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SEC Filings

424B2
 filed this Form 424B2 on 12/06/2017
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If we fail to satisfy the REIT requirements described below but nonetheless maintain our qualification for taxation as a REIT because of specified exceptions or cure provisions, we may be subject to a tax of at least $50,000 per failure. In the case of certain REIT asset test failures, the tax will be the greater of $50,000 per failure or the highest regular corporate tax rate multiplied by the net income generated by the nonqualifying assets;

 

   

If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed;

 

   

If we acquire an asset with an adjusted tax basis determined by reference to its adjusted tax basis in the hands of a C corporation, and we later dispose of that asset within five years of the acquisition, we will generally pay tax at the highest regular corporate tax rate on the lesser of (i) the excess of the fair market value of the asset over the C corporation’s adjusted tax basis in the asset each on the date the asset ceased to be owned by the C corporation, and (ii) the gain we recognize in the disposition;

 

   

To preserve our qualification for taxation as a REIT we must generally distribute inherited C corporation earnings and profits by the end of our taxable year. If we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution; and

 

   

Our subsidiaries that are C corporations, including our taxable REIT subsidiaries as defined by Section 856(l) of the Code (“TRSs”), generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.

Other countries may impose taxes on our and our subsidiaries’ and partnerships’ assets and operations within their jurisdictions. As a REIT, neither we nor our stockholders are expected to benefit from foreign tax credits arising from those taxes.

If we fail to qualify for taxation as a REIT in any year or terminate or revoke our REIT election, we will generally be disqualified from taxation as a REIT for the four taxable years following the taxable year in which the termination is effective. Relief provisions under the Code may allow us to continue to qualify for taxation as a REIT even if we fail to comply with various REIT requirements, all as described in more detail below. However, it is impossible to state whether in any particular circumstance we would be entitled to the benefit of these relief provisions.

REIT Qualification Requirements

General Requirements. Section 856(a) of the Code defines a REIT as a corporation, trust or association:

 

  (1) that is managed by one or more trustees or directors;

 

  (2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

 

  (3) that would be taxable, but for Sections 856 through 859 of the Code, as a domestic C corporation;

 

  (4) that is not a financial institution or an insurance company subject to special provisions of the Code;

 

  (5) the beneficial ownership of which is held by 100 or more persons;

 

  (6) that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer “individuals” (as defined in the Code to include specified tax-exempt entities); and

 

  (7) that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.

 

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