain compliance, Thomas noted that joint venture agreements typically include covenants that protect the public REIT’s interests. “The JV partner would be contractually required to abide by those requirements,” she explained, referring to provisions in LLC agreements that ensure the joint venture is operated in a REIT-compliant manner.
She also addressed the tax complexities involved when a joint venture receives an unsolicited offer to sell property within two years of acquisition. Thomas cautioned that such a sale would not fall within the prohibited transaction safe harbor. To avoid the 100% prohibited transactions tax, she advised that public REITs must carefully analyze the specific facts and circumstances of each deal.