REITs Provided Safe Harbors for Modifying Loans Secured by Distressed Real Estate
19 January 2011
Mayer Brown Legal Update
On January 5, 2011, the US Treasury Department published Revenue Procedure 2011-16 (the “Revenue Procedure”), providing guidance to real estate investment trusts (REITs) engaged in transactions involving debt secured by real estate that has declined in value. Specifically, the Revenue Procedure provides safe harbors for meeting the REIT income and asset tests in connection with the modification of loans secured by real estate, and it clarifies the treatment of mortgage loans acquired by a REIT through a secondary purchase.